UN Biodiversity Conference (COP 15) – What is it?
COP 15 Biodiversity took place from December 7–19 in Montreal, Canada—it convened global governments to establish a formal set of goals for nature. Established at the 1992 Rio Earth Summit, the convention promotes sustainable development. It posits that biological diversity is more than plants, animals, and ecosystems—it’s about people and our need for food security, medicine, fresh air, water, shelter, etc.
The convention has seven primary themes that reflect various biomes on Earth and the associated services they provide—think wetlands, forests, agriculture, island, marine environments, mountains, etc.
The big problem is that global frameworks and collective action around nature and biodiversity are over five years behind climate action. There are no formal requirements in the frameworks underpinning the convention, only a broad acknowledgment that substantial investments are required to conserve biological diversity. Investments are the challenge and require a pricing structure for natural “services” provided by nature (water purification, pollination, natural minerals). We haven’t figured out the math, which is what new frameworks like the Taskforce on Nature-related Financial Disclosures (TNFD) seek to address.
The overall goal was “to agree on a new set of goals to guide global action through 2030 to halt and reverse nature loss” and draw parallels to the Paris Agreement. Just as investors realize the financial impact of climate-related risks and opportunities, they are similarly waking up to the tie between biodiversity and the economy.
Key takeaways from COP 15 Biodiversity
- 30 by 30 goal – protect 30% of land and 30% of coastal and marine areas, and restore 30% of land and waters by 2030
- Financing – $200 billion annually from public and private sources toward conservation initiatives, with a goal for wealthier countries to contribute $20 billion of this by 2025 and $30 billion by 2030
- Corporate reporting on biodiversity issues, starting with large companies and financial institutions (TNFD)
- Harmful subsidies – identify subsidies that deplete biodiversity by 2025, then phase out, eliminate, or reform them
- Pollution and pesticides – one of the weaker clauses with loose language around reducing the harmful impact of pesticides and pollution on nature
- Monitoring and reporting progress – similar to the nationally determined contributions of the climate COPs, nations will submit action plans, although there was no deadline to do this
European carbon import tariff
Who: European Union
What: The Carbon Border Adjustment Mechanism (CBAM) is a preliminary agreement to impose a carbon dioxide emissions tariff on imports of carbon-heavy goods like iron and steel, cement, chemical fertilizer, aluminum, and electricity (i.e., hard-to-abate sectors).
Why: “The aim of the levy is to prevent European industry from being undercut by cheaper goods made in countries with weaker environmental rules.” (Reuters) Applying this kind of import tariff supports a transition to decarbonization fro domestic industries. Put plainly, if decarbonizing cement makes that cement more expensive, applying an import tariff to conventional foreign cement levels the playing field.
How it will work: Companies importing goods to the EU will have to buy a certificate to cover the embodied CO2 emissions of the product. The unit cost of carbon will be the same as what already exists for domestic companies in the EU that emit over their regulated allotment. Bonus: The tax also applies to imported hydrogen, incentivizing the domestic industry
When: The law is expected to be approved by EU member states by the end of 2022 and the European Parliament in early 2023. Implementation would start in October 2023 with a transition period to give companies time to prepare. It is expected to go into full effect in 2026–2027.
Are there any exclusions? Yes, the law states that the tariff may be waived if the import comes from a country with similar environmental or climate change policies.