COP26 stokes optimism, but action must follow

It has become clear at the 26th United Nations Climate Change Conference of the Parties, or COP 26, in Glasgow, Scotland, that the climate challenge is perceived as global.

The tone has changed, as noted by Youssef Nassef, director of the UN Adaptation Division of the UN Framework Convention on Climate Change, who said that in the history of the conferences, "there has never been such a large number of voluntary initiatives".

The question is whether this consensus is also reflected in global determination to substantially reform the economic system. That is a different order of challenge that is nothing less than civilizational. As Italian Prime Minister Mario Draghi said right before COP 26, "We are changing the economic system."

The focus rests on how to bring to the mainstream the innovation to accelerate the transition to a post-fossil fuel economy. The first step, however, is to build a new system of rules for the ecological industrial system. New policies must be designed to ensure the scalability of solutions and the transformation of markets. A whole-economy carbon (and resource) price is what we need. This will transform our societies and the way we all live.

However, in the history of climate negotiations, while environment ministers have made commitments to reduce carbon emissions, their colleagues in energy, agriculture and finance posts have promoted policies to support the production and consumption of fossil fuels. This contradiction has marked the entire long journey of the COPs.

The global environmental challenge of climate change requires policies both to reduce the carbon intensity of the economy as well as to enhance natural carbon sinks. Energy, industry, transportation, agriculture, and taxation and incentives are the main sectoral policies to be involved in addressing climate change.

To address environmental challenges, environmental management needs to shift toward social and industrial systems. We need to use carbon less intensively while bolstering the resilience of the environment by enhancing carbon sinks-things such as plants, soil and oceans that absorb more carbon from the atmosphere than they release.

The rules of the new economy are simple: To bring climate regulation to the mainstream, we need to internalize the external environmental damage. Once these externalities are integrated into the market system, energy producers and national economies will have a level playing field. This industrial, economic and social revolution needs to happen quickly and globally.

There is a sense of urgency. China's climate envoy, Xie Zhenhua, believes that a broad deal on carbon markets is becoming possible. German State Secretary for the Environment Jochen Flasbarth said, "The new normal of COP 26 is speeding things up".

Eventually, how we build forward better will make or break the success of the ecological transition. Even more than before, truly ecological standards are needed.

What we need is an orderly transition. If rich states are unwilling to assume a fair share of the cost, in their own interest, we will all fail. The main task lies with private and green finance. New mechanisms are needed to address this demand.

In addition, technical negotiations that revolve around clauses of the Paris climate agreement are moving on in Glasgow, with China playing an active role. As European Commission Vice-President Frans Timmermans said, the Chinese "are ambitious on the transition to renewables".

Beijing has put a concrete program on the table, and it has already been converted into law. The European Union is banking on collaboration.

After the injection of optimism in Glasgow, it's time to move from words to deeds. The clock is ticking.

The author is a partner and board member of management advisory company Brainscapital and serves as a European Commission expert for the European Innovation Council. The views do not necessarily reflect those of China Daily.