The road to Australia’s net-zero goals will be long and winding, requiring significant market backing. The potential for Australian banks to finance renewable initiatives as part of Australia’s commitment is significant, and it will not only assist the government to fulfill its carbon targets but will also help the economy develop.
COP 26 and the Paris Agreement
The goal of the Paris Agreement is to enhance the international approach to the risk of climate change and keep global temperatures below 2 degrees Celsius above pre-industrial levels. The Paris Agreement went into effect on November 4, 2016, after it was ratified by at least 55 parties (nations) accounting for at least 55 percent of global emissions. After the initial threshold was met, the deal was approved by 196 nations, notably the European Union, China, India, and New Zealand. The United States was previously a signatory to the agreement but informed the UN that it would leave as fast as it was legally able to do so, which would be in November 2020. President Biden of the United States has stated that the US will re-enter the accord.
Global warming of more than 2°C, according to the IPCC (Intergovernmental Panel on Climate Change), would have major implications, including an increase in the incidence of extreme weather occurrences. Countries filed Intended Nationally Determined Contributions (INDC) in the run-up to the Paris Conference of Parties (COP), which outlined each party’s objectives for tackling climate change, including a target for decreasing greenhouse gas (GHG) emissions and how those targets would be met.
It’s tough to assess the outcome of the current COP26 in Glasgow. Only the EU, the United Kingdom, Chile, and Costa Rica, according to Climate Action Tracker, have appropriately defined net-zero targets. However, net-zero agreements already cover around 80% of total emissions, and the 1.5°C limits are widely agreed upon. The agreements from the private sector were likely the biggest surprise, setting it apart from prior COP summits.
The sectorial promises on terminating coal-fired electricity, pledging to reduce global methane emissions, improving road transportation, and reducing deforestation were all incredibly positive and real accomplishments. China, India, and Russia, on the other hand, are noticeable exclusions from most new projects, diluting their impact.
Although many analysts point out that the execution plans are poor, the number of nations pledging to net-zero has climbed significantly. Fortunately, Australia is on course to meet its 2030 carbon reduction goal (down 35 percent). In a 45 percent larger economy, emissions have decreased by more than 20% since 2005. Australia presented a new net-zero plan for 2050 at COP26, which includes reductions to date (-20%), global technology trends (-15%), technology (-40%), international and local offsets (-10 to -20%), and more technological advances (-15 percent). There are many detractors of the technology-heavy, detail-light promise.