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With the UN Climate Change Conference of the Parties (COP26) coming up in November this year, we thought it important to highlight some of the key issues, agendas and initiatives that should be front of mind for those of us in the legal sector.

The COP26 will play a crucial role in measuring the progress made since 2015 at COP21 in Paris - it will also create the opportunity to set new targets.

Below are the key themes and topics taken from our special report, COP26 – The Road to Net Zero, which you can download for free here.

1) Reducing emissions

A key climate emission reduction initiative in the UK is the government's ‘Ten Point Plan’, part of which aims to make new homes net zero by 2025. The plan involves improving the energy performance of all new homes by deploying higher regulations relating to energy and ventilation, and subjecting existing homes to higher standards. Debra Wilson, partner at Anthony Gold Solicitors, has some very useful insights on the topic for those interested.

Another key initiative in place is the decarbonisation of transport initiative – the government plan to phase out all polluting vehicles by 2030. The initiative, which is being executed 10 years earlier than initially planned, involves funding for electric vehicle (EV) infrastructure, grants to incentivise more people to buy a zero or ultra-low emission vehicle, and the mass-scale production of EV batteries. The government also plans to make walking and cycling more attractive to the general public. Paul Dight and Suzanne Moir, the Projects & Energy partners at Addleshaw Goddard Infrastructure, have some interesting insights into how achievable these initiatives will be and what can be done to speed up the process. 

There is also a growing spotlight on the market-based measures (MBM) in place in the maritime industry which aim to reduce greenhouse gas emissions to net zero. The maritime industry, which accounts for 3% of GHG emissions globally, has been slow to put in place new industry standards, but this seems likely to change. For instance, in April 2021, the UK announced plans to incorporate international aviation and shipping emissions into its sixth Carbon Budget for the first time, enabling ‘these emissions to be accounted for consistently’. Simon Bullock, shipping researcher at the Tyndall Centre for Climate Change Research, and Alessio Sbraga and Gudmund Bernitz, both partners at HFW, provide comment on the current hurdles standing in the way of marine shipping decarbonisation - read more here.

2) The search for sustainable energy alternatives

With the COVID-19 lockdowns having an unexpectedly positive impact on nature, there's a strong interest in finding out more about how these shifts in human behaviours can impact biodiversity.

As a result, a number of interesting initiatives have been put in place. Since September 2020, 700+ companies have signed the Business For Nature’s Call to Action, which was launched in the lead up to the 2020 UN Summit on Biodiversity. Last year we also saw the Leaders’ Pledge for Nature initiative, in which 88 countries from all regions of the world committed to reversing biodiversity loss by 2030. And earlier this year we saw the World Economic Forum’s Global Risks Report 2021, which listed biodiversity among its top five threats.

Partner at Clyde & Co, Nigel Brook, discusses the increased international focus and recent developments on the issue of biodiversity loss as well as the role of nature-based solutions in the fight against climate change.

Renewable energy sources will also be a hot topic at COP26. Wind, solar and hydroelectric power sources offer a greener alternative to traditional energy sources, and governments across the globe have invested heavily in harvesting these energy sources.

However, there are a number of geographic and practical elements that make these sources unreliable, unobtainable or unwise to rely on fully. Scientists have been exploring the option of nuclear fusion as an energy source for decades now, but progress is starting to pick up.

Ian Salter, Ian Truman, and Peter Ramsden at Burges Salmon LLP, comment on the legal and market context of fusion energy here.

3) The financial sector and climate risk

The financial services sector is also doing its part to drive significant change with regards to sustainable investments. The Taxonomy Regulation (EU) 2020/852 came into effect mid-2020, and is one of the most significant developments in sustainable finance – it has created a system which classifies economic activities based on their environmental impact. The Taxonomy Regulation is structured as a roadmap to change the trajectory of economic activities and align them with the goals and targets of the Paris Agreement.

However, some are arguing that the framework, which lists natural gas, hydropower, hydrogen, biofuels, nuclear power and agriculture and forestry management as ‘green’, is fundamentally flawed, and there's concern viable technologies are being ignored.

Another heavily disputed discussion point in the financial sector is Bitcoin, which, like other cryptocurrencies, requires large amounts of energy to run. The energy requirements for Bitcoin mining is equal to the total consumption of many small countries, with well over half of this energy coming from non-renewable sources.

A potential solution is to change the protocol from ‘Proof-of-Work’ to ‘Proof-of-Stake’. Instead of using computing power to create new blocks, believes a more sustainable alternative is to ask participants to deposit a large sum of cryptocurrency as a stake in that cryptocurrency’s network, for which they will earn interest, and in turn receive an algorithm which calls on the participants to validate transactions on the blockchain at random, contributing to the creation of each new block.

The private finance sector is set to play a significant role in achieving the emission reduction targets of the Paris Agreement. However, the balance between mitigation and adaption is still largely unclear, as is the exact role of the private sector and private finance. The pre-COP26 strategy report, Building A Private Finance System for Net Zero, outlines four key objectives: reporting, risk management, returns and mobilisation – all of which will be crucial to ensuring the goals are met. But there are concerns more questions will be left unanswered after this year’s COP26 meeting in Glasgow, as every company, investor, insurer and bank will essentially have to adjust their business model to implement these changes. offer more commentary on the topic.

4) Climate change and the international arena

When it comes to discussing climate change on the international stage, disputes are always commonplace, and there will always be numerous factors, agendas, opinions and precedents to consider. That’s why arbitration is crucial to the process.

Arbitration is well-suited to climate change cases. In 2019, an International Chamber of Commerce taskforce published a report analysing the role arbitration and ADR play in climate change disputes and found various potential use cases and features which could enhance existing procedures. Pamela McDonald, partner at Pinsent Masons, looks into this in more detail here.

Another popular topic involving climate change and dispute resolution is ‘Green Trade’. While it is a term that’s been thrown around in political discussions for some time now, there is still a lot of debate when it comes to the particulars. Under the World Trade Organization (WTO) Agreement, environmental protection measures are categorised by having a direct or indirect effect on trade. In negotiating new regional trade agreements (RTAs), members build on this strong base, but so far have not added substantial additional disciplines, says Rambod Behboodi, an international trade law and policy expert in Geneva. New ‘sustainable development’ provisions in RTAs appear to signal, instead, willingness to refrain from challenging environmental measures of trading partners and, potentially, to pursue ‘level playing field’ measures domestically, he says.

The COP26 conference in Glasgow will surely be one for the history books - in the past 18 months we've seen widespread change take place concerning climate change. More and more companies are committing to reduce greenhouse gas emissions, and consumers are increasing the pressure on companies and governments to make changes. These pressures will no doubt be prevalent in this conference and in the years to come.   

Read the full report - COP26 - Road to Net Zero - for free here.