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[HSC] Economist: 15th November

This week's economics news summarised: COP26 Climate Conference!

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COP26 has now concluded! The two-week long global discussions and outcomes (as well as criticisms) reinforces the increasing presence of globalisation and interconnectedness of economies within the global economy. Especially in relation to economic issues such as environmental sustainability which depend on collaborative action for success.

Pledges made towards environmental sustainability during COP26

During the past two weeks, representatives from 197 countries across the world met at Glasgow for the 26th Conference of Parties (COP) to discuss the issue of climate change, and more specifically, devise plans and commitments to avoid global warming from increasing above 1.5 degrees celsius above pre-industrial levels. COP is the main decision making body for the United Nations Framework Convention on Climate Change, ultimately acting as one of the many arms of the influential international organisation.

So how does it relate to the HSC Economics syllabus?

The Global Economy (Topic 1):
International Economic Integration

  • The Global Economy
  • Globalisation 

Trade, financial flows and foreign investment

  • role of international organisations – WTO, IMF, World Bank, United Nations, OECD

Globalisation and economic development

  • effects of globalisation
  • environmental sustainability

Economic Issues (Topic 3):

Economic issues in the Australian economy

  • Environmental sustainability

–  preservation of natural environments

–  pollution, climate change

–  depletion of renewable and non-renewable resources

COP26 was very much focused on acting as a successor to the Paris Conference in 2015, due to how it aimed to conclude the “Paris Rulebook”. The Paris Conference was highly effective in encouraging discussions around climate change across the globe, however, was meant to only act as a foundation for further action, as in 2015 committed countries only had to set targets which “reflect its highest possible ambition”, with more ambitious targets being set every five years. However, following the onset of the COVID-19 pandemic, the 2020 meeting was cancelled, and thus the new targets were meant to be set during this year’s COP. Thus, COP26 very much acted as an indicator as to how effective the Paris Conference was, and the role of globalisation in responding to this issue.

However, this particular COP was also viewed as quite significant due to the forecasts made in August this year, the UN’s Intergovernmental Panel on Climate Change (IPCC) that global temperatures would increase by 1.5 degrees celsius above pre-industrial levels around 2030, and furthermore, the current trajectory of emissions would lead to an an overall increase by 2.7 degrees celsius by the end of the century, having already increased by 1.1 degrees celsius currently. It is for this reason, that COP26 wanted countries to particularly focus on 2030 emissions targets as opposed to the 2050 targets which were prevalent during the Paris Conference, as the IPCC found that if appropriate action was taken, global warming would peak at 1.6 degrees celsius.

It should be noted that the effectiveness of COP26 in addressing climate change and environmental sustainability is very much still to be seen.

Notable outcomes include:

  1. More than 100 countries agreeing to slash methane emissions and signing a pact to end deforestation
  2. 140 countries agreeing to strengthen their 2030 targets (due to aforementioned nature of COP)
  3. 190 countries agreeing to phase out coal and ending public funding

Britain’s COP26 president Alok Sharma, concluded the conference noting that “I think today, we can say with credibility that we have kept 1.5 degrees within reach”. However, he also mentioned that this was very much dependent on countries maintaining their commitment and drafting further ambitious policies during following COP meetings, with the next one taking place in Egypt next year. This aspect was particularly criticised by Climate groups with figures such as Greenpeace Australia Pacific CEO David Ritter emphasising that the final agreement produced at COP26 was “not the deal the world needed, but it is what has been delivered”.His comments follow the last minute change in the wording of the agreement from the ‘phase out’ of coal to ‘phase down’, due to resistance from countries such as India and China, which limited the effectiveness of the agreement to an extent, as the previous focus on reducing fossil fuel emissions had been considered a “bright spot in this package”. Furthermore the commitments made in Glasgow still do not avoid global temperatures from exceeding above 2 degrees celsius, and Alok Sharma’s previous comments are founded on the ‘ratchet mechanism’ of the COP meetings, where targets and commitments made are expected to increase with each following meeting.

However, Ritter also believes that due to the agreement, “momentum is in the right direction, with successes such as the surprise joint statement made between the world’s two biggest carbon-polluting countries, the United States and China. The two geopolitical powers vowed to work together to achieve “enhanced climate action in the 2020s”, through engaging in activities such as cutting methane emissions, phasing out coal consumption and protecting forests. This will contribute significantly towards environmental sustainability, as the two countries together account for nearly 40% of the world’s carbon pollution. However, as mentioned before the overall effectiveness of this COP will be determined by COP meetings in following years, where countries will be expected to ‘revisit and strengthen their targets’ on an annual basis through the ratchet mechanism.

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