A Daunting Challenge Ahead

It may take months, if not years, to judge if all the pledges and agreements reached at COP26 will be enough to help us course-correct away from our dangerous climate trajectory. The challenge could not be more daunting: to ensure a livable planet for younger generations, we need to cut emissions by 45% by 2030. As UN secretary-general António Gutteres said in Glasgow, the goal of “keeping1.5C alive” is not dead, “but it is on life support”. 

Following the “Code Red for Humanity” report launched during a series of wildfires in the Mediterranean as well as Turkey, this year’s COP26 ended with bigger and bolder targets to ensure we undo the effects of human-induced climate change.

The Glasgow Climate Pact

At the 26th UN Climate Change Conference (COP26), held in Glasgow, Scotland, countries signed an agreement that included a series of measures to be taken against climate change. The agreement includes important decisions such as a commitment to phase out coal, a regular review of emission reduction plans, and more financial support to developing countries.

The UN chief António Guterres states that it is time to go “into emergency mode”, ending fossil fuel subsidies, phasing out coal, putting a price on carbon, protecting vulnerable communities, and delivering the $100 billion climate finance commitment.

The “Article Six” and Net Zero Targets

After six years of negotiations, the UN climate talks at COP26 in Glasgow produced a strong Paris Agreement rulebook for international cooperation through carbon markets. The agreed Article 6 rules, while not perfect, give countries the tools they need for environmental integrity, to avoid double-counting, and ultimately to clear a path to get private capital flowing to developing countries.

Within the setup, the international trade of the carbon credits has been agreed that one country or company can buy carbon credits from the other country that is the host country. If a country reduces its carbon emissions by more than it promised in its Nationally Determined Contributions within the Paris Agreement, it can then trade these carbon credits with other countries and companies as long as a Corresponding Adjustment is signed to avoid double counting. Double counting refers to claiming the reduction of the same carbon reduction by two different parties.  

As a result of this, the current voluntary carbon market is going to grow dramatically. It’s also going to create a more internationally aligned price on carbon.

We have seen an unprecedented increase in carbon prices in the regulated markets. Take EU ETS for example. During November the price was around EUR 67 and we now see that in a month it has reached levels as high as almost EUR 90.  The increase in the regulated markets also implies an increase in the voluntary markets as well. 

Carbon sequestration and clean power generation, the rise of hydrogen will be the most prominent factors going forward. Companies are starting to see that conservation efforts are not enough and the only way out of a catastrophic scenario is the one where carbon sequestration plays a dominant role. Otherwise, we should all forget about reaching net-zero levels as of 2050. 

Carbon sequestration happens in two ways: Nature-based solutions meaning afforestation and reforestation projects and direct air carbon capture and storage technologies. As the latter is in the very early stages of development, nature-based solutions, especially blue carbon projects seem to be the most viable option going forward over the next decade.

To conclude, measures under Article 6 support and contribute to two clear goals of the Paris Agreement: First is delivering emission reductions and second is mobilizing investments. If countries set up the rules correctly, Article 6 can accelerate countries’ efforts to do both. One study shows that re-investing the full cost savings potentially achievable via Article 6 into greater emissions reductions could roughly double global climate ambition, without any additional cost. This proves that 2050 targets are achievable.

Other key COP26 achievements

Beyond the political negotiations and the Leaders’ Summit, COP26 brought together around 50,000 participants online and in-person to share innovative ideas, solutions, attend cultural events, build partnerships and coalitions.

The conference heard many encouraging announcements. One of the biggest saw leaders from over 120 countries, representing about 90% of the world’s forests, pledged to halt and reverse deforestation by 2030. The same date by which the Sustainable Development Goals (SDGs) to curb poverty and secure the planet’s future are supposed to have been achieved. The good news is that the pledge includes almost $19.2 billion of public and private funds.

The private sector also showed strong engagement with nearly 500 global financial services firms agreeing to align $130 trillion – some 40% of the world’s financial assets – with the goals set out in the Paris Agreement, including limiting global warming to 1.5^oC.

There was also a methane pledge, led by the United States and the European Union, by which more than 100 countries agreed to cut emissions of this greenhouse gas by 2030. The pledge includes 105 signatory countries, half of the top 30 methane emitters and covers 2/3 of the global economy. However, significant methane emitters such as China, Russia and India have yet to sign. If methane emissions can be cut globally 30% by 2030, scientists believe it could help the world avoid 0.3^oC of warming by 2040.

Regarding green transport, more than 100 national governments, cities, states and major car companies signed the Glasgow Declaration on Zero-Emission Cars and Vans to end the sale of internal combustion engines by 2035 in leading markets, and by 2040 worldwide. At least 13 nations also committed to ending the sale of fossil fuel powered heavy duty vehicles by 2040.

Lastly, there are two bold ambitions towards 2030: Halve emissions and build resilience for 4 billion people. Even today, people from all around the world are being displaced the solidarity is not addressed in the pledges. Sustainable development has the magnitude of the industrial revolution and the speed of the digital revolution.

Arçelik’s commitment to the Paris Agreement goals 

Arcelik has announced on November 5th their commitment to the Paris Agreement goals, by re-submitting more ambitious science-based targets for their Scope 1, 2 and 3 emissions, pushing for a 50.4% reduction across all three scopes. Commentating on the announcement, Hakan Bulgurlu said "Two-thirds of global emissions are now coming from developing countries, but only one-fifth of investment in clean energy is occurring there. Manufacturers like Arçelik, and our partners in these countries, have a collective responsibility to lead the way in energy transformation. We continue to innovate and create ways – to not only transform our products and services but every household that our products enter. Now, we are calling on other businesses to join us in this fight and recognize how they can effect change and stop environmental devastation."