2021 Wrap Up: Climate Wins
With 2022 a few breaths away, many of us think forward to what is coming. Nevertheless, with 2021 acting as a pivotal year for climate-change activism despite coming out of a pandemic-hit economy, looking at the 2021 wins in retrospect can act as a catalyst for further change in 2022. Living in the beginning of the Decisive Decade has definitely had its downfalls: it is easy to fall victim to climate-anxiety, it has, however, come with some wins worth celebrating.
Let’s look more into positive climate news from 2021 and their significance in steering the coming years to a brighter direction.
Milieudefensie et al. v. Royal Dutch Shell plc.
The infamous Royal Shell decision by the District Court in The Hague was passed down in May 2021. The decision ruled that Shell must reduce its global net carbon emissions by 45% by 2030 compared to its 2019 levels (this is mandatory for scopes 1 and 2 emissions but not for scope 3 emissions which account for 85% of the giant’s emissions).
The claim was brought by Friends of Earth alongside 6 other bodies and more than 17,000 Dutch citizens. The decision is the first time that the company is legally obliged to align its policies with the Paris climate accords. The claims made against Shell were founded on Shell’s contribution to climate change which violated its duty of care under Dutch law and human rights (EU law). The case built upon the landmark Urgenda decision which found that the Dutch government’s inadequate action on climate change violated a duty of care to its citizens. This has been marked as a monumental moment for climate litigation as it has the potential to set a precedent for European litigation, while there is an exponentially increasing trend being set across European countries in terms of climate-change litigation.
French court ruling against the French State’s inadequate climate action
In February 2021, the Paris Administrative Court found the French State at fault for scant action to tackle climate change. The court ordered the French government to take additional measures to increase emission cuts.
Jakarta residents win battle for clear air against the Indonesian government
In September 2021, a Jakarta court ruled the Indonesian government failed to uphold citizens’ rights to clean air in a landmark decision that activists hope will push authorities to take further action on the city’s smog crisis. Following a two-year legal battle brought by 32 Jakarta citizens against the Indonesian President, three cabinet ministers, the Jakarta governor and two provincial leaders, the court ruled that the defendants were guilty of ‘committing unlawful acts’ and failing to combat air pollution in the capital, and were found in violation of the country’s environmental protection laws.
In Australia, courts establish a duty of care precedent owed to young people
Anjali Sharma - 17 years old - won a case against the Australian governments here she took the nation’s environment minister to court over the extension of a coal mine. The case established that the government owes a duty of care to all Australian children in light of the climate crisis.
Cambo is paused
Shell’s withdrawal from the project in the beginning of December threw the project’s future in doubt. Now, work on the Cambo oilfield is being paused. This is to evaluate the next steps in light of the newest developments. The oil field was projected to yield hundreds of millions of barrels of oil, raising questions about the UK’s oil industry and other large-scale oil schemes in the North Sea. This is just the beginning of questioning the tangible potential that large-scale projects have in terms of being sanctioned. According to The Guardian. Industry sources said the explorer would struggle to find a new partner to replace Shell because most listed oil companies reduced their presence in the North Sea and most smaller companies lack the financial muscle to develop a field of this scale.
The Gambia - Government stops the expansion of major fish meat and fish oil plant
At the end of March the Gambian Environmental Agency issued a Stop Notice to Golden Lead - a Chinese Fishmeal plant on the shores of Gunjur. The order put an end to the extension works and requires the immediate evacuation of all equipment and personnel on-site.
“It is a good day for the people of the Gambia and for the ocean and its biodiversity. The decision to stop expansion plans by the fishmeal and fish oil industry is a victory for the women farmers of Gunjur and Gambian civil society,” said Dr. Aliou Ba, Political Advisor at Greenpeace Africa in Dakar.
IEA Net-Zero by 2050 Analysis
According to the IEA’s report, there is no need for investment in new fossil fuel supply in our net-zero pathway. Beyond the 2021 commitments, there are no new oil and gas fields approved for development in our pathway towards 2050, no new coal mines or mine extensions are required either. Governments must be aware that they cannot afford to burn more - the report found that countries have the option to transition to clean energy while remaining within 1.5 degrees and meet the energy needs of consumers.
Mexico - a ban on glyphosate and genetically modified corn
Mexico’s Supreme Court unanimously denied four appeals filed against the judicial decision to ban the sowing of genetically-modified corn and a controversial herbicide in the country. The decree (announced in the beginning of 2021) cited a precautionary principle and growing body of scientific research showing the dangers of the chemical. The persistent use of contaminants like GMOs and glyphosate can put Mexican agricultural biodiversity at risk. This can move Mexico from the path of food sovereignty and self-sufficiency.
EU’s Net-Zero Ambitions
While a lot more needs to be done much faster, the EU announced its new Climate Law in June, alluding to the ‘green’ regulations that are coming up after 2022 as part of the Green Deal.
Regulation 2021/1119 enshrined in law the EU’s objective of becoming climate-neutral by 2050 and the intermediate target of reducing greenhouse gas emissions by 55% by 2030. The regulation establishes a binding requirement for EU institutions and Member States to adopt a regulatory environment enabling the achievement of the climate targets and must take the necessary measures at the EU and national levels to achieve climate neutrality.
On July 14, the Commission presented a series of legislative proposals - the fit for 55 package - setting out the EU’s climate targets and regulatory ambitions. Several proposals have been made as part of the package which can be found here.
Multiple jurisdictions are following, with the FCA in the UK publishing an initial consultation regarding ESG disclosures by asset managers consistent with the requirements set by the international TCFD. These will be coming into force in January 2022 and will only apply to firms with more than £5 billion of assets under management, limiting the scope and obligations under the SFDR.
$1.1 Trillion of Sustainable Debt in 9 Months
Sustainable debt products - loans and bonds with proceeds targeted to positive environmental investment or furthering corporate social goals - emerged as an instrument class 8 years ago. In 2020, it was estimated by BloombergNEF that 2021 would be the first year of $1 trillion of sustainable debt insurance. This prediction was exceeded, and by the end of September, companies, banks and government entities had issued more than $1.1 trillion of sustainable debt.
Climate Tech Investments Skyrocketing
Early-stage investment in energy tech companies skyrocketed in comparison to a decade ago. Today, climate tech companies are raising billions in a month, and at every stage, from pre-seed funding to billion-dollar pre-IPO rounds. In November, climate tech companies raised more than $49 billion for early stage activities. This is thanks to the need to fund planetary-scale innovation.
According to a report by the Climate Bond Initiative, global issuance of green bonds is on track to reach $400 billion and $500 billion in 2021: double of $270 billion in 2020. This is a reflection of the investors’ focus on ESG and the appeal of lower borrowing costs that green debt offers governments and companies.
What to expect in 2002
Climate finance in 2022
Climate finance continued growing in 2021 - taking a center stage at COP26 discussions, and having raised trillions of dollars of assets under some kind of climate-related mandate - it is unlikely that this momentum will not exist in 2022. Desiree Fixler from Deutsche Bank AG’s DWS said that DWS did not have a robust way to evaluate companies’ ESG standings and implement that across their investments. This raises concerns about the potential spread of greenwashing in the banking sector and the extent to which tools such as ESG evaluations are means of expanding transparency.
Another issue when thinking about climate finance is: where do green funds go? An ongoing conversation that we will be seeing more of in 2022, and in COP27 will be what green funds should be financed by governments and where does the private sector come in? Investors are keen to invest in clean energy projects and electric vehicle companies, but do not seem as ambitious to invest. In projects that do not fit directly into existing asset classes and financing structures (such as boosting residential energy efficiency or scaling up new technologies). A global financial system that cannot be accessed by developing nations cannot support the immediate systemic changes that are necessary to limit global warming.
With many key decisions being left for COP27, which will be held in Egypt in 2022, it is imperative to consider the areas that will be discussed in the Subsidiary Bodies meeting of the UNFCCC scheduled to take place in Bonn, Germany in June 2022. This will set the agenda items for COP27, while some items have already been mandated to be discussed in the SB meeting including the Santiago Network on Loss and Damage and the Glasgow Dialogue on Loss and Damage. The financing for loss and damage for developing nations is predicted to be at the center stage of COP27. Further, the upcoming publication of the 6th Assessment Report of Working Group 2 on Impacts, Vulnerability and Adaptation of the IPCC is expected to be released in early 2022, which will provide the latest updates and evidence of the success of different adaptations methods.