BY ARINA RAUF

COP26 - short for the 26th rendition of the Conference of the Parties - concluded with much fanfare last year. Like its predecessors, COP26 carried along a tinge of disappointment as leaders of nations could not agree upon a collective global climate action to take in the dying hours of the event. We look at how major economies around the world have pledged towards the cause using economic concepts, and how these culminate in the pursuit of the macroeconomic goal of economic growth - whether inclusive or sustainable. 

Economic Policies

Singapore has placed strong emphasis on green policies over the years, rolling out the Singapore Green Plan 2030, which will help chart the country's way towards a more sustainable future over the next decade, even before COP26. Besides funding the costs of achieving carbon-neutral office buildings and schools, the government has also committed to providing subsidies for research, partnering with educational institutions as well as local firms, in the development of cost-effective green technologies. These fiscal and supply-side policies ensure that Singapore is well-positioned to tackle future climate emergencies.

Carbon Markets

Many economies have started some form of carbon market, where emissions are capped and traded to reduce negative externalities associated with industrialisation. One notable carbon market is the EU Carbon Trading Emissions Scheme, which comprises EU countries agreeing upon a certain set of rules to buy and sell a fixed amount of ‘pollution’. COP26 introduced the Voluntary Carbon Market (VCM) which was agreed by almost 200 countries. While carbon credits can direct capital to green ventures, an international carbon market that lacks clear rules could increase global emissions if, for example, both buyers and sellers of carbon credits are not transparent in their transactions.

“People ‘over-produce’ pollution because they are not paying for the costs of dealing with it.” - Ha-Joon Chang

Government Failure

America’s hegemony over international affairs suggests that many economies look up to or are heavily influenced by it. The White House claimed that it was the renewed US leadership at the COP26 which raised ambition to tackle the climate crisis. While the US government has made strong commitments to tackling climate change - passing a $555 billion package to lure the country away from fossil fuels which features tax incentives to cut the costs to consumers and manufacturers of electric vehicles, electric heat pumps, solar panels, wind farms and other equipment designed to power the economy without pollution - it remains to be seen whether such a policy can be successful given the many bureaucratic blocks.

Also unsurprisingly to some, China did not sign on to the Global Methane Pledge at the just concluded COP26 climate summit, despite being the top emitter of methane. This shows that some governments may have other legislative agendas, such as backing the local energy industry, which may conflict with the aim of sustainable growth.

Similarly, India's opposition to phasing out coal shows the disparity between developed and developing economies. The former relies a lot on coal while the latter relies more on oil and gas, but COP26 pledged to phase out coal rather than all fossil fuels. This begs the question of whether all countries were taking the same level of risk by phasing out coal, and whether what comes out of COP26 is balanced and just for all countries, not just a few.

While COP26 has been largely inconsequential in the grand scheme of things, the outcome, called the Glasgow Climate Pact, will provide greater clarity for nations to implement stronger domestic climate policies which will help the world avoid harsher climate impacts in the future.

“Without environmental sustainability, economic stability and social cohesion cannot be achieved.” - Phil Harding

Hopefully, the next rendition of the Conference will see greater and more substantial changes as governments continue to work together with firms, consumers and climate activists. After all, the pursuit of sustainable growth should be an aim for all economies, not just developed economies.