Taking stock of global greenhouse gas (GHG) emissions was a theme at the latest annual Conference of the Parties* in Dubai (COP 28). An uncomfortable question that was not asked is whether a stocktake of the COP process itself is now overdue.

More specifically, is it time to consider other institutional ways to address the climate threat?

The earlier Paris Agreement (COP 21) commits the international community “to achieve a balance between anthropogenic emissions by sources, and removals by sinks, of GHGs in the second half of this century” (referred to as net zero). This is designed to keep average global temperature increases to “well below 20C above pre-industrial levels, with the ambition to limit the increase to 1.50C.”

Yet despite the cool ambition of Paris, the climate’s fever worsens year by year.

Atmospheric CO2 concentrations, a key GHG, are now nearly 420ppm**, roughly 50% higher than in 1850. Long-term average global temperature now relative to then is nearly 1.20C higher. Several forecasts suggest the 1.50C (average) ceiling may be breached in the 2030s, or earlier in terms of individual years (this decade). According to the United Nations, “emissions are not in line with modelled global mitigation pathways consistent with the temperature goal of the Paris Agreement.”

So, judging by results to date, it is a time to envisage reform.

Three axes for progress spring to mind. First, a re-focussing of the COP process. Second, a consideration of other ‘institutional’ possibilities, of which the most obvious are carbon markets. Third, more realpolitik to address the distributional challenges associated with climate change.

On the first issue, climate policy does not require a cohort of 80,000 people travelling annually to compete in terms of who can make the most memorable sound bites. Let’s face it – COP communiques often boil down to phrases that can mean whatever we want them to mean. They are part of a narrative driven by the lowest common denominator, not surprising given COP’s unanimity principle.

A smaller, more focussed institutional ‘form’ would have much to recommend it. It might build on principles set out in a paper co-authored by the economist George Yarrow and myself: To see or not to see: that is the question which develops reform ideas for UK economic governance based on neuro-science and the work of Dr. Iain McGilchrist.***

In essence, our evolved hemispheric brain structure, with each ‘half’ attending to the world in a different way, offers us advantages as humans in terms of the division of labour necessary to survive and thrive. We can learn from this brain topology for institutional governance, with resonances back to insights of Adam Smith.

This is not the place to discuss these ideas in detail, but some initial suggestions for COP might be as follows. The technical (left-hemisphere brain) routines of climate science, currently vested in the Intergovernmental Panel on Climate Change (IPCC), could continue as at present, done virtually, or in small expert sessions.

The contextual oversight (right-hemisphere brain) could remain as a narrowed-down COP, setting the broad global climate agenda (such as net zero) and periodically appraising a range of opinions in the climate space, including the stocktake of actual carbon emissions This could meet every five years, in effect acting as a second opinion on direct regional efforts (below).

Between the two, much of the practical regulatory and implementation work could arguably be done better at the level of ‘coalitions of the willing’ or ‘country clubs’ operating within existing institutional frameworks and broadly shared values (for example the G7 in our own case in the UK).

On the second issue (other institutional possibilities), we could give greater effect to the ‘polluter pays’ principle by encouraging the development of carbon markets. It is true that their evolution has been chequered to date. Then again, history is full of examples where market activity has adapted over time to allow growth in efficient trading practices, solving governance problems along the way.

So, we should not let perfection be the enemy of the good. To quote the World Bank “carbon markets could be a game changer in advancing climate action” and “a win-win for people and the planet.”

Moreover, carbon pricing revenues can form a part of climate financing for the developing world, bringing us directly to the third issue of international ‘fairness’ in the energy transition. A basic point to make is that to see distribution issues solely through a climate lens is almost definitely a mistake. At the very least, they involve a set of sustainable development goals (SDGs). However, agreement on a distribution of globally tradeable emissions rights could be contributor to achieving equity.

To sum up: first, and most fundamentally, rewire the institutional structure of the COP. Second, encourage the development of carbon markets. Third, promote piecemeal global integration of these markets as part of the broader challenge of achieving a just energy transition.


*Annual meetings (COPs) began in 1995 to act as mileposts under the United Nations Framework Convention on Climate Change (UNFCCC) signed a year earlier. The Paris Agreement (COP 21) was a further stage post in the process, with the articulation of net zero and nationally-determined contribution plans (NDCs).

** ppm stands for parts per million, a conventional volume metric used in atmospheric science.

*** Iain McGilchrist: The Matter with Things: Our Brains, Our Delusions, and the Unmaking of the World.  Perspectiva (2021)

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Disclaimer: The blog does not aim to give investment advice, but is designed to afford relevant longer-term context to investors, encouraging a broad perspective where uncertainty is high and a spirit of learning is important. The views expressed are those of the author, not those of Investec.