US-China climate deal lifts hopes as UN talks turn to dollars and cents

Draft conclusions call for more to be done on “climate finance” through grants rather than loans to developing nations.
 China's chief climate negotiator Xie Zhenhua speaks during a joint China and US statement on a declaration enhancing climate action, during the COP26 climate conference in Glasgow, UK 10  November 2021.
China's chief climate negotiator Xie Zhenhua speaks during a joint China and US statement on a declaration enhancing climate action, during the COP26 climate conference in Glasgow, UK 10 November 2021.

A surprise deal between China and the US, the world's two biggest greenhouse gas emitters, has boosted the COP26 UN climate summit as it enters two final days of tough bargaining to try to stop global warming from becoming catastrophic.

The UK's conference president, Alok Sharma, told delegations that the latest draft conclusions that he had seen showed "significant" progress but that "we are not there yet".

In particular, he called for more effort on "climate finance" — the perennially vexed question of how much the rich countries whose development caused most global warming should pay the poorer ones who will bear most of its consequences.

Developing nations want tougher rules from 2025 onwards, after rich countries failed to meet a 2009 pledge to provide $100 billion a year in climate finance by 2020 to help them curb emissions and cope with the effects of rising temperatures. Campaigners say that sum is anyway woefully inadequate.

A first draft published on Wednesday merely "urges" developed countries to "urgently scale up" aid to help poorer ones adapt to climate change, and calls for more funding through grants rather than loans, which add to debt burdens.

China, the world's biggest producer of greenhouse gases, has gradually accepted more responsibility for its emissions from an economy that has grown substantially in the last two decades.

US climate envoy John Kerry and his Chinese counterpart Xie Zhenhua unveiled a joint declaration late Wednesday in which China, the biggest producer and user of coal, promised to accelerate its transition from the dirtiest fossil fuel.

A powerful message

The deal between two global powers, which have been divided by many diplomatic disputes on other issues, sent a powerful message to COP26, including the producers of the fossil fuels that are the main cause of man-made global warming.

Although scant on numbers, leaders said it offered a strong signal to other countries and could persuade them to do more to seal agreement at the summit.

"This is a boost to negotiations as we go into the final days of COP26 and continue working to deliver an ambitious outcome for the planet," UK Prime Minister Boris Johnson said on Twitter.

Kerry told a news conference: "Together we set out our support for a successful COP26, including certain elements which will promote ambition."

A joint declaration said China, home to half the world's coal-fired plants, would begin phasing out its coal consumption from 2026 to 2030 and also cut its emissions of methane, a greenhouse gas many times more potent than carbon dioxide.

Observers had been worried before the announcement that Chinese President Xi Jinping was not attending the talks in Glasgow, and Beijing had made no substantial new pledges.

China's climate plan had also not addressed its methane emissions, linked largely to its sprawling coal industry.

The US has set a goal to decarbonise its economy by 2050, although President Joe Biden has been struggling to pass crucial legislation to do so through a politically divided Congress.

"It's really encouraging to see that those countries that were at odds in so many areas have found common ground on what is the biggest challenge humanity faces today," EU climate policy chief Frans Timmermans told Reuters.

He also said negotiators were edging towards a compromise on a long-elusive deal on taxing global carbon markets to fund climate adaptation in poor countries.

Poor countries say a tax on carbon markets would provide critical support, but rich nations, including EU members, are concerned about the costs.

They also want to siphon off money from a carbon market that some experts say could be valued at around $170 billion per year by 2030 to pay for measures to adapt to increasingly destructive floods, droughts, and rising seas.

'Time running out'

The last two days of negotiations are likely to be fierce and Pope Francis sounded a warning in a letter to Scotland's Catholics, saying: "Time is running out."

The conference host, the UK, says the goal is to "keep alive" hopes of capping global temperatures at 1.5 degrees Celsius (2.7 degrees Fahrenheit) above pre-industrial levels, still far out of reach under current national pledges to cut emissions.

The landmark 2015 Paris Agreement legally bound its signatories collectively to keep the rise "well below" 2.0 degrees Celsius (3.6 degrees Fahrenheit) this century, and to "pursue efforts" to keep it below 1.5C.

Since then, scientific evidence has grown that crossing the 1.5C threshold would unleash significantly worse sea level rises, floods, droughts, wildfires, and storms than those already occurring, with irreversible consequences.

On Tuesday, the Climate Action Tracker research group said all national pledges so far to cut greenhouse gases by 2030 would, if fulfilled, allow the Earth's temperature to rise 2.4C by 2100.

Wednesday's first draft of the final agreement implicitly acknowledged that current pledges to reduce greenhouse gas emissions up to 2030 were insufficient to avert climate catastrophe, asking countries to "revisit and strengthen" their targets next year.

In a first for a UN climate conference, it also called for huge state subsidies to the oil, coal, and gas industries to be phased out.

(Additional reporting by Elizabeth Piper, Kate Abnett, William James, Simon Jessop; writing by Kevin Liffey; editing by Alexander Smith)

AICPA & CIMA will partner with the Center for Audit Quality and the Value Reporting Foundation to offer a free live virtual session addressing key ESG reporting and assurance topics post-COP26 on 15 November from 11am to 12.30pm EST. There will be a debriefing from COP26 attendees and discussions on the shape of global sustainability standards, new considerations around climate goals, SEC rulemaking, and what's on the horizon for internal controls and assurance. You can register for the event here.