SFE Perspective | COP27 was a wake up call. We must urgently develop transition plans to get back on track

In the closing words of her speech to the pre-COP26 youth summit, Ugandan climate activist, Vanessa Nakate, appealed to delegates; “No more empty promises, no more empty summits, no more empty conferences. It’s time to show us the money.” 

COP27 was supposed to be the moment we heard more of the detail, and the transition plans, that would enable the long-term targets agreed at COP26. This in turn could spark a shift from words to actions, with finance flowing at a greater pace. And yet, even with the hugely symbolic loss and damage agreement, there’s an overarching feeling of missed opportunity pervading the summit.

A big part of the challenge is of course the global economic context since COP26 in Glasgow. Russia’s invasion of Ukraine has precipitated a global energy crisis that has contributed to a surge in the cost of living and a battle to ensure energy security across the world.

But this is no excuse for inaction. In fact, today’s geopolitical and economic uncertainty could not do more to strengthen the case for acting faster to accelerate a just transition. Rather than despair at a perceived lack of progress, both industry and government must seize the opportunity to urgently advance the development of our transition plans.

The UK Transition Plan Taskforce has launched its consultation for businesses, which will help inform the wider framework, and continue to develop reporting and disclosure. This is a welcome development to build on the progress we are making on proactive regulation to ‘green’ the UK finance system and improve financial reporting. Encouraging firms to describe how they will achieve the targets they’ve communicated will go some way to providing investors with clarity on long-term opportunities.

This will help to unlock the vast sums of capital committed by members of the Glasgow Financial Alliance for Net Zero (GFANZ) committed to decarbonisation of the global economy.

It’s vital that this framework is designed to create the conditions to accelerate the transition and close the gap between long-term targets and the current trajectory. Alongside this, government must adopt a bolder approach, with actions that can be implemented at local, regional and national levels to fully harness the strengths of key industries like finance and energy.

Here are some practical examples of what this approach could look like.

It could include removing barriers to urban planning and encouraging the aggregation and scale of major investible projects. There are a range of levers, from mandating change at national level to empowering local authorities to generate investment in regional growth and transition plans. These are the types of actions that build capacity in the system and can enable asset owners and managers to invest their client’s money at scale and with confidence for the long-term.

It must capitalise on the skills, experience and infrastructure of our existing world class energy industry to accelerate the development of green energies, particularly offshore wind. Targeted investment is needed to increase the capacity of the energy supply chain, onshore energy storage and grid connectivity.

More complex but equally important are transport and infrastructure development, and home and buildings insulation. This is particularly essential during the current crisis where improvements to energy efficiency and insulation can help businesses and households on a very practical level to reduce their costs. Long-term capital investment needs to be directed at scale to support country-wide infrastructure, housing and building improvements.

The potential for Scotland to lead this national effort are huge and multifaceted. We have the tools at our disposal to become a global hub for green investment: natural resources, technology, infrastructure, skills and finance. Few countries in the world have as strong a combination of assets to lead the way in the green revolution. With the right approach, we can secure greater energy security for the entire country, support the delivery of the UK as a global net zero aligned financial centre and, in doing so, lead by example to build confidence across the world on how change can happen.

Above all, we can begin to credibly address the huge difficulties that the climate crisis creates for people and habitats across our planet, and build a better, more sustainable world.

Since COP26 we have witnessed a series of tragic and worrying developments contributing to an emerging geopolitical and economic context that is hugely uncertain. The danger is that we continue to rely on perfect agreement at conferences when an increasingly volatile and uncertain global context makes that consensus ever harder to achieve. Lets not fall victim to this possibility.