COP26 (1/5): What Agoria is expecting from COP26 | Agoria

COP26 (1/5): What Agoria is expecting from COP26

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Published on 28/10/21 by Sarah Godard
On 31 October, the annual United Nations climate conference will start in Glasgow. With almost 30,000 participants and more than 100 world leaders in attendance, this 26th climate conference promises once again to be a grand spectacle with busy international negotiations. The expectations are already high. After all, the conference comes a few months after the publication of the sixth assessment report by the IPPC (the UN's intergovernmental panel on climate change). This report paints an alarming picture of climate warming. UN Secretary-General António Guterres described the report as a "code red for humanity".

When Greta Thunberg was recently asked what she expected from COP26, her answer was: "Nothing. There are always many announcements, countries say they are going to work together, but in the end nothing is done." Agoria would not dare to be so negative. The Paris climate agreement concluded in 2015 (during COP21) was a major step forward. The agreement established the upper limit of 2 degrees of warming compared to the pre-industrial era in a legal instrument for the first time, and also set the ambition to limit warming to 1.5°C. 

It is true that many climate conferences in the past have come to nothing. Marc Jaccard, Professor of Sustainable Energy at Simon Fraser University in Canada, says in his book "A citizen's guide to climate change" that we expect too much from climate conferences. "International negotiations always assume that all countries will voluntarily agree on how to share the burden fairly and proportionately, but that is a utopia."

In Belgium, it took years before we had an agreement on how to share the efforts resulting from the Kyoto Protocol among the regions. What can one expect to be achieved in 12 days with more than 100 countries? 

Whether or not an ambitious climate agreement is reached, Europe must continue to set an example and form a coalition of the willing with other like-minded countries. 

Whether or not an ambitious climate agreement is reached, Europe must continue to set an example and form a coalition of the willing with other like-minded countries. This way, pressure can be exerted on countries that lag behind in setting and achieving climate targets. In the words of Marc Jaccard: “Climate leading countries that realize the necessity of carbon tariffs can form climate clubs that establish consistent carbon tariffs on the imports of laggard countries. This should be the basis for new international trade deals.” 

With the 'FIT for 55' package proposed this summer, Europe is once again showing the way forward. The package contains a whole range of concrete legislative instruments to tighten the EU's 2030 interim climate target to a 55% reduction in CO2 emissions from the current 40%. Much is expected from the tightening of the European Emissions Trading System (ETS), resulting in higher carbon prices for industry which (on top of high gas prices) translate into the current very high electricity prices.

To prevent companies from moving their production to countries outside Europe with a less strict climate policy (this phenomenon is called 'carbon leakage'), Europe is therefore coming up with something new, namely a carbon correction mechanism at the border. This CBAM, or 'carbon border adjustment mechanism', is to be the capstone of the European CO2 market. 

The CBAM is an instrument that is proposed with good objectives in mind. However, we must be careful to ensure that such an instrument does not have a major adverse impact on the value chain of our processing industries, including the many producers of innovative and climate-friendly technologies. 

The CBAM is an instrument that is proposed with good objectives in mind. However, we must be careful to ensure that such an instrument does not have a major adverse impact on the value chain of our processing industries, including the many producers of innovative and climate-friendly technologies. Existing carbon leakage measures should be better analysed before introducing a new instrument. After all, the CBAM, on top of the existing anti-dumping, safeguard and other trade defence measures, entails an additional increase in price for basic materials for the processing industry. The question is therefore whether the CBAM, in its current form, might not actually lead to more carbon leakage downstream in the value chain and precisely where the most added value for the European economy is created.

A unilateral action such as the CBAM may even complicate rather than promote negotiations for a major climate agreement at COP26. Therefore, Agoria calls on European leaders to use the opportunity to positively conclude multilateral trade agreements with other like-minded countries outside Europe, based on climate targets and measures, and to form the largest possible climate club. Then we will hopefully not need a complex and potentially risky European CBAM.

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