COP Background Chatter Supports Views Held By Greta

Greta Thunberg looks to have COP26’s number. The 18-year-old Swedish environmental activist opened her speech to green protesters on Friday by declaring the global climate shindig a failure. If some business leaders and policymakers in Glasgow were prepared to express openly what they were saying behind the scenes, that might be a more widely held view.

The first of two conference weeks ended on a nuanced note. Former banks regulator Adair Turner said that government pledges made thus far would only shave 9 billion tons off the 43 billion tons of carbon dioxide emitted annually by 2030. To keep global warming to the targeted 1.5 degrees Celsius they must halve. On the other hand, former Bank of England boss Mark Carney, Standard Chartered chief Bill Winters and other A-list financiers rejoiced that $130 trillion of banking, insurance and investment assets were now signed up to achieve the same target.

For some in the financial sector, these private-sector promises can paper over public shortcomings. If every member of the Glasgow Financial Alliance for Net Zero does what it has committed to, everything that touches the Western financial system – including big emitter borrowers like global multinational companies and petro-states seeking bond finance – will have to toe the line. In that scenario, business leaders would achieve de-carbonisation even if politicians can’t agree on tougher targets.

Yet not all private-sector attendees in Scotland have got the memo, judging by background discussions and chatter in the green rooms before their panels. Many American delegates are currently concerned about energy security issues that have caused surging gas prices in Europe and elsewhere. The emerging buzzword from this bunch is for “responsible retirement” of oil and coal financing.

That might sound reasonable enough, given the potential for the sort of instant fossil-fuel reductions advocated by Thunberg to cause supply-demand imbalances and elevated prices. Yet the International Energy Agency’s 1.5 degrees Celsius pathway cites no need for new oil and gas investment. The concern of some observers is that responsible retirement is a euphemism for foot-dragging on an exit from profitable hydrocarbons financing.

Thunberg accused political leaders of doing nothing useful. That’s overblown. But if businesses don’t stick to their pledges, especially those from financiers signed up to Carney’s big GFANZ initiative, she will prove prescient. (Reuters)