COP26 - What we’ve learned about the trends and commitments of the future
by Gaby Flores on Nov 04, 2021
World leaders met in Glasgow this week for COP26. COP26 is the 26th Conference of the Parties, a United Nations climate summit where countries in attendance discuss and share their plans to cut emissions. Due to the nature of COP26, it’s reasonable to assume that topics discussed at COP26 will indicate future trends in the energy industry, and how we live our lives in general. The top three trends at this week’s conference include:
1) Convergence of the public and private financial sectors
Going into COP26, McKinsey mentioned this was one to expect, and they were right. At the conference, politicians noted that collaboration between the private and public sectors would be essential to keeping warming below 1.9 degrees celsius. In Glasgow this week, we’ve seen the financial sector step up to the plate more than ever before.
Twenty countries and financial institutions have agreed to halt financing for fossil fuel development overseas. They expect this will result in diverting approximately $8 billion per year to domestic green energy.
Additionally, hundreds of the world’s biggest banks have committed to reaching net-zero emissions across their portfolios by 2050. This group, the Glasgow Financial Alliance for Net Zero (GFANZ), controls about $130 trillion of the world’s pension funds and assets. The alliance essentially signals that the private financial sector is committing to making climate change a major factor in future financial decisions.
2) Weaning ourselves off coal
Another major development at COP26 this week was the pledge by more than 40 countries to phase coal-fired power out of their generation stack. Coal is considered the dirtiest fuel source, and the biggest contributor to CO2 emissions. While the US was not one of the countries making this pledge, countries that did include Poland, Vietnam, and Chile, some of the most coal-dependent countries in the world.
3) Reduction of methane gas emissions
Lastly, approximately 100 nations and parties have committed to cutting methane emissions by 30% by 2030. Methane, one of the main components of natural gas, is an extremely potent greenhouse gas. Methane has 80% more warming power than CO2 and is responsible for about 30% of global warming since the industrial revolution. Parties that have committed to slashing methane gas emissions include the US, Canada, and the European Union.
Without clarity on how all of these commitments will be implemented and achieved, it’s clear that, coming out of COP26, we can expect the financial sector to be more involved in climate policy and action, and we will continue to see a desire to move away from fossil fuel power toward renewable energy sources in our generation stack. Technology is evolving rapidly, and we’ll likely continue to see an unprecedented amount of renewable generation and utility-scale batteries coming onto the grid in the coming years. As this occurs, however, it remains to be seen how these technologies will impact the North American power grid. How will congestion and volatility be affected? What technologies will investors find most appealing, and in what areas? How will consumer behaviors and demand change in the coming years? How will this affect grid reliability?
While Yes Energy doesn’t have answers to these questions, we do offer the data to help you develop your own hypotheses when it comes to the future of the power grid. Extensive nodal power data will be increasingly essential to making sound, strategic investment and operational decisions. For a complimentary consultation with one of our experts to support your business’ participation in nodal markets in the power industry of the future, click here.
Sources: RTO Insider 11-02-21, https://www.bbc.com/news/world-59138578, https://www.theguardian.com/environment/2021/nov/03/what-happened-at-cop26-day-three-at-a-glance, https://www.theguardian.com/environment/2021/nov/03/more-than-40-countries-agree-to-phase-out-coal-fired-power, https://www.mckinsey.com/about-us/new-at-mckinsey-blog/ahead-of-cop26-seven-sustainability-trends-most-on-our-minds, https://www.washingtonpost.com/climate-environment/2021/11/02/cop26-climate-summit-live-updates/, https://www.cnn.com/2021/11/02/world/cop26-day-2-takeaways-intl-climate/index.html, https://www.euronews.com/green/2021/11/02/cop26-six-takeaways-as-day-2-wraps-with-major-climate-deals, https://www.nytimes.com/live/2021/11/03/world/cop26-glasgow-climate-summit, https://www.bbc.com/news/science-environment-59159018, https://www.cnbc.com/2021/11/03/global-finance-urged-to-step-up-climate-fight-at-cop26-summit.html, https://www.reuters.com/business/cop/wrapup-politicians-exit-cop26-130tn-worth-financiers-take-stage-2021-11-03/, https://www.rtoinsider.com/articles/28990-us-canada-eu-slash-methane-emissions