The United Nations Climate Summit held in Sharm El-Sheikh last year brought together countries from around the world to discuss and negotiate climate change. Despite some progress, the result left many feeling that more needs to be done. The European Union’s climate policy chief, Frans Timmermans, has proposed a compromise to break the deadlock: the EU would agree to the creation of a financing facility to pay for the loss and damage caused by climate change if all countries commit to further eliminating the use of fossil fuels.
The COP28 challenge: reducing oil and gas emissions in a difficult economic context
While the promise of funding for loss and damage was included in the final COP27 agreement, the stronger agreement to phase out fossil fuels was not. This defeat is still bitter for Timmermans, who believes that without stronger actions against emissions, financing, adaptation and loss and damage efforts will be insufficient to meet our needs.
Last year’s defeat on emissions reductions has now created one of the biggest challenges for COP28. The host country, the United Arab Emirates, is an oil-rich state whose economy depends on oil and gas exports. Proponents of emissions reductions will have to contend with the UAE’s appointment of COP28 President Sultan Al Jaber, CEO of Abu Dhabi National Oil Co. the world’s 12th largest oil and gas producer.
Timmermans has the science on his side, arguing that the cost of reducing emissions will be much less than the higher damages of a warming world. But the politics will be even more difficult as Al Jaber said diplomats should focus on reducing emissions from oil and gas rather than eliminating these fuels themselves, which is seen as opening the door to burning oil and gas while increasing carbon capture technologies.
The question is how the EU will achieve its goal of accelerating the pace of emissions reductions. In Sharm El-Sheikh last year, the bloc was part of a push by India to expand the language adopted at COP26 on reducing coal to gas and oil. Timmermans also wanted a commitment to peak energy sector emissions by 2025. The effort failed under pressure from Saudi Arabia, China and Russia, who convinced the Egyptian chair of the summit to scrap the idea.
Deployment of renewable energy: a huge cost for developing countries
This year, EU leaders clearly anticipate opposition to the language calling for rapid emissions reductions. European officials, from Commission President Ursula von der Leyen to German Foreign Minister Annalena Baerbock, have begun calling for a global target for renewable energy deployment. Such a measure would imply a decrease in pollution while wind and solar energy would reduce the share of fossil fuels in the energy mix.
The EU agreed last month to increase its own renewable energy to 42.5% of the energy mix by 2030. The International Energy Agency has estimated that the share of these technologies in total global energy production is only 5.2% in 2021. A summary of the Petersberg Climate Dialogue in Berlin mentioned the need to triple the capacity of renewable energy.
However, the cost of deploying renewable energy, especially in developing countries, is likely to be enormous. Rich countries have consistently failed to meet a funding target of $100 billion a year, which they hope to reach this year, but poorer countries have already said the figure should be in the trillions and without conditions. Closing this gap may require new and innovative financing instruments, such as global taxes on air travel and fuel for shipping. Or perhaps an overhaul of the multilateral development banks, an idea put forward by the Prime Minister of Barbados, Mia Mottley.
In the meantime, a separate global target for improving energy efficiency may be easier to achieve. The EU has already agreed to an energy reduction target, and there may be a push for a global target that focuses instead on lowering energy intensity, or the amount of energy needed to generate a unit of output. Energy efficiency is an area where there is much room for improvement, especially among the major industrialized countries. At last week’s climate event, Timmermans questioned why countries are not more cooperative in reducing their energy consumption.
In conclusion, the upcoming COP28 conference will be a crucial moment for the climate change negotiations. The EU is pushing for a global target for renewable energy deployment and wants to accelerate the pace of emissions reductions. However, the policy surrounding the phase-out of fossil fuels will be difficult to navigate, especially with the host country being a major oil and gas producer. Meanwhile, the cost of deploying renewable energy, particularly in developing countries, remains a significant challenge.
