COP26: What’s Going On in Glasgow?
“You’ll never find a more wretched hive of scum and villainy.” – Obi-Wan Kenobi.
It’s a bright, shiny Monday here in the Far East. I’ve already had my first cup o’ joe, and I’m eager to go.
For the next two weeks, I’ll mainly be covering the COP26. That’s the UN Conference on Climate Change taking place in Glasgow, Scotland, starting next week.
From our friends over at carboncredits.com, I’ll be borrowing liberally.
This is because carbon credits may be one of the easiest ways you can profit from the upcoming political agenda, whether you agree with it or not.
That’s the best part.
My analogy would be to owning defense stocks from September 2001 until this year.
When the USG declared war in the Middle East after the Twin Towers came down, buying aerospace and defense stocks was a no-brainer.
Whether you agreed with Cheney, Rumsfeld, and Dubya or not, that $85 billion Dopey Joe left on the ground in Afghanistan would’ve hurt far less.
You may not like what the unelected elites are doing, but there’s every reason for you to defray your upcoming increased costs.
Because this is going to get expensive.
What’s Happening in Glasgow?
This year, it will take place in Glasgow, Scotland, between November 1 – November 12, 2021.
The “Parties” involved are all the signatory parties of the United Nations Framework Convention on Climate Change (UNFCCC), an international treaty formed to combat the threat of human-driven climate change.
This framework was first established in 1992 at the United Nations Conference on Environment and Development and signed by 154 countries. The COP is the supreme decision-making body of the UNFCCC, and annual COP meetings are held to check up on each member’s progress in meeting the targets laid out by the convention.
Who Are the Players?
Under the UNFCCC, signatory countries are split into distinct categories: Annex I, Annex II, Least-developed Countries (LDCs), and Non-Annex I.
Annex I countries consist of the most developed countries in the world, such as the U.S. and the E.U., and several Economies in Transition (EITs) like Poland.
Annex II is a subset of Annex I that doesn’t include any of the EITs – in other words, Annex II comprises only countries with the most industrialized and well-established economies. Annex II countries have the additional responsibility of providing financial support and technical expertise to other parties of the UNFCCC, on top of their own emissions reduction commitments.
The Least-developed countries are among the poorest and least-developed countries of the world. Their economies’ sizes and extent of their infrastructure are such that their ability to change their emissions are limited. These countries are given special statuses under the UNFCCC.
Finally, Non-Annex I countries cover all the remaining parties that are neither Annex I countries nor LDCs. These consist of most of the world’s developing economies.
Initially, the framework aimed for all Annex I countries to stabilize their greenhouse gas emissions at 1990 levels by the year 2000.
However, at the first COP meeting in 1995, it was determined that the goals initially set out by the UNFCCC were insufficient to combat the effect of climate change caused by human activity.
Eventually, this would lead to establishing the Kyoto Protocol in 1997, an extension of the UNFCCC’s original framework.
The Kyoto Protocol
The Kyoto Protocol extended the United Nations Framework Convention on Climate Change (UNFCCC), first signed in Japan in 1997.
Originally implemented because the UNFCCC’s greenhouse gas emissions targets were deemed insufficient to counteract the effects of human-driven climate change, the Kyoto Protocol was ratified late in 2004 and came into force in 2005.
The Kyoto Protocol laid out both emissions reduction targets for all its participating countries and a timeline for achieving said reductions. The Kyoto Protocol also formed the first basis for a global carbon credit market by implementing a mechanism allowing signatory countries to pollute over their targets to offset their excess emissions by purchasing allowances from other countries. Participating countries could also offset their excess emissions by funding emission reduction projects in other countries.
Thirty-seven countries, including nearly all Annex I countries, participated in the first commitment period from 2008-2012. Notably, the U.S. did not ratify the Kyoto Protocol, and Canada initially did but later withdrew from the treaty in 2011 without meeting its target.
Of the remaining 36 countries, all of them met their emissions reduction goals, though 9 of those 36 had to rely on offsetting mechanisms to do so.
Still, despite these efforts, global emissions of carbon dioxide rose 60% between 1990 and 2013.
While the Kyoto Protocol had indeed resulted in a reduction in greenhouse gas emissions in several countries, it was considered insufficiently binding and not effective in meaningfully reducing global emissions. While an extension to the Kyoto Protocol was decided, the parties also agreed a successor protocol was needed.
A deadline of 2015 was set for this new agreement to be adopted. And in 2015, at COP21 held in Paris, France, the Paris Agreement would supersede the Kyoto Protocol.
What’s the Paris Agreement?
The Paris Climate Accords, also known as the Paris Agreement, is the most recent international climate change treaty. Drafted at the end of 2015 and first signed in April 2016, the Agreement became effective in November 2016.
As of October 2021, only five countries in the world have yet to ratify the Paris Agreement: Eritrea, Iran, Iraq, Libya, and Yemen. While the U.S. under President Trump briefly withdrew from the Agreement in 2020, the country rejoined under President Biden in 2021.
One marked distinction between the Paris Agreement and the Kyoto Protocol is that instead of just Annex I countries, every country must submit a plan to reduce its emissions – a Nationally Determined Contribution (NDC). As a result, even developing, non-Annex I countries must submit emissions reduction plans under the Agreement.
Unlike the Kyoto Protocol, the Paris Agreement doesn’t cover specific commitment periods but instead operates on rolling five-year cycles. The first cycle began in 2020, with 113 NDCs submitted, and governments must submit new NDCs every five years. Each subsequent NDC must also contain more aggressive emissions reduction targets than the last.
However, currently, no legally binding component of the Agreement forces countries to set a specific target level for their emissions reductions. As a result, it’s now projected that the world will not reach the Paris Agreement’s max 2°C temperature increase goal based on the current submitted NDCs.
Here’s Why Glasgow Matters to You
One Article of the Paris Agreement that hasn’t been fully implemented yet is Article 6, which governs the structure of carbon credits and carbon offsets.
Article 6 is at the top of every country’s agenda at COP26.
Once realized, Article 6 would solidify the foundation for an international carbon credit market first laid out in the Kyoto Protocol, establishing a UNFCCC-compliant regulated carbon market.
And once that’s established, we’ll have a better idea of how to profit from this government-imposed climate change agreement.
All the best,