Under one month to go until the UK hosts the next annual UN climate change conference (COP26) in Glasgow which will see over 200 countries, businesses, NGOs and many others come together to discuss ways of tackling climate change.
The primary goals of COP26 are to:
- Secure global net zero by mid-century and keep the commitments recorded in the Paris Agreement within reach (principally to keep global temperatures from rising more than 1.5 degrees by 2050);
- Adapt to protect communities and habitats;
- Mobilize finance; and
- Ensure countries work together to deliver results.
Countries are being asked to put forward proposals for ambitious emissions reductions by 2030 in order to reach net-zero by 2050.
Many have already announced landmark targets in the run up to COP26:
- The UK has set the world’s most ambitious climate change target into law to reduce emissions by 78% by 2035 compared to 1990 levels, including pledging that all of UK’s electricity will be generated from ‘clean’ energy sources by 2035 and banning the production of cars with internal combustion engines by 2030.
- The EU has agreed a legally binding target to for the bloc to cut its carbon emissions by at least 55% by 2030, compared with 1990 levels.
- China has announced that it aims to achieve peak carbon emissions by 2030 and is expected to release further reduction plans soon.
- The USA has set a target of cutting its greenhouse gas emissions by 50-52% below 2005 levels.
We expect many more announcements to be made in the lead up to, and during, COP26.
What does all this mean in practice?
- A fast moving and evolving political, legal and regulatory landscape for the energy sector worldwide.
- Energy companies likely to be exposed to a greater degree of climate related project risk.
- Increased pressure by shareholders and other stakeholders on companies to set their own climate change targets and to demonstrate compliance with national and international policy.
- The prospect of a comprehensive carbon pricing regime edges closer.
- Continued increased scrutiny by lenders and further demand for transparent and scrutinized supply chains.
How can Baker Botts help?
- With a deep understanding of our clients’ businesses, we can help our clients safely navigate evolving legal and regulatory frameworks.
- Work with our clients to overcome strategic challenges and to mitigate climate related project risk.
- Assist clients with mobilizing finance, including unlocking and deploying investment capital, to meet climate change objectives.
- Help our clients take advantage of the inherent opportunities in a low carbon future.
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