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| | | | | |  | | By Lorraine Woellert and Catherine Boudreau | | | | | 
Solar panels in India | Abhishek Chinnappa/Getty Images | PRICING POLLUTION — The U.N. climate summit begins Sunday. You’ll be hearing a lot about killing fossil fuels and reining in global warming. But behind the headlines is a wonky discussion that could make or break the integrity of national pledges to cut greenhouse gas emissions. Article 6 , an unfinished provision of the Paris Agreement, allows countries to cooperate to meet their targets. In practice, it would encourage a system of carbon trading that could move polluting countries along the path of compliance. “To be truly successful in meeting Paris goals, progress has got to be made on Article 6,” said Sonja Gibbs, head of sustainable finance at the Institute of International Finance, an industry group working to scale the offsets market to meet exploding demand from greenhouse gas emitters. Carbon trading — the practice of buying or selling the right to release emissions — already is big business. Regulated schemes known as compliance markets operate in China, Europe and other major economies. In the U.S., states are joining regional compliance regimes or launching their own. Washington adopted a cap-and-trade law in May. Then there’s the voluntary carbon market , a separate system of bespoke contracts between private parties that’s less than half the size of the compliance market but has quadrupled in the past five years as entrepreneurs race to meet demand for offsets. Protected forests, capped methane wells, and renewable energy installations can be packaged and sold as carbon offsets. Until regulated offsets come into their own, voluntary carbon markets will need to fill the gap. As of 2020, 1,565 companies had made net-zero pledges, according to the IIF. Most of them — including Google, Microsoft Corp. and JPMorgan Chase & Co. — will need carbon offsets to meet their targets. Combined, compliance and voluntary carbon markets could cover more than half of global emissions by 2030. A lot of work will be required to get it right. A mistake could be disastrous. If poorly designed, Article 6 could allow emission reductions to be counted more than once. Up to 30 percent of global emissions could be at high risk of double counting, according to the Environmental Defense Fund. Voluntary offsets aren’t regulated. The exploding trade in voluntary carbon credits is governed loosely by self-appointed standard-setters. IIF’s Task Force on Scaling Voluntary Carbon Markets, launched by Mark Carney, the U.N.’s special envoy for climate action, is working to set principles for the fragmented industry. There aren’t enough offsets. United Airlines CEO Scott Kirby has famously called offsets a “fig leaf” and said “there’s simply not enough room on the planet ” to plant the trees needed to digest our carbon. Companies are jumping on the net-zero bandwagon before the offsets they need have even been created. Offsets are too cheap. Only 4 percent of greenhouse gas emissions are priced high enough to limit global warming to 2 degrees Celsius, according to the World Bank. Until it’s painfully expensive to pollute, carbon pricing won’t make much of a difference. Wall Street is circling. Carbon credits are an asset class, an investment like bonds or oil. “To make the pricing meaningful you really need scale and you need very clear standards,” Gibbs of IIF said. “The whole point of pricing carbon is to help the world rid itself of emissions. You can’t do that unless you understand what you’re pricing.” | | | We talked about inflation last week and asked what you’d pay to fight climate change. Elise Koning sent some thoughts from a cow pasture on her 600 acres in Indiana. “I am concerned that the removal of fossil fuels in agriculture could require a return to horse-drawn farming,” she wrote. “Perhaps this sounds alarmist, but solar, wind and battery technology is going to take a while to implement in making tractors, combines, skid steers and other equipment we need to do our jobs. The adoption cost of these technologies is going to be enormous, and not all farmers will be able to or want to purchase right away.” Let’s compile a list of corporate VIPs who will be in Glasgow. Send names to cboudreau@politico.com and lwoellert@politico.com. Follow us on Twitter @ceboudreau and @Woellert. FOMO? Sign up for The Long Game. Thanks to Jordan Wolman, Shayna Greene, Karl Mathiesen and Zack Colman for their help this week.
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Alok Sharma isn’t happy. | Leon Neal - WPA Pool/Getty Images | OUR BAD, SORRY — Rich countries will fall short of their 2009 pledge to contribute a combined $100 billion a year to help poor nations cope with climate change. But they should be able to deliver on their promises by 2023 — three years late. That good-news-bad-news message was delivered in a report Monday as world leaders prepared to gather in Scotland for the U.N. climate summit, or COP26. The blueprint, commissioned by summit President Alok Sharma, presented ways the money could be forthcoming. The report’s intent, Sharma said, was to “try to restore trust in the system.” “Ultimately, this is for donor nations to deliver on,” Sharma told reporters. “We will all be watching to make sure that they actually deliver on the commitments that have been made.” Climate finance mobilized by developed countries increased from $58.5 billion in 2016 to only $79.6 billion in 2019, the group said. Mohamed Adow, director of Nairobi-based think tank Power Shift Africa, called the financing failure “utterly shameful.” “Poor nations will not be conned,” Adow wrote. “The leaders of the developed world need to pull their finger out and get this money on the table if COP26 is going to be a success.” The mood is gloomy. On the eve of the summit, some countries have yet to step up with new targets . President Joe Biden will be forced to compensate for congressional inaction on his climate agenda. And less-developed nations are angry (see above). This just in: “Vague” national climate pledges are falling short of what’s needed to limit global temperature increases to 1.5 degrees Celsius, the U.N. said Tuesday. | | | FUTURE VOTERS SPEAK — Young people are more likely than adults to believe that the world is facing a climate emergency, according to a survey from the University of Oxford and the U.N. Development Programme. Seventy percent of young people from G-20 nations believe climate change is a global emergency, compared with 65 percent of adults. The survey tallied nearly 690,000 responses from people in 18 countries over the past year, surveying young people — and future voters — in some countries for the first time. Pollsters used mobile gaming networks to draw responses from teenagers and young people. “A majority of young people under the age of 18 said they think that climate change is a global emergency — from Argentina to the United States to Saudi Arabia and beyond,” U.N. Development Programme Administrator Achim Steiner said. “The results tell us that tomorrow’s voters want a climate transformation.” THE PANDEMIC DIDN’T SAVE US — Carbon dioxide, methane and nitrous oxide levels reached new highs in 2020, the World Meteorological Organization reports despite a pandemic-driven decrease in fossil fuel emissions. “At the current rate of increase in greenhouse gas concentrations, we will see a temperature increase by the end of this century far in excess of the Paris Agreement targets of 1.5 to 2 degrees Celsius,” WMO Secretary-General Petteri Taalas said in a written statement. “We are way off track.” Then there’s this nugget: The Amazon rainforest is now a net emitter of carbon dioxide. | | | SHOTS FIRED — In its latest naming-and-shaming campaign, the Break Free From Plastic coalition on Monday published an analysis of 330,493 pieces of plastic pollution across six continents, listing The Coca-Cola Co., PepsiCo., Unilever, Nestlé, Mondelēz, Danone, Colgate Palmolive, Procter & Gamble and Mars among the worst offenders. Promises to reduce waste have been ineffective, the group said. It wants corporations to report their plastic use and associated emissions, then set goals to reduce them. Team Plastic had this to say: A Plastics Industry Association report shows that plastic produces less carbon emissions during its life cycle than glass or metal, which are heavier to transport. The paper acknowledges that plastic currently is unsustainable because most of it ends up in landfills. Brands are setting new targets. PepsiCo has pledged to halve its use of virgin plastic by 2030. Coca-Cola, Mondelēz, Walmart, Keurig Dr Pepper and Target Corp. this year set similar goals under deals with shareholders. Many brands are signatories to a pact to use more recycled plastic and make all plastic packaging reusable, recyclable or compostable by 2025.
| | | | COP26 Preview Panel Event: Join reporters from E&E News and POLITICO for a live event on Nov. 2 as the U.N. Climate Change Conference gets underway. Get analysis on the current strength of U.S. power in negotiations, how G-20 talks will impact COP26, financial logistics for countries, the U.K. and EU push to achieve 1.5 degrees Celsius and EU legislative efforts to reach client goals. REGISTER HERE. | | | | | | | | Citigroup will conduct a racial equity audit, marking an about-face for the bank. Earlier this year, Citi urged shareholders to vote against a resolution calling for an independent review of the company promise to close the racial wealth gap, a pledge it made in the wake of George Floyd’s murder. Your hosts had this report. Hertz Corp. ordered 100,000 Teslas to electrify its rental fleet. Tesla Inc.’s share price soared. Bloomberg has more. Exxon Mobil Corp. wants to build carbon capture and storage across Southeast Asia . | | | BIDEN’S BEEN BUSY — While the president worked to cut a climate deal in Congress, his administration last week was laying the groundwork for massive policy shifts. The Office of the Director of National Intelligence, in its inaugural estimate on climate change , said changing weather patterns and the shift to clean energy could strain political stability and create geopolitical flashpoints. The Pentagon said climate considerations will be “essential” to training troops. A report on migration concluded that weather extremes could lead to conflict. And banking regulators declared climate change “an emerging and increasing threat” to financial stability. | | | | 
Coldplay needs you to keep the lights on. | Theo Wargo/Getty Images for SiriusXM | — Coldplay’s 2022 world tour will be powered by solar and batteries. The emo-pop band said its stadiums will have kinetic floors and bikes for fans to generate power, which will be stored in a rechargeable battery developed in partnership with BMW.
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