The stage is set. The (energy-efficient) lights are lit. After nearly a year of delay, the 26th session of the Conference of the Parties (COP 26) to the UNFCCC is finally upon us.
Walking you through the event is The COP Shop, the brand-new podcast and article boxset series from Energy Voice Out Loud in association with COP26 principal partner NatWest Group, diving into the most important climate summit in history, and the role of green finance in the battle against climate change.
In this episode, EV Europe Editor Allister Thomas is joined by co-host James Close, Head of Climate Change at NatWest Group, and special guest Rachel McEwen, Chief Sustainability Officer at SSE, to discuss the aims of COP, what we can hope it might achieve, and how it can help secure the role of finance in the green transition.
One of the primary outcomes of COP26 is to officially secure the $100 billion per year in climate finance, supplied by wealthier nations to support developing nations in fighting climate change and enabling energy transition. James noted that the target was first raised at COP15 in Copenhagen, so ratification has been a long time coming.
“We’re pretty close to that being visible and agreed which would be a great step forward because developing countries will feel as though promises made by developed countries are going to be kept,” he added.
Although this now won’t be achieved until 2023, success would mean those billions in public finance joining trillions in private capital invested in the energy transition.
Rachel noted that: “At its most basic the point of COP is to bring about international co-operation, and if ever there was an issue that needs international co-operation then climate change is probably top of the list.” A good outcome from the conference would put the world onto a clear pathway with a chance of achieving the 1.5C global warming target.
From SSE’s perspective as a principal partner, the event brings responsibility and privilege. “Not every day that you get such an important international meeting on your doorstep so it’s one of those things you need to step up to,” she says.
For the energy developer, greater global governmental consensus on plans to fight climate change will ultimately a political and regulatory environment, with less risk, in which it can invest.
Rachel discussed SSE’s issuance of green bonds to help fund specific renewable generation projects, and highlighted the potential for innovation in green finance, not only to tackle issues like fuel poverty but to create social value too – in the UK and globally. NatWest Group, meanwhile, intends to provide £100 billion in climate sustainable finance to customers by 2025, with a focus on SMEs.
On funding for the energy transition, Rachel mentioned the “orderly” phase-out of funding and use of coal-fired generation, and now sees the move away from “unabated” gas generation as the next big transition to make. This must happen alongside deployment of new renewables capacity and development of energy storage.
And while the UK has in many ways been a role model, James said, challenges remain in heating, buildings, transport and other sectors: “The devil in many ways is in the detail; there is a gap the trajectory that we’re on – as highlighted by the CCC – and the policies required to get us to those ambitious targets around decarbonising the whole country.”
But as renewables funding grows, are doors shutting on oil and gas just as those businesses may seek help to transition? James said NatWest Group assists businesses in developing “credible transition plans” – but that it is not a case of “either/or”.
In the early-stage technology space, access to finance will also be key to this transition, and government can help by setting the right policies, such as those set out in the Ten Point Plan. James explained: “Policy ends long-term, signal to investors and entrepreneurs that these technologies are here to stay.” The more detail the government can provide on the importance of these new innovations, the easier it will be to mobilise new investments and accelerate the transition.
Baked into the Paris Agreements is the concept of ‘Just Transition’ – but means many things to different communities. As part of the Scottish Government’s commission looking at the issue, Rachel said the group is focused on the human and social consequences of the transition to net zero – an important distinction from a wider movement for climate justice.
But those human consequences do include North Sea oil and gas workers who are worried about their place in a low-carbon future. Rachel said SSE has put a lot of thought into this and how it can support people and communities linked to high-carbon industries, but that there is already a strong correlation between oil and gas and renewables skills within its workforce.
From a wider perspective, James said NatWest Group takes an intergenerational view of climate change as something that must be addressed to ensure a sustainable future for young people. The same applies to learning and skills, where he sees a role for organisations like NatWest Group in providing support for businesses looking to transition and (re) skill personnel.
COP26 is no silver bullet for the issues raised in these discussions. But it is a vital and long-awaited step in setting the course of policy, investment, technology and skills over the next 30 years.