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Emission Impossible

Posted November 2, 2021 at 10:00 am

What’s going on?

COP26 – a United Nations climate meeting with more than 100 world leaders in attendance – kicked off in the UK this weekend.

What does this mean?

The 2015 Paris Agreement saw 196 countries agree to limit the global temperature rise to 1.5°C above pre-industrial levels, but most of their plans aren’t ambitious enough to achieve that aim. And even if they are, members still haven’t been meeting the targets quickly enough to halve emissions by 2030 and reach net-zero emissions by 2050. Cue COP26: a summit devoted to putting solid pledges in place and getting the whole process back on track. There could be any number of ways countries decide to do that, but expect a lot of talk about investment in renewable infrastructure, incentives to promote greener habits, and disincentives to limit the use of fossil fuels.

Why should I care?

For markets: The winners and losers of COP26.

It’ll come as no shock to hear that investors are expecting renewable energy companies and energy storage firms to benefit from countries’ COP26-inspired investments. In fact, the market for wind turbines, solar panels, batteries, and hydrogen energy technology could hit $27 trillion if the world gets on track for net-zero by 2050, according to the International Energy Agency. As for the potential losers, high emission sectors – airlines, shipping, chemical producers, and oil companies – are all set to be in the firing line from stricter regulations.

Zooming out: Aramco’s full of hot air.

Saudi Aramco isn’t going to take this sitting down: the world’s biggest oil company – which reported better-than-expected quarterly profit over the weekend – announced plans to achieve net-zero emissions by 2050 last week. But if you’re skeptical, you’re right to be: Aramco has previously laid out plans to up its daily oil production by more than 8% by 2027, even as its rivals have promised to cut theirs.

Originally posted on November 1, 2021 – Emission Impossible

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