Exxon Ripped Up $30-Billion Rebuilding Plan, Could Declare Stranded Assets at Kearl Lake

August 7, 2021: ExxonMobil’s massive Kearl Lake mine north of Fort McMurray was at risk of becoming the latest tar sands/oil sands to be devalued as one of the world’s most determined colossal fossils considered designating up to one-fifth of its global oil and gas reserves as stranded assets, part of a company-wide scramble to respond to crashing oil prices and weak markets for its product.

On Monday, Bloomberg News reported that Exxon was “ripping up its debt-fueled, US$30 billion-a-year plan to rebuild an aging worldwide portfolio after cash flow evaporated and threatened the company’s vaunted dividend.” Then in a regulatory filing Wednesday, the company admitted that “certain quantities of crude oil, bitumen. and natural gas will not qualify as proved reserves at year-end 2020” if oil prices stay low through the end of the year—as many analysts expect.

And just as French colossal fossil Total singled out two investments—its tar sands/oil sands operations at Fort Hills and Surmont—when it declared C$9.3 billion in stranded assets last week, Exxon’s statement Wednesday focused in on one particular project. “The company’s massive Kearl oil sands mine in Alberta was the only specific asset singled as a potential victim of any year-end revision,” Bloomberg writes. “Imperial Oil Ltd., which is about 70% owned by Exxon and run as a subsidiary, said in a separate filing that an undetermined portion of Kearl’s reserves may be imperiled.”

As for the bigger picture, “a 20% hit would impact the equivalent of almost 4.5 billion barrels of crude, or enough to supply every refinery on the U.S. Gulf Coast for 18 months,” the news agency adds. And “Exxon isn’t waiting until the traditional end-of-year period to reassess reserves. After slashing its drilling budget by $10 billion to cope with the virus-driven market collapse, the company on Wednesday said it removed about one billion barrels from its books,” mostly in shale fields.

Those moves are part of a bigger and, some analysts would say, long-overdue change in Exxon’s investment strategy. “The shift by the Western world’s premier oil explorer represents an about-face after more than two years of doing pretty much the opposite of its biggest rivals, who have been shrinking and looking to a future beyond fossil fuels,” Bloomberg wrote Monday. “As recently as March, the Texas giant had pinned its future to huge capital spending on oil and natural gas at a time when peers were exploring ways to decarbonize.”

At the time, “Exxon Chief Executive Officer Darren Woods’ plan was to lean on the company’s impeccable balance sheet to drill for gushers and still cover almost $15 billion in annual dividends,” the news agency added. But now, the company is cutting its capital spending, exploring management job cuts, and announced that “work on Exxon’s five marquee developments—deepwater oil in Guyana and Brazil, Permian Basin shale, gas exports from Mozambique and Papua New Guinea—will all be curtailed or delayed.”

Senior Vice President Neil Chapman told analysts the moves were just an adjustment, not a strategic shift. “I don’t think it’s a fundamental change,” he said. “I think it’s a response to the short-term environment.”

Sustaining the company’s annual dividend to shareholders is “something we take really, really seriously,” Chapman added. “Exxon is keenly sensitive to the fate of its dividend because 70% of the company’s shareholders are retail investors,” Bloomberg explains. But “the commitment comes at a significant cost,” and “without so much money being spent on new projects, questions remain over how Exxon can mitigate its long-term production declines and how resilient its assets will be in an energy transition toward low-carbon fuels.”

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Exxon Lobbyist Caught on Video, Admitted ‘Aggressive’ Attack on Biden Climate Plan

July 4, 2021: Senior executives from colossal fossils ExxonMobil, Shell, and Chevron ultimately received subpoenas from a powerful U.S. congressional subcommittee after the investigative reporting team at Unearthed, a branch of Greenpeace UK, revealed Exxon’s continuing efforts to undermine the Biden administration’s climate plans and “aggressively” combat climate science.

The initial revelations came from a Zoom call with a senior director of the company’s Washington, DC government affairs team, Keith McCoy, in which an Unearthed reporter posed as a job recruiter.

McCoy “told an undercover reporter that the company had been working to weaken key aspects of President Joe Biden’s flagship initiative on climate change, the American Jobs Plan,” Unearthed reported Wednesday. “He described Biden’s new plan to slash U.S. greenhouse gas emissions as ‘insane’ and admitted that the company had aggressively fought early climate science through ‘shadow groups’ to protect its investments.”

In his call with Unearthed, McCoy:

• Revealed that he was in weekly contact with the office of Sen. Joe Manchin (D-WV), who’s been widely seen as the Democrats’ biggest obstruction to Biden’s climate and energy transition plan;

• Identified 10 other senators as Exxon’s key lobbying targets, including Republicans John Barrasso (WY), John Cornyn (TX), Steve Daines (MT), Shelley Moore Capito (WV), and Marco Rubio (FL) and Democrats Chris Coons (DE), Maggie Hassan (NH), Mark Kelly (AZ), Kyrsten Sinema (AZ), and John Tester (MT);

• Admitted that Exxon’s support for a carbon tax as its main climate policy was an “advocacy tool” and a “great talking point” that will never actually come to pass.

“Nobody is going to propose a tax on all Americans,” McCoy said, “and the cynical side of me says, ‘yeah, we kind of know that but it gives us a talking point that we can say, well what is ExxonMobil for? Well, we’re for a carbon tax.’”

He added that Exxon had not buried its own science on climate change, but had cast doubt on the scientific consensus on the climate crisis. “Did we aggressively fight against some of the science? Yes. Did we hide our science? Absolutely not. Did we join some of these ‘shadow groups’ to work against some of the early efforts? Yes, that’s true. But there’s nothing illegal about that. You know, we were looking out for our investments, we were looking out for our shareholders.”

Unearthed has clips from McCoy’s Zoom call here.

A second Exxon lobbyist, Dan Easley, who worked for the company as a White House lobbyist through the Trump years, “laughed when asked by an undercover reporter if the company had achieved many policy wins under Trump, before outlining victories on fossil fuel permitting and the renegotiation of the NAFTA trade agreement,” Unearthed says.

“The wins are such that it would be difficult to categorize them all,” he said, adding that one decision, the reduction in the U.S. corporate tax rate, was “probably worth billions to Exxon”.

Despite the lavish return on its investment in lobbying, Exxon has still found itself laying of 14,000 staff and writing off $20 billion in stranded assets in the last year, resulting in frustrated investors and an epic defeat in a board challenge by upstart hedge fund Engine No. 1.

An Exxon spokesperson said the allegations in the Unearthed exposé “contained a number of important factual misstatements that are starkly at odds with our positions on a variety of issues, including climate policy and our firm commitment to carbon pricing.”

Unearthed has much more on the story, and is promising further revelations on Exxon’s fight against a toxic chemical ban and plastic regulations.

On Friday, Rep. Ro Khanna (D-CA), chair of the U.S. House Oversight and Reform Subcommittee on the Environment, said he would issue subpoenas to compel fossil companies’ testimony if they didn’t show up for a meeting voluntarily, the New York Times writes. “The video was appalling,” he said, adding that it spotlighted the industry’s effort to “engage in climate denialism and to manipulate public opinion and to exert undue influence in shaping policy in Congress.”

Khanna added that fossil execs have distinguished themselves so far with their refusal to comply when Congress invited them to drop by. “I find it mind boggling, honestly. Tech CEOs from my district have showed up. Wall Street executives showed up many times to Congress. Pharmaceutical executives,” he told the Times. “We fully plan to issue subpoenas if they don’t come voluntarily.”

Unearthed dropped its initial bombshell just days after a leaked draft of an upcoming UN science report blamed disinformation and lobbying campaigns by Exxon and others “for undermining government efforts to reduce greenhouse gas emissions and increasing the dangers of global warming to society,” Politico reports.

The draft science review from the Intergovernmental Panel on Climate Change (IPCC) “blamed think tanks, foundations, trade associations, and other third-party groups that represent fossil fuel companies for promoting ‘contrarian’ science that misleads the public and disrupts efforts to implement climate policies needed to address the rising threats,” the news story states.

“Rhetoric on climate change and the undermining of science have contributed to misperceptions of the scientific consensus, uncertainty, unduly discounted risk and urgency, dissent, and, most importantly, polarized public support delaying mitigation and adaptation action, particularly in the U.S.,” the scientists wrote.

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New Carbon Capture Tax Credit Would Drive Higher Emissions, Could Mislead Investors

March 24, 2021: A new federal incentive, modelled on a U.S. tax credit for carbon capture, utilization and storage, would be tailor-made to drive higher greenhouse gas emissions and could produce unexpected surprises for private investors, a veteran U.S. energy consultant and attorney told The Energy Mix.

The fossil industry and its allies had been intensifying their push for carbon capture (CCUS) subsidies ahead of Finance Minister Chrystia Freeland’s April budget, with Alberta Premier Jason Kenney calling for C$30 billion in federal largesse over 10 years. In an email Tuesday, Ian Cameron, press secretary to Natural Resources Minister Seamus O’Regan, said carbon capture technology “creates jobs, lowers emissions, and increases our competitiveness. It’s an important part of our government’s plan to get to net-zero emissions by 2050 and we are working with all provinces, including Alberta, to keep Canada at the forefront of this promising technology.”

But the signature tax measure that is generating much of the hype, the Section 45Q tax credit [pdf] named for the relevant section of the U.S. Internal Revenue Code, creates an incentive for power plant operators to emit more carbon, while giving investors a false picture of projects’ viability, said David Schlissel, a Massachusetts-based consultant associated with the Institute for Energy Economics and Financial Analysis (IEEFA).

“The oil industry and the coal industry see this as a way to keep their industries going,” Schlissel told The Mix. “So they green-wrap it as a way to save produced CO2.” But the economics of those failing power plants, coupled with a volume-based tax credit that pays up to US$50 per tonne for any carbon an operator can capture, turn Section 45Q into an incentive to burn and emit more carbon, not less.

Schlissel cited the example of the San Juan generating station, a coal plant in New Mexico that was to be propped up by adding a carbon capture unit, but that the local utility has been trying hard to shut down. The plant had been operating about 63% of the time. But to generate enough carbon credits for the project to pay for itself, it would have needed an 85% capacity factor. “In order to capture more CO2, they have to run more to produce more CO2,” he said, when “the whole purpose of this endeavour is supposed to be to reduce emissions.”

The other problem was the real-life efficiency of a CCUS unit that was supposed to capture 90% of the carbon the plant produced, but was more likely to secure about 80%—which would still be better than Sask Power’s ill-fated Boundary Dam CCUS project in Saskatchewan, where he said successful carbon capture amounted to 65% of the original plan. With lower power output and less carbon capture than project developers promised, the San Juan plant looked likely to take in far less tax credit revenue than advertised—which meant broken promises and potential financial risk for investors.

That’s a big problem, Schlissel added, since one of the main purposes of a tax credit is to “de-risk” a project for its private backers. “Investors wouldn’t do this if they had to pay for it themselves,” he told The Mix.

Paying Billions for Higher Emissions

Schlissel was just as skeptical about CCUS credits for Enhanced Oil Recovery (EOR), where captured carbon is pumped underground to extend the life of aging oil wells. It’s the method of choice for carbon capture operations in Saskatchewan and Alberta, and one of the most likely uses for a federal carbon capture tax credit.

“If the carbon is used for EOR, you’re producing more CO2 by producing even more oil,” he said. “You’ve got to divorce carbon capture from Enhanced Oil Recovery, because that just compounds the problem.”

Earlier this month, Toronto-based Environmental Defence wrote to Freeland and three other cabinet ministers, urging them to reject subsidies for enhanced oil production in this year’s budget. The letter’s 47 signatories represented two million people across Canada, Environmental Defence said. [Disclosure: Energy Mix Productions was one of the signatories.]

The letter took specific aim at the attempts to secure a 45Q-style tax credit in Canada. (It placed the value of the credit at US$35 per tonne, not $50 as quoted by IEEFA.)

“Despite a veneer of green, such a tax credit could result in a significant amount of foregone revenue and enable the production of more carbon than is captured,” the letter stated. “Since the overall incentive for power plants and industrial facilities to sell captured CO2 to oil companies for use in extraction would be more lucrative than the incentive for facilities to directly sequester their carbon pollution, this measure would primarily incentivize oil extraction. In fact, oil companies are looking to EOR to expand production—and the biggest expense in EOR operations is the CO2.”

Citing a 2017 analysis [pdf] by Oil Change International, the Environmental Defence letter said the U.S. credit “could result in at least an additional 400,000 barrels per day of CO2-enhanced oil production in the United States in 2035, which would directly lead to as much as 50.7 million tonnes of net CO2 emissions annually—and possibly far more. The portion of the bill that benefits the oil industry alone could cost American taxpayers as much as US$2.8 billion every year.”

Julia Levin, Environmental Defence’s climate and energy program manager, said the connection back to Enhanced Oil Recovery should be enough to disqualify a new carbon capture tax credit in Freeland’s budget. With more than 80% of the world’s captured carbon used to extract more oil, “it’s carbon-positive,” she said. “No one should be behind this,” because “no one should be behind production subsidies anymore. Even when our minister talks about subsidies, he agrees there should be no subsidies for the production of oil and gas.”

The 0.1% Solution

The critical analysis on both sides of the border presents a distinctly different view from the “strong consensus” reached by the Energy Future Forum, a multistakeholder panel convened by the Ottawa-based Public Policy Forum to seek an “achievable pathway to national climate and economic objectives”. That pathway, the EFF says, “must include a significant contribution from carbon capture technologies and from utilization and storage.”

Despite the severe stumbles Schlissel details in the U.S., the high cost and disappointing performance of Boundary Dam, and the low capacity and slow start-up of CCUS projects world-wide, the EFF bravely imagines the technology as a part of Canada’s 2030 short-term emissions reduction target. “If Canada is going to meet its 2030 climate change objectives and establish a plan to achieve net-zero carbon emissions by 2050, carbon capture, utilization and storage (CCUS), including direct air capture (DAC) and other developing technologies, will play an integral role,” the forum states.

Two months ago, the UK’s Tyndall Centre for Climate Change Research placed the operational capacity of CCUS projects around the world at just 39 megatonnes of CO2 per year, or roughly 0.1% of global annual emissions, with deployment slow and plagued by accidents. Tyndall reported 81% of the captured carbon was being used to extract more oil via EOR.

An eight-page consensus paper [pdf] produced by the Energy Future Forum points to Boundary Dam, along with a second CCUS plant at the Shell Quest heavy oil upgrader in Alberta, as success stories that each capture roughly one megatonne of carbon per year—a bit less at Boundary Dam, a bit more at Shell Quest. All it took to get the Shell Quest operation up and running was combined federal and provincial subsidies of C$865 million, and Environmental Defence’s Levin put total Canadian CCUS subsidies to date at $2 billion. [Which surely wouldn’t have cut nearly as much carbon or created nearly as many jobs if it had been invested in, say, a mass, deep energy retrofit program [pdf]—Ed.]

A third project, the Alberta Carbon Trunk Line (ACTL), has capacity to transmit 14.6 megatonnes of captured CO2 per year from a refinery, a fertilizer plant, and other industries in Edmonton for use in an EOR facility, the EFF says. And Canadian Natural Resources Ltd.’s Horizon tar sands/oil sands plant is capturing 438,000 tonnes per year.

“Each of these projects proves CCUS technology is available and commercially viable with the right incentives,” the report states. The EFF calls for Canada to “level the playing field” and support CCUS with “stackable federal and provincial tax credits” to “spur innovation and make investments competitive with those available in the United States and elsewhere.”

The forum cites a 90% capture rate for CCUS plants, in contrast to Schlissel’s assertion that the technology often fails to perform as intended.

Hard-to-Decarbonize Industries

The EFF names hard-to-decarbonize sectors like cement and steel, where carbon capture may be one of the options to keep essential industries going in a decarbonizing world. And it points to fossil companies (and others) investing in direct air capture technologies that aren’t attached to fossil extraction, and might be able to draw down some of the emissions that have been pouring into the atmosphere since the dawn of the industrial age.

Schlissel gives that line of thinking mixed reviews.

“Right now, I’m agnostic about carbon capture for industrial uses,” including oil, he said. “And while I have serious doubts about carbon capture from gas plants, I think it should be studied.”

But Schlissel did cite other analysts’ concerns about the sheer volume of (presumably renewable) energy it would take to run DAC installations at scale, and pointed to a more basic problem with the way low-carbon pathways are too often framed.

“Everybody tries to avoid the simple solution,” he told The Mix. “Stop producing the crap. Start with energy efficiency, renewables, storage. I imagine we’ll have to run some gas for decades in some places, not a lot of gas, but I accept there will be some. Then let the planet heal. Don’t sink billions and billions into these new technologies, whether it’s carbon capture or small modular reactors, that are going to take a long time to build and to prove that they’re effective.”

The other question is how long it will take for that proof to accumulate—against the 2050 deadline in the UN’s 1.5°C pathways report, much less the 2030 target in the EFF’s sights. Scenario modelling reported in yesterday’s Bloomberg Green newsletter showed that the most promising new emissions reduction innovation would only have a limited impact on the climate crisis if it were introduced today, given the time it would take to scale up.

“It might take a decade to bring this zero-carbon miracle to market, and the better part of another decade to design and build plants,” explained columnist Eric Roston. “What’s worse is this: in the time it takes the new industry to grow, coal and gas plants will continue to be built and last 30 years or more. Even with [nuclear] fusion tomorrow, we’d make it to 2050 without retiring much of the CO2-spewing infrastructure that needs replacement yesterday.”

A ‘Grand Bargain’

The independent writer behind the EFF report, Regina-based consultant Dale Eisler, said the forum’s purpose was to bring together a wide range of interests—including business, Indigenous, academic, and environmental organizations—“to find out if there’s a grand bargain that can be struck here that reconciles energy and the environment.” Reflecting the Public Policy Forum’s much longer history with multistakeholder engagement, he stressed the EFF “is not a lobby group” but “simply serves as a convening function to get people together to talk about these issues.” [Second disclosure in a very long feature post: The Public Policy Forum was a long-ago client of the conference reporting firm that preceded Smarter Shift, the firm that subsequently launched The Energy Mix.]

“The bottom line is oil is not going away anytime soon,” Eisler said. “We’re going to see a period where there may not be growth in oil production, but by 2050 oil is still projected to be a big part of global energy,” accounting for about 50% of total production.

“If demand remains, oil will be produced to meet that demand,” he added. And how much of it is produced in Canada “will depend a lot on how clean oil production is. Can Canada produce the cleanest barrel of oil that people will actually want, what will it take to do that, and does CCUS have a role to play in that if it’s going to be around for several more decades?”

Eisler based that projection on 2050 scenarios from the International Energy Agency and the Canada Energy Regulator. He said he wasn’t familiar with continuing pressure and critical analysis from business and civil society, calling for the agencies to align their energy futures modelling with a 1.5°C climate stabilization target, nor with recent predictions that power utilities relying on fossil fuels face $1 trillion in stranded asset risk in the transition to renewable energy, energy efficiency, and storage.

“These are all forecasts and predictions that are often wrong,” he said, “on all sides.”

Asked how reliance on CCUS would abate the roughly 80% of oil and gas emissions that occur when the product reaches its final destination and is used as directed, Eisler said he could only base his analysis on the predictions he’d read. “Oil is going to be with us,” he said, “and we have a mature industry in Canada. So it’s not a binary choice. The tough public policy issues never are. That’s why they’re tough.”

But Environmental Defence’s Levin said it’s too convenient for fossil companies and governments alike to brush off the 80% of emissions that occur after Canada’s oil and gas is shipped. Ultimately, she said, “they’re banking on the world failing to reach the commitments in the Paris Agreement, and they’re also not reading the writing on the wall,” with everyone from governments to automakers pushing a faster transition off fossil fuels.

“It’s coming within the next decade,” Levin added, “and these are projects that have decades-long timelines.” Which means the fossil industry and its boosters are just “delaying a transition, even though they know where markets are going.”

Eisler pointed to Canada’s history as a natural resource exporter as a driver of the country’s standard of living—and its potential loss in a transition off oil as a serious risk. Oil “is a huge earner of foreign currency that is essential to the economic health of Canada and the strength of the Canadian dollar,” he said. “What are we going to replace that with, in terms of our exports, to sustain our quality of life?”

‘These Are All Huge Questions

The Calgary-based Pembina Institute is a member of the Energy Future Forum, and a quote from Executive Director Linda Coady features prominently on the landing page for the CCUS report. “Canada must incent deployment of multiple approaches to achieve an economy-wide path to net-zero emissions including energy efficiency, renewable electricity, and carbon removal,” she says. “New policies that directly encourage carbon capture and utilization projects while further strengthening carbon pricing and establishment of the Clean Fuel Standard will increase CCUS deployment.”

Pembina’s Alberta regional director, Chris Severson-Baker, said that position reflects a wider view of the path to decarbonization.

“Everything we’ve looked at suggests we’ve got to massively scale up everything: electrification, energy efficiency, convert buildings,” he told The Mix. “But for the hard-to-decarbonize industrial sectors there needs to be some mechanism, some technology that allows us to capture the carbon emissions inherent in those processes and prevent them from getting into the atmosphere.”

He added that “how much of a role that creates for CCUS is a big question. But for chemical production, fertilizer production, steel, for some oil and gas production between now and 2050, it appears to be part of the pathway. How much, for what exactly, for how long, and what does the government need to do to help the technology be there when it’s needed? These are all huge questions.”

Speaking not long after Kenney issued his demand for a C$30-billion CCUS line in next month’s federal budget, Severson-Baker said it’s “a perfectly valid argument” to call on governments to stop subsidizing the problem. But he added that he was happy to see Kenney talking about how to decarbonize the Alberta economy.

“It implies a willingness to recognize that we actually need a climate policy environment that is stable and predictable, to make the case that we need investment in decarbonization,” he said. “Even if their opening negotiation position is very hard to understand, it’s shocking in some ways, it’s the opening of a dialogue about what it will actually take to get Alberta from where it is now, which is resisting the federal government’s climate plan, to more of a negotiation over how to do it. That would be significant progress.”

But Levin said Canada already has a policy that creates an incentive to capture carbon: It’s called a carbon tax. “You can’t say you care about carbon capture, fight the carbon tax, but still want $30 billion from the feds,” she said of Kenney. “It doesn’t work that way. And it shouldn’t work that way unless you have a lot of influence with government.”

LNG Canada On Track to Become ‘Financial Albatross’, Analysts Warned

November 25, 2021: British Columbia’s only confirmed liquefied natural gas (LNG) terminal may be on its way to becoming a “financial albatross”, even as a developer continues to tout a second LNG project in Howe Sound, just north of Vancouver.

The LNG Canada megaproject was approved with lavish provincial subsidies in 2018, producing a massive emissions gap in the province’s climate plan. Now under construction, it’s the intended terminus for the Coastal GasLink pipeline that has become a trigger for militarized raids on unceded Indigenous land and a railway blockade in the weeks leading up to COVID-19 lockdowns in 2020.

Now, a report by the Institute for Energy Economics and Financial Analysis (IEEFA) says the first phase of LNG Canada “could be the last liquefied natural gas project built in British Columbia” given changing market conditions, project delays, rising costs, and policy shifts.

“Over the last three years, market shifts and policy changes have tested LNG Canada’s long-term economic viability,” said lead author Omar Mawji, IEEFA’s energy finance Canada analyst. “This project could become a financial albatross for its sponsor investors, and it stands as a warning to other natural gas producers” involved with natural gas fracking projects in the Montney Basin in northeastern B.C.

That isn’t a good look for Phase 2 of the LNG Canada venture, or for other LNG projects that B.C. Premier John Horgan and his Liberal Party predecessor, Christy Clark, have been desperately promoting for years.

“If the project sponsors assessed the energy landscape today instead of 2018, they would likely have been far more cautious in deciding whether to move forward with Phase 1,” Mawji said in an IEEFA release. “The conditions do not bode well for other LNG projects in Canada.”

IEEFA released its analysis just a day after Woodfibre LNG announced it had signed a C$2.5-billion deal to build a terminal on Howe Sound, the Squamish Chief reports. The contractor, Houston-based McDermott International, recently emerged from bankruptcy protection in the United States after “facing enormous cost overruns at construction projects for two LNG plants,” the Houston Chronicle recounted. Woodfibre said it chose McDermott based on its experience with low-emission facilities—a feature the company is touting based on its access to electricity from large hydro dams in B.C.

“One of the things they bring to the table is a philosophy of low-emissions LNG construction, and that’s our philosophy as well,” said Woodfibre spokesperson Rebecca Scott. “So when you’re working with the engineers who are going to design the facility, you want to make sure you’re aligned on what you want it to be like.”

Net-Zero Home Rode Out Edmonton Cold Snap with No Furnace Required

February 17, 2021: A net-zero home in Edmonton, Alberta stayed toasty warm when the polar vortex brought bitterly cold temperatures to town, enabling Darryl Zubot and his family to stay comfortable and safe—without having to turn on the furnace.

In pure dollar terms, net-zero homes can be a costly venture, with homeowners looking at up to 20 years before they recoup the up-front investment, writes CBC News. But the trend toward climate-friendly, self-sufficient houses is gaining momentum—even in a region where winters are wild, and oil and gas is still perceived as the economic bread and butter.  

Zubot and his family recently built a net-zero home south of Edmonton, CBC says. The structure features south-facing, triple-paned windows, added insulation, extra-efficient appliances, and a heat pump—all working together to sharply reduce the home’s energy consumption. In Alberta, that means they can sell electricity to the grid when they have a surplus, then buy some back when they need it.

The windows measure six by 10 feet and provide “about 30 to 35% of the home’s heat” during bright, sunny days, CBC says, helping to keep things cozy and warm during the worst of winter. Add the heat pump, and the house remained a toasty 23°C indoors this week, even as the mercury outside plunged below -30°C during the recent stint of bitter cold.

“This house is a testament to how you can be completely self-sufficient in this day and age, with no reliance on oil and gas,” Zubot told CBC.

Zubot plans to add solar panels this spring, after which the house will generate as much energy as it uses. “We need to do our part to reduce our oil consumption,” he said. “I know it’s not going to change overnight and we still need oil, but it’s definitely slowly transitioning.”

This particular net-zero project was expensive—Zubot paid “roughly C$40,000” more than what an equivalent non-net-zero house would have cost. But “we plan to be here for a long time, and it’ll pay back in the long run,” he said. “It’s definitely not a short-term investment game, but long-term it definitely pays off.”

Then again, the strict financial calculation was not the Zubot’s primary concern—nor is it for many net-zero homeowners, said Dale Rott, co-owner of Effect Home Builders in Edmonton. 

“They are aware of climate change and they have an ideological reason,” he told CBC. “It’s not because of cost savings on utilities and all that. We’re not hearing that yet.”

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When it Rains in Greenland

New video from Jason Box, discussing impact of darkening surface, algae growth, and, more frequently, rain, on the surface of the Greenland Ice sheet. This past summer marked the first time that rainfall has been observed at the summit of the ice sheet, 10 thousand foot elevation. National Snow and Ice Data Center: On August […]

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2021 Climate Year in Review

There was a lot of climate news in a year overflowing with news. We help you catch up.
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NO MORE EXCUSES: ‘Unimaginable, Unforgiving World’ without Drastic Emission Cuts, IPCC Warned

This story includes details about the impacts of climate change that may be difficult for some readers. If you are feeling overwhelmed by this crisis situation here is a list of resources on how to cope with fears and feelings about the scope and pace of the climate crisis.

August 9, 2021: Human activity is “unequivocally” producing a world of heat waves, wildfires, floods, sea level rise, and needless death and suffering, “it is more likely than not” that average global warming will exceed 1.5°C by 2040, and faster, deeper emission reductions will be needed to bring temperatures back below 1.5° by the end of the century, the Intergovernmental Panel on Climate Change (IPCC) concluded in a landmark science assessment.

“It is still possible to forestall many of the most dire impacts, but it really requires unprecedented transformational change—the rapid and immediate reduction of greenhouse gases,” IPCC Vice-Chair Ko Barrett told media.

But “today’s IPCC Working Group 1 Report is a code red for humanity,” said United Nations Secretary-General António Guterres. “If we combine forces now, we can avert climate catastrophe. But, as today’s report makes clear, there is no time for delay and no room for excuses. I count on government leaders and all stakeholders to ensure COP 26 is a success.”

Guterres added: “This report must sound a death knell for coal and fossil fuels before they destroy our planet.”

“If this IPCC report doesn’t shock you into action, it should. The report paints a very sobering picture of the unforgiving, unimaginable world we have in store if our addiction to burning fossil fuels and destroying forests continues,” said Helen Mountford, vice president of climate and economics at the World Resources Institute.

“While the IPCC’s findings are alarming, they most certainly should not translate to hopelessness or inaction,” she added. “This report should galvanize every country, company, city and citizen to fight like hell to avoid every bit of warming we can.”

The Energy Mix followed the IPCC release with a more detailed Special Report on the major conclusions in the report. Find a full index here.

The report “throws a key goal of the Paris Agreement into danger as signs of climate change become apparent across every part of the world,” Bloomberg Green reports. It concludes that humanity “will have about a 50% chance of staying below the 1.5°C threshold called for by the Paris Agreement if CO2 emissions from 2020 onwards remain below 500 billion tonnes. At the current rate of emissions, that carbon budget would be used up in about 13 years. If the rate doesn’t come down, the planet will warm more than 1.5°C.”

The most ambitious of the IPCC’s five scenarios shows greenhouse gas emissions hitting net-zero by 2050, Bloomberg adds. But the team of 234 scientists from 66 countries says it’s “very likely” humanity will breach the 1.5°C threshold even sooner in a scenario of very high greenhouse gas emissions, The Independent reports. And the ability of the world’s oceans and to buffer global warming by absorbing atmospheric carbon dioxide will decline if emissions continue their rapid rise.

Only one of the five scenarios has average warming falling back below 1.5°, and “achieving that cooling will depend on large-scale removal of carbon dioxide from the air,” Bloomberg writes.

Climate Action Tracker’s analysis of countries’ latest emission reduction pledges under the Paris Agreement show the world on track for  2.7 to 3.6°C of warming by 2100.

“The report also warns that potential tipping points in Earth’s climate—thresholds where a small change could lead to dramatic change—’can’t be ruled out’. Such tipping points could include ice sheet collapse or abrupt changes to ocean circulation patterns,” The Independent states. “However, taking urgent action to address greenhouse gas emissions would minimize the likelihood of such tipping points occurring, the scientists said.”

The IPCC also stresses “that dramatic and rapid cuts in super-potent methane would have a significant impact, not just on global heating but more immediately on air quality,” the UK-based paper adds.

“Climate change is not a problem of the future—it’s here and now and affecting every region of the world,” said IPCC author Dr. Friederike Otto, associate director of the Environmental Change Institute at the University of Oxford.

Exceeding the 1.5°C target in the 2015 Paris agreement “doesn’t necessarily constitute a failure of our climate policies,” said IPCC author Prof. Piers Forster, director of the Priestley International Centre for Climate at the University of Leeds. “We want to clearly get across that every bit of additional warming we can prevent is really a success.”

“Those of us living in Africa have been aware of the urgency of the climate crisis for many years,” said Mohamed Adow, director of Nairobi-based Power Shift Africa. “Lives and livelihoods have been shattered by overwhelming heat, rising seas, and extreme weather. It is vital that governments heed the warning of the IPCC’s scientists and act with speed and boldness to make our world safer, cleaner, and greener.”

The IPCC’s new analysis “makes clear that the warming we’ve experienced to date has made changes to many of our planetary support systems that are irreversible on time scales of centuries to millennia,” the BBC writes. “The oceans will continue to warm and become more acidic. Mountain and polar glaciers will continue melting for decades or centuries.”

“The consequences will continue to get worse for every bit of warming,” said University of Reading climatologist Prof. Ed Hawkins. “And for many of these consequences, there’s no going back.”

Since 1970, the BBC reports, “global surface temperatures have risen faster than in any other 50-year period over the past 2,000 years.” The scientists say those changes are “already affecting many weather and climate extremes in every region across the globe,” from heat waves to floods, and “their attribution to human influence has strengthened” over the past decade.

The science concludes that:

• The past five years have been the hottest on record since 1850.

• The past decade was most likely the hottest in 125,000 years, a time when sea levels were 10 metres higher.

• Global surface temperatures were 1.09°C higher in the last decade than they were between 1850 and 1900.

• Fossil fuel burning and deforestation have driven carbon dioxide levels in the atmosphere to a two-million-year high.

Agriculture and fossil fuels have brought methane and nitrous oxide levels to an 800,000-year high.

• Sea level rise has nearly tripled compared to the decades between 1901 and 1971.

• Human activity is 90% likely to be the main cause of glacier loss since the 1990s and decreases in Arctic sea ice.

• It’s “virtually certain” that extreme heat waves have become more frequent and intense since the 1950s, while extreme cold has become less frequent and severe.

“Even as the IPCC authors have done away with some of the cautious uncertainty that marked past assessments, the last few months have seen a series of rapid-fire climate disasters that underline the new language,” Bloomberg writes. “Summertime in the Northern Hemisphere has been marred by severe flooding across Europe and China, as well as alarming drought and the early onset of large wildfires in the Western U.S. and Canada. One of the coldest places on the planet, Siberia, has experienced severe heat and forest fires. Just this past weekend brought disturbing footage of people fleeing sprawling wildfires in Greece.”

And with major advances in scientific understanding, “nearly all of this can be attributed to human influence,” the news agency adds. “The contribution to global warming of natural factors, such as the sun and volcanoes, is estimated to be close to zero. In fact, humans have dumped enough greenhouse gas into the atmosphere to heat the planet by 1.5°C, according to the report, but fine particle pollution from fossil fuels provides a cooling effect that masks some of the impact.”

Even with global warming all but certain to exceed the 1.5°C threshold, the takeaway message from IPCC scientists, UN officials, and this morning’s wave of news coverage is that it’s time to accelerate climate action and greenhouse gas reductions—not to give up.

“By mid-century, the world’s choices on how fast to limit carbon pollution will start to lead to divergent climates,” Gizmodo writes. “Curtail emissions rapidly and now, and global warming will halt around 1.5°. If world leaders make unprecedented changes to every economic sector and society at large to stop emissions, we will still likely cross 1.5°. But we can bend the curve back in the right direction and, by the end of the century, keep the climate from going off the rails.

“Continue emitting, though, and the world will heat up further. Doing so will come with major consequences. Not all life will be able to adapt to the new, hotter, more dangerous conditions.” But “that doesn’t mean we should throw in the towel. In fact, the report shows we can’t. Decarbonization is our only path to survival,” and “every tonne of carbon pollution and every tenth of a degree matter.”

$11 Million Per Minute in Fossil Subsidies ‘Add Fuel to the Fire’, IMF Study Showed

October 7, 2021: The coal, oil, and gas industries received US$5.9 trillion in worldwide subsidies in 2020—a mind-bending $11.2 million per minute, every minute of every hour of every day in the year—the International Monetary Fund (IMF) revealed.

An independent analyst said the report shows the subsidies “adding fuel to the fire” of the climate emergency, The Guardian reports, with not a single country pricing fossil energy in a way that reflects its full supply and environmental costs.

“Explicit subsidies that cut fuel prices accounted for 8% of the total and tax breaks another 6%,” the paper writes, citing the IMF. “The biggest factors were failing to make polluters pay for the deaths and poor health caused by air pollution (42%) and for the heat waves and other impacts of global heating (29%).”

Pricing fossil fuel prices to reflect their fully-loaded cost would be enough on its own to reduce global carbon dioxide emissions by more than one-third, the analysts concluded.

“This would be a big step towards meeting the internationally agreed 1.5°C target,” The Guardian says. Along with that overarching target, “agreeing rules for carbon markets, which enable the proper pricing of pollution, is another COP 26 goal.”

“There would be enormous benefits from reform, so there’s an enormous amount at stake,” said lead author Ian Parry, the IMF’s Principal Environmental Fiscal Policy Expert. “Some countries are reluctant to raise energy prices because they think it will harm the poor. But holding down fossil fuel prices is a highly inefficient way to help the poor, because most of the benefits accrue to wealthier households. It would be better to target resources towards helping poor and vulnerable people directly.”

This isn’t the first time the usually staid IMF has shone a light on global fossil fuel subsidies, placing the total at $5.3 trillion in 2015 and $5.7 trillion in 2017. Since the Fund’s last report in 2019, the pace of the climate emergency has quickened, as have the community response and the official analysis charting a course to faster, deeper emission cuts.

But by 2020, the latest numbers show, the governments setting the subsidies had yet to get the memo. With 50 countries committed to net-zero targets by mid-century and 60 carbon pricing regimes in effect around the world, “we’re still just scratching the surface really, and there’s an awfully long way to go,” Parry said.

Five countries—China, the United States, Russia, India, and Japan—accounted for two-thirds of the subsidies, the IMF found, with the annual total on track to hit $6.4 trillion by 2025 without action to bring subsidies under control.

“To stabilize global temperatures, we must urgently move away from fossil fuels instead of adding fuel to the fire,” said Carbon Tracker Senior Analyst Mike Coffin. “It’s critical that governments stop propping up an industry that is in decline and look to accelerate the low-carbon energy transition, and our future, instead.”

He added that the United Kingdom, as host of next month’s United Nations climate conference, COP 26, “could play an important global leadership role by ending all subsidies for fossil fuels,” instead of sanctioning new oil and gas drilling licences in the North Sea.

“Proper pricing for fossil fuels would cut emissions by, for example, encouraging electricity generators to switch from coal to renewable energy and making electric cars an even cheaper option for motorists,” The Guardian explains. “International cooperation is important, Parry said, to allay fears that countries could lose competitiveness if their fossil fuel prices were higher.”

The Guardian has commentary pointing to the G20 summit at the end of this month as the place to clear a major stumbling block to decarbonization. “It is maddening to realize the much-needed change could start happening now, if not for governments’ entanglement with the fossil fuels industry in so many major economies,” said E3G Senior Policy Advisor Maria Pastukhova.

‘Breathtaking’ Lack of Commitment as Rich Countries Delayed Climate Finance Pledge to 2023

October 26, 2021: The United Kingdom was forced to open the COP 26 climate summit in Glasgow with a last-ditch bid to mobilize US$100 billion per year in international climate finance from the world’s wealthiest nations, after a diplomatic effort led by Canada and Germany failed to reach a funding target that was first promised in 2009.

The success of the UK’s arm-twisting, in its role as President of this year’s UN climate conference, will determine whether the COP process can regain the trust of developing countries that are already facing severe impacts of climate change, climate finance experts told The Energy Mix yesterday. A failed climate finance package could severely undermine confidence in the 2015 Paris Agreement itself, producing an even narrower path for climate stabilization efforts that are already falling far behind schedule.

“This lack of ambition is breathtaking,” and “it is the people living on the front line of the climate emergency who will bear the brunt,” said Fionna Smyth, head of global policy and advocacy at London, U.K.-based Christian Aid. “It is over a decade since the world’s richer countries agreed to $100 billion a year in climate finance by 2020. It was already a drop in the ocean, yet still the target has been missed and is now set to be watered down.”

“This plan claims that rich nations will meet their target three years late, but conveniently fails to mention the money that poorer countries are owed for every year they fell short,” added Oxfam Senior Climate Policy Adviser Jan Kowalzig. “This shortfall, which started to accumulate in 2020, will likely amount to several tens of billions of dollars. These are achievable amounts of money—governments have spent trillions on COVID-19 fiscal recovery packages, which show their ability to act in an emergency. This is an emergency.”

That was just some of the blistering criticism that followed yesterday’s announcement by Canadian Environment Minister Jonathan Wilkinson and Jochen Flasbarth, German state secretary for the Environment, Nature Conservation and Nuclear Safety, that weeks of behind-the-scenes talks had missed a key deadline to secure the $100-billion annual commitment. The funds were to be available each year beginning in 2020. But under the Climate Finance Delivery Plan [pdf] that Wilkinson and Flasbarth brokered on behalf of COP 26 President Alok Sharma, the target year to make good on the pledge is postponed to 2023.

Because of epic delays and limited transparency in international climate finance reporting, countries won’t be able to verify the 2023 figure until 2025.

Breaking a ‘Totemic’ Promise

The 2020 climate finance promise was first adopted by 23 wealthy countries at the 2009 UN climate conference in Copenhagen. Now, Politico Europe says those governments have broken a “totemic” pledge, undermining “a bargain where developing countries were to cut emissions in return for climate finance”.

With a full accounting still a year away, Politico says it’s likely the countries’ 2020 climate finance contributions fell $20 billion short. The delivery plan suggests a pathway to deliver an average of $100 billion per year between 2021 and 2025, but observers say those numbers rely too heavily on private sector contributions and may not be enough to make up the 2020 shortfall.

In their prepared remarks, the two ministers tried to make the most of a decidedly tepid result.

“It is critically important for developing countries to be able to trust that the developed world will make good on its promises, starting with the $100-billion climate finance goal,” Wilkinson said. “While more work needs to be done, I hope today’s report can instill confidence and trust that developed countries will deliver on their promises to the developing world.”

“Developing countries have been rightfully disappointed that, so far, developed countries have not delivered on the $100-billion promise that was already given in 2009,” Flasbarth said. And after a process that “has created momentum to help comply with the finance commitment overall in the period up to 2025,” he added, “we are very aware that… a lot of work remains. However, it is my strong hope that with this plan, we can show the international community that developed countries remain committed to deliver on their promises.”

Citing data from the Organization for Economic Cooperation and Development (OECD), the delivery plan says climate finance commitments increased from $58.5 billion in 2016 to $79.6 billion in 2019, the last year for which figures are available. Funding to address climate change impacts came in at $20.1 billion, a doubling since 2013 but still far short of developing countries’ and climate community advocates’ demand that 50% of financing be devoted to climate adaptation. Outright grants from public agencies accounted for just 27% of the 2019 total, compared to 71% coming from loans that some of the world’s poorest, most vulnerable countries will eventually be expected to repay.

In their joint statement, Wilkinson and Flasbarth both touted their own countries’ stepped-up climate finance commitments. But as The Energy Mix went to virtual press last night, it was not known whether Wilkinson would still be in position as environment minister beyond Tuesday morning, when Prime Minister Justin Trudeau was scheduled to announce a major Cabinet shuffle.

Funding Total ‘Just Sneaks In’…Or Not

The delivery plan presents two funding scenarios through 2025 that show “a positive trend in public climate finance, that developed countries will make significant progress towards the US$100 billion goal in 2022 and provides confidence that it would be met in 2023.” A chart supplied by the OECD shows:

• A more optimistic scenario that delivers $521 billion between 2021 and 2025, with no distinction between grants and loans, that depends on $90.3 billion from private investors;

• A more modest calculation that lands at $497 billion over five years and still needs $78.1 billion in private finance to get there.

Which means that, if all goes well, the higher-end total “just sneaks in” with enough money to meet the $100-billion pledge for 2021-25 and make up the shortfall for 2020, one analyst said.

Oxfam Canada climate policy specialist Anya Knechtel said the higher figure is “a very optimistic projection” when “we haven’t seen countries delivering fully on their pledges. The problem with this plan is that it’s again based on unsubstantiated pledges from countries that we can hope will deliver fully, but the history to date hasn’t shown that that’s
necessarily the case.”

The plan also leans heavily on private sector financing that “hasn’t met expectations in the past,” she told The Mix. “The underlying problem with that is that we need to see more grants-based funding, particularly for climate change adaptation, and a plan based on a mobilization of private capital won’t address the growing need for adaptation financing.”

And that’s still the more optimistic news, Knechtel said. “In the less optimistic, more conservative, and possibly more likely scenario, you don’t necessarily see the whole $100-billion pledge being reached. So it’s really going to be a matter that time will tell,” based on a delivery plan that is “once again a projection of pledges, and not necessarily real commitments to deliver. That’s the challenge we’re seeing.”

Showing the Math

None of the official documents identify the countries that have come forward with new contributions to the $100-billion goal, or those that haven’t.

“We asked for more transparency,” said Eddy Pérez, international climate diplomacy manager at Climate Action Network-Canada and co-chair of CAN-International’s finance working group. “It’s a huge mistake to send a document that doesn’t give you answers to critical questions. If you have specific information that shows what each country is contributing to the $100 billion, that tells you with certainty what commitments they’re making to close the gap. With the projection we’re getting right now, we can’t assess that” until the funds have spent in 2023, then reported through the OECD two years later.

In addition to Canada and Germany, observers say Spain and Portugal have stepped up, and while President Joe Biden announced plans last month to double the United States’ contribution to US$11.4 billion, analysts said the total still fell far short of the country’s fair share contribution. Even that amount could face stiff opposition in a fractious U.S. Congress, Axios warned at the time.

Overall, “most developed countries have not yet mobilized finance in accordance with their fair share,” the Washington, DC-based World Resources Institute (WRI) said in a release yesterday. “The United States is responsible for the greatest shortfall, and Australia, Canada, Italy, Greece, Iceland, and Portugal, among others, must do more.”

That matters even more because “delivery on this climate finance goal will be key to unlocking more ambitious climate commitments from developing countries and ensuring progress in international climate negotiations,” wrote WRI analysts Joe Thwaites and Julie Bos in a technical paper released last month. “Developed countries’ ability to deliver $100 billion in climate finance annually will also set the tone for deliberations on a future collective climate finance goal, from a floor of $100 billion, which governments decided in Paris in 2015 would be agreed upon before 2025.”

In addition to scaling up their climate finance pledges, the Climate Finance Delivery Plan calls on the 23 countries to put more money into adaptation, make grant-based financing a priority for the poorest, most vulnerable countries, address barriers that impede developing countries’ access to climate finance, and report progress more transparently.

How to Get a Better Result

There’s still a possibility that more rich countries will step up with new climate finance commitments before or during COP 26, which begins this Sunday and continues through November 12—although Knechtel said the lack of a clear, simple list of who’s promised what will make it hard to distinguish new pledges from rehashed announcements.

The bigger challenge for negotiators will be to build trust between the rich nations that are holding back the funds and the poorer, acutely vulnerable countries that are seeing the worst impacts of the climate emergency, even though they did the least to drive up greenhouse gas concentrations in the atmosphere.

“Rebuilding trust is the right term,” Knechtel said. “Developing countries have every right to feel a lack of trust in the promises from the developed countries,” that much more because of the deeply flawed international distribution of COVID-19 vaccines. “There’s going to be a need for a very strong demonstration of a commitment to deliver, a strong demonstration at this COP that countries are willing to step up more.”

The 2009 target was set at a time when “we were living in a different climate reality,” she said, and since then, the same high-emitting countries that have lagged on greenhouse gas reductions have also shown a “lack of commitment and delivery on climate finance”.

By toxifying negotiations at a crucial moment in the COP process, Pérez said the 23 developed countries have only made things harder for themselves.

“The plan does not provide a sufficient response on the $100-billion pledge from the perspective of quantity, quality, or accountability,” he said. “So in Glasgow, the price of cooperation to reach an ambitious climate action package will increase, and developing countries are going to come in with a much more direct ask on the issues that weren’t addressed in the delivery plan,” particularly climate adaptation funding and grant-based financing.

All of this is happening, Pérez added, even though “there are certainly some developed countries that wanted a much more ambitious plan.” Germany’s Flasbarth and Canada’s Wilkinson can still push for those gains after the COP gets under way, “but only if developed countries hear the message that they need to step up.”

Earlier this month, a committee of the UN Framework Convention on Climate Change (UNFCCC) concluded that developing countries will need nearly $6 trillion by 2030 to cover 40% of their commitments under the Paris Agreement, Carbon Copy reports.

Knechtel said she hoped the delivery plan isn’t the final word on climate finance. “I hope it leaves countries with the space and the intent of going further, to go where they need to go and have a responsibility to go,” she said. “I think it’s true that countries play a game of announcing improved pledges and increased targets at these big events because it shines a spotlight on them. If that’s what it honestly takes to move it forward, so be it.”

But she stressed that “this is not charity. This is justice. This is what climate justice is about, recognizing and accepting responsibility for the emissions countries have put into the atmosphere and the impact that’s having. It needs to happen soon, and COP 26 should be a critical turning point for action.”

Can the UK Deliver?

Now that the German and Canadian ministers have issued their report, Pérez said it will be up to Sharma to finish the job.

“This delivery plan was supposed to help us close a chapter and move on,” he said. “Now, the UK COP 26 President needs to bring countries together to deliver on a Glasgow climate finance package that brings confidence to countries. In the first week of COP 26, ministers from developing and developed countries should try to move closer together and reassure each other on the need to deliver on climate finance, in line with the UK’s agenda to keep 1.5°C within reach. Because those go hand in hand.”

A key question is how much moral authority Sha
rma will be able to assert with his credibility shredded by the UK government’s decision to boost its climate finance contribution after cutting back on Overseas Development Assistance. None of the observers who weighed in on the Climate Finance Delivery Plan addressed that contradiction directly, but Oxfam Canada’s Knechtel stressed that “climate finance should be additional to ODA. That’s so critical, because we cannot finance climate action at the expense of other development needs.”

In Monday’s announcement, Sharma cast the delivery plan as “a step towards rebuilding trust,” but stressed that “we can and must do more to get finance flowing to developing nations. So in the lead up to COP 26, it’s vital we see further pledges from the donor community and action on key priorities such as access to finance and funding for adaptation.”