On 22 and 23 April 2021, US President Joe Biden hosted a global two-day international climate summit to formally mark the US' return to the Paris Agreement (the "Climate Summit"). The Climate Summit's focus was on starting conversations around how to address the climate crisis in practice, including emission reductions, carbon trading, finance, innovation and job creation, in advance of more formal talks at COP26 later this year. It was the first time in four years that the US government has hosted a major international climate discussion, sending a strong signal to the rest of the world that the US is serious again about tackling climate change. Meanwhile in the EU, on 21 April 2021, the European Council and European Parliament reached a provisional political agreement on the European Climate Law, enshrining the EU's objective to reach carbon neutrality by 2050 (including a commitment to reduce the bloc's greenhouse gas emissions by at least 55% by 2030).
COP26: New US and EU greenhouse gas reduction commitments
The Climate Summit was attended by 40 heads of state and government delegations from around the world, including Russian President Vladimir Putin, and Chinese President Xi Jinping. Multilateral attendance on this scale was welcomed by many, especially amid rising tensions between the US, China and Russia over various trade, military and human rights disputes. Also in attendance at the summit were leading members of the business community, UN Secretary-General Antonio Guterres and representatives of leading environmental organisations such as the International Energy Agency.
At the summit, President Biden and U.S. Special Presidential Envoy for Climate John Kerry unveiled the US' Paris Agreement nationally determined contribution (please see our earlier article for further details) to cut carbon emissions by 50-52% below 2005 levels by the year 2030. The new target is more than double the US' previous commitment under the 2015 Paris Agreement and Nathaniel Keohane, from the US Environmental Defense Fund, said that this target aligns with what the science says is necessary to avoid dangerous levels of warming, (although this target has been disputed by some).
Joe Biden's electoral win has been seen as a much-needed victory for climate change, including the re-joining of the Paris Agreement on the first day of his presidency.
However, although it is reassuring that the US is making a substantial commitment to acting on the climate emergency, there are fears that Joe Biden will not be able to implement the necessary legislative agenda to meet this new commitment as he only has narrow majority in the US Congress and Senate. The new target will also inevitably mean significant changes to the American way of life, including a drastic reduction in coal from the electricity mix, and a sharp transition from heavy fuel consuming cars and trucks towards newer electric models.
The Climate Summit encouraged more ambitious targets from a number of other countries although, disappointingly, two of the largest greenhouse gas emitters, India and China, did not unveil any new nationally determined contributions. Below is a list of some of the commitments made by various international stakeholders at, and in advance of, the Climate Summit:
In advance of the Climate Summit, the EU announced a preliminary political agreement setting into law the objective of a climate-neutral EU by 2050 and a collective greenhouse gas emissions reduction target of at least 55% by 2030, compared to 1990 levels (both core parts of the EU's 'Green Deal').
Delegates at the European Climate Law negotiation also agreed to prioritise carbon reduction over carbon removal, introducing a cap on the levels of CO2 that can count towards the 2030 target. This is aimed at ensuring that states and businesses actively reduce their carbon emissions in addition to removing them from the atmosphere through carbon sequestration. It is widely accepted that a balance of both carbon reduction and carbon removal is necessary to meet the Paris Agreement targets.
Under the provisional EU agreement a new scientific advisory body, the European Scientific Advisory Board on Climate Change, will also be established, which will provide scientific advice on how the EU should go about achieving its climate goals.
The initial reaction to the new EU wide commitment has mostly been positive, however critics have pointed out that the new target does not include certain sectors, like aviation, shipping and goods manufactured outside the EU. The agreement will now be amended by experts before it is submitted to the European Council and European Parliament for final approval.
In advance of COP26, and as countries begin to make more significant public commitments to reduce their overall greenhouse gas emissions, there will an increasing focus from other key stakeholders (including businesses) on the mechanisms and policies that will be put in place to achieve these targets. To date, these have been fairly limited – their ultimate success will depend on a fully developed national and international framework to help countries and businesses achieve the targets they have set.
Over the coming months, Travers Smith will be updating this page to keep you informed of all the key developments and news in the run-up to COP26. Travers Smith is involved in a number of different initiatives connected to COP26.
- Jonathan Gilmour, our Head of Derivatives and Structured Products at Travers Smith, has recently been appointed to the Principles & Contracts Working Group of the Taskforce on Scaling Voluntary Carbon Markets. Launched in September 2020, this is a private sector initiative working to scale a workable carbon credit market so companies can meet their carbon reduction commitments through purchasing carbon offsets.
- Travers Smith's Environment Committee is actively committed to helping the firm reduce its overall carbon footprint and acting in an environmentally friendly and sustainable way. For more information on our efforts in this area, please see our Environment page here.
- Please also see our Sustainable Business Hub – where you can find resources designed to help you and your business to anticipate regulatory developments, proactively manage risk and achieve your ESG focused business objectives.
For further information, please contact