In my last few blog posts on climate change and how it affects the poor, I had wondered how a COP summit being held in hydrocarbon heartland would go. On the one hand, it could be stymied by all the powerful interests in fossil fuels present in the region as many of their economies are almost entirely dependent on the industry. On the other, it could present a once-in-a-lifetime opportunity for Middle-East and Gulf countries to demonstrate that they intend to be on the right side of history, economics and science.
Throughout the recently concluded summit in Dubai, it appeared from the news that the climate talks were making good progress, belying whatever apprehensions there might have been. It was reported that COP28 was taking several steps forward from COP27 that was held in Egypt. Then, the focus was all on climate finance, and on multilateral banks as well as private capital helping fund the transition to clean energy.
From what little reporting one heard or read about COP28 in Dubai, there was initial progress made in agreeing to a Loss and Damage Fund that is meant to help the poor in developing countries who are most at risk and suffer huge losses on account of climate change, extreme weather systems and global warming. Details on any of this are sketchy, and more importantly, US $700 million is woefully inadequate when you consider just how much damage climate change wreaks on the poor.
Then, there is the climate finance on lowering carbon emissions, and the goal to achieve US$ 100 billion globally in funding. This seems such a paltry sum, when you consider that some experts believe the world needs at least US $ 3 trillion to be able to meet all its climate goals by 2030. Then again, it also shows how difficult it is to find agreement between countries on climate matters. Between the developed and advanced economies and the poorer, developing ones, to be more precise. When I last checked the COP28 website, it appeared that the world is still only at US $85 billion in terms of commitments. And we all know that there is many a slip between the cup and the lip, on pledges and commitments.
The other much-watched for aspect of COP28 was its attempt to try and get agreement on phasing out of fossil fuels, which has proven to be the biggest stumbling block to climate change action. Phasing out of fossil-fuels puts the onus on oil-rich countries and their mega-oil corporations to wean themselves off hydrocarbons. Unfortunately, when you have so many countries whose economies are totally dependent on oil and gas, whether through state-owned companies or the private sector, you can expect huge resistance to change. Besides, the post-Covid pandemic economic surge and the war in Ukraine increased the world’s dependence on fossil fuels, and OPEC is firmly back in power irrespective of what the US does. Governments in UK and Europe were subsidizing the cost of energy for households during the Ukraine war, when the world is expected to reduce and phase out oil and gas subsidies, and if anything, subsidise the adoption of clean energy. It appears from the reporting on COP28, that the phasing out of fossil fuels has been dropped from the summit draft declaration, and it is reported that OPEC countries were against it.
This is something that the UN has itself been championing and demanding of countries, so this last-minute cop out does seem a setback to the UNFCC Climate Change Panel. In my own country, India, while we have made huge strides in developing renewables as a source of energy, we continue to also increase our dependence on coal. We justify it on the grounds of our developing country status with vast numbers of poor people, but I think it’s also because the Indian government owns the biggest coal company in India and it’s a monopoly.
Climate change to my mind, therefore, is not merely about the science – which is clear on the man-made impacts on global warming – but about economics and geopolitics. Which is why we have a situation where the US has made huge progress on renewables, and most of its energy comes from renewables, yet it is also one of the world’s largest oil and gas producers and exporters today, second only to Saudi Arabia. Take Norway, for instance. It is reported to have the highest percentage of electric cars on the road, all of which are imported since the country doesn’t have an automobile industry. Yet, it is also an oil and gas dependent economy with one of the world’s wealthiest sovereign wealth funds financed by its oil and gas industry. Therein lies the conflict and the moral and economic dilemma.
It is clear to me that if the world is to make any progress on clean energy, it has to be through reduction of fossil fuels. I don’t think we can ever fully replace it, but the ideal goal for every country would be to reduce its share in the overall energy mix, and to reduce subsidies on it. One of the big successes of the 2015 Paris Climate Accord was the NDCs, which allowed each country to define its own path to reducing carbon emissions and to transition to clean energy. While that might mean that some countries set and achieve their targets faster than others, it puts pressure on developing countries to accelerate their transition to clean energy. That’s a good thing, provided the developed world can also help finance the transition in the developing world, something that has been the biggest stumbling block in climate change discussions for decades.
I am not sure if countries were asked to set targets for phasing out of fossil fuels at the COP28 Summit; perhaps this might have been more helpful than merely insisting on phasing them out in principle. Countries could have set targets for how much they would reduce fossil fuels by, over 10-year periods, and also how much they would reduce fossil-fuel subsidies by.
There is another reason why this might have been a better approach and one that might have elicited a more positive response. These days there is more talk of adaptation, than mitigation, in climate change discussions. This suggests to me that the world has resigned itself to the fact that climate change cannot be mitigated, we can only adapt to it. Setting targets for phasing out of fossil fuels is both climate change mitigation and adaptation and I think more countries – including those dependent on oil and gas production and exports – might have been favourably disposed to fossil fuel reduction if they were made to see it in this light.
On climate finance, there is not just a massive need for funding clean technology innovation and adoption, there is a need for funding the transfer of technology to developing countries on attractive terms.
And finally, clean energy transition needs to work through a deterrent for fossil fuels. Which brings us back to pricing carbon. More countries around the world need to consider some form of carbon pricing; I think a carbon tax would be more effective than emissions trading, but here too political will and courage are lacking.
As it turns out, COP28 which began on an optimistic note before running into a barrier on the phasing out of fossil fuels, saw some last-minute haranguing as countries pushed harder for a commitment on replacing them and the conference was extended into overtime. The best all 200 countries could come up with is a compromise text that talks of transitioning away from fossil fuels.
To COP29 now which, I just discovered, is being held in Azerbaijan. Another oil and gas economy that is reported to have the backing of East European countries. Hardly surprising, since Azerbaijan must now be an important source of natural gas for Europe as it tries to wean itself off Russian gas.
In the meantime, we have ideas such as EU’s CBAM to consider, and perhaps modify and adopt across G20 countries at least, as I have been writing on my blog. And we have the reform of MDBs to consider and implement, including ways in which they can partner with private capital to invest more in clean energy transition.
Plenty to keep the world occupied, before the next COP.
The animated owl gif that forms the featured image and title of the Owleye column is by animatedimages.org and I am thankful to them.
Peripatetic Perch 