As widely heralded, yesterday marked the start of COP 26, the latest in a seemingly endless succession of climate negations.

Let’s look back to COP 15 (2009), the first COP I attended.  Back then, hundreds of pages of negotiating text (littered with square brackets illustrating undecided points and concepts) went into one end of the process.  Negotiations were on a dual track, with one stream attempting to agree a second Kyoto Protocol commitment period, and another trying to agree a broader way forward which would apply to global emissions.  Targets under the Kyoto Protocol covered around 25% of global emissions and did not constrain those of, for example, China and India.  The US had walked away from the Protocol soon after it was agreed.

I had recently joined a law firm to advise a handful of clients (carbon traders and oil and gas firms) on the legal implications of the negotiations.  COP 15 was to mark the start of a brave world of increased climate action, including carbon trading (buying and selling emissions within the framework of binding targets and a robust compliance mechanism), which I wanted to be part of.

Out popped, after two weeks of formal negotiations, the Copenhagen Accord, a three page damp squib.  In a massive dose of collective side eye, the COP “noted” the Accord.  The negotiations were eventually rescued and at COP 21 (2016), the Paris Agreement was agreed.  At its heart, countries agreed to holding the increase in the global average temperature to well below 2°C above pre-industrial levels and to pursue efforts to limit the temperature increase to 1.5°C above pre-industrial levels.  They committed to submit successive nationally determined contributions (NDCs) which represent a progression beyond their then current NDC and which reflect the country’s highest possible ambition.

What really matters now is that countries commit to more aggressive NDCs.

According to Climate Action Tracker, 118 countries have submitted new NDC targets (117 countries plus the EU27) and 89.4% of global emissions are covered by them.  Current commitments to cut greenhouse gas emissions put the planet on track for an average 2.7 °C temperature rise this century.

One means of allowing countries to adopt more aggressive NDCs is to allow the market mechanisms provided for  under the Paris Agreement to get going.  We have already had a run at this with the Clean Development Meacham (and “Joint Implementation”) under the Kyoto Protocol, but so far the detailed rules under the Paris Agreement have not been agreed.  The PAris Agreement provides for “cooperative approaches that involve the use of “internationally transferred mitigation outcomes” (ITMOs)  towards NDCs.  It also provides for a “sustainable development mechanism”.  Market mechanisms are at least one (or two) of the keys to the castle, and let’s hope that they can be agreed at Glasgow.  This would likely unlock a wave of private sector climate finance which would help allow climate mitigation and adaptation to be adequately funded.

Back to Denmark, the Copenhagen Accord provided that “In the context of meaningful mitigation actions and transparency on implementation, developed countries commit to a goal of mobilizing jointly USD 100 billion dollars a year by 2020 to address the needs of developing countries”.

In Paris, the COP extended the goal of mobilizing jointly USD 100 billion through 2025, and decided that prior to 2025 countries shall set a new collective quantified goal from a floor of USD 100 billion per year, taking into account the needs and priorities of developing countries.

On the broader climate finance piece, China’s ambassador to the UK recently wrote that “Commitments should be honoured in order to strengthen international mutual trust. The longstanding pledge by developed countries to provide $100bn a year in climate finance to developing countries by 2020 has yet to be fulfilled. All countries must keep their word rather than just pay lip service.”

Emissions reduction targets, market mechanisms and finance are only three of the many complex issues being discussed at COP 26, but they are probably those which are of most interest to the private sector.  Though governments are the entities that will be bound by COP decisions, the private sector will live with the consequences.  Many businesses have already spent significant amounts of time and money transforming their business models to be “climate appropriate”.  Others have yet to start this journey.  None have completed it. A weak outcome from COP 26, which does not send a signal that governments remain committed to being guided by the demands of climate science, will make the journey even more treacherous.  In any event, COP 26 will be a waypoint, and not the destination.  The private sector is likely to have to forge ahead of government ambition.