The year ahead could mark a shift in efforts to tackle the climate crisis. The scale of the challenge requires an unprecedented response. Critically, real-world action needs cooperation, competition and consistency.
The collective outcome of several high-level events in 2021 will be crucial for meeting global climate change objectives, as well as national climate and energy targets. Even under ordinary circumstances this would be an important time, as China sets its next five-year plan, President Biden likely implements progressive campaign pledges – including re-joining the Paris Agreement and setting a 2050 net zero target – and the EU introduces the next structural funds programme.
However, the importance of 2021 is even greater as countries submit their revised five-year pledges to the UNFCCC and negotiate at the COP26 in order to put global mitigation plans back on track to meet the objectives of the Paris Agreement. Two additional factors make the next 12 months particularly important. First, the COVID-19 impacts on energy supply, demand and emissions; the extent of associated recovery packages; and the acceleration or slowing of the energy transition. Second, climate diplomacy between China, the EU and the US is in greater flux than ever before, with an emerging shift towards competitive climate action mechanisms with import taxes on the carbon content of goods.
It is still too early to determine the precise impacts of COVID-19 on the speed of decarbonization and the energy transition. Emissions slowed in 2020, but the initial substantial reduction due to lockdowns shows signs of abating and emissions are returning to near pre-pandemic levels. This only underscores the importance of countries’ revised NDC pledges demonstrating significantly increased ambition. This will be aided by the EU’s announcement of a 55 per cent emission reduction target by 2030 and President Xi stating that China’s goal is to reach carbon neutrality by 2060. Consequently, there is today significantly more optimism over the politics of international climate change than there was just six months ago and the likelihood of an ambitious outcome of COP26 has increased significantly.
The stimulus packages in response to the COVID-19 pandemic are a once-in-a-generation opportunity to accelerate public-sector low-carbon expenditure. China, the EU and the US will need to ensure these have climate action front and centre. The EU has made firm pledges in this regard, dedicating at least 30 per cent of its recovery plan and multi-year budget to meeting climate pledges, and there will be considerable global scrutiny of President Biden on the implementation of his Build Back Better pledges.
China, the EU and the US have been the most important parties to the UNFCCC, not only due to their historical and current emissions, but also to their geopolitical power, which has enabled them to encourage or discourage greater mitigation ambition. Therefore, a united front from these major players and demonstrable examples of cooperation will be fundamental to the success of meeting the objectives of the Paris Agreement. They may prioritize different approaches including using the market, subsidies, green stimulus packages, and legislation or regulation to accelerate the transition to a low-carbon society.
However, even with a new US administration it is likely that a trend towards less international cooperation and more competition will continue. The clearest sign of this shift is the proposed introduction of import taxes on the carbon content of goods entering the EU. This will test the level of political support within the EU and opposition from other countries, as well as the EUs ability to overcome the challenges to the implementation of CBAMs, principally regarding WTO rules. President Biden is considering similar carbon import taxes for the US. New mechanisms that impact global trade are notoriously difficult to introduce and are highly politically sensitive; therefore the chances of their effective implementation are probably low. Nevertheless, just seriously considering carbon import taxes could stimulate trading partners to further their cooperative international pledges and domestic climate action. Thus, a simple dichotomy between cooperation and competition is too reductionist.
The delay in holding COP26, due to COVID-19, gives countries time to take into account the change in administration in the US before submitting their revised NDCs. Moreover, COP26 is being hosted jointly by Italy and the UK, the respective presidents of the G20 and G7 in 2021, which is likely to increase the profile of climate initiatives.
Policies to reduce GHG emissions tend to be long-term, requiring consistency and stability. The EU has achieved this, across successive European Commissions, resulting in more ambitious mitigation targets and global leadership in the deployment of low-carbon technologies. Likewise, China, through its five-year planning cycle has consistently addressed environmental and climate-change issues. But, while this has created policy stability, addressing climate change has often been subordinate to other social and economic priorities of the Chinese government. In the US, climate change remains a partisan issue, with Democratic administrations pushing forward climate policies, only for these to be slowed down or reversed by Republicans. This stop-start approach to climate mitigation and adaption reduces the effectiveness of domestic policies and diminishes the effectiveness of the US in the international process.