Blog post

Is the opportunity wasted?

This blog post begins with a pretty important caveat. BusinessGreen’s Michael Holder and Cecilia Keating are on the ground in Sharm el-Sheikh this week reporting on crucial developments in the UN talks, but I am not physically at this year’s COP. As such, the following observations are largely formed from afar. The impressions of those in the room where it is happening may well be very different.

That said, judging by some of the noise coming out of COP27 this week, I’m not the only one who’s been decidedly disappointed so far. It feels like an important opportunity has been squandered.

This frustration does not come from the failure to secure a historic new climate agreement or deliver the billions of dollars in climate finance that are due. Engineering a major breakthrough at COP27 has always seemed like a nearly impossible grand diplomatic ask, given the backdrop of intense geopolitical tensions and worsening economic headwinds. As US climate envoy John Kerry made clear last week, proposals for anything that qualifies as climate offsetting will never fly. As unfair and myopic as their intransigence may be, industrialized countries are not going to disburse billions of dollars in new climate finance, few governments with fossil fuel reserves will voluntarily keep them in the ground at a time when oil and gas prices are skyrocketing, and whether it’s an impending invasion or an impending recession, everyone is dealing with serious short-term distractions.

And yet, one gets the impression that governments are deliberately failing to exploit some of the relatively easy wins that could have enabled meaningful progress at this Summit.

Take last week’s report from Climate Action Tracker detailing how this century’s warming projections based on the government’s National Climate Action Plans haven’t advanced even a fraction of a degree in the past 12 month. We are still on track for a disastrous 2.4°C warming based on the targets that governments have put in place for 2030, and that assumes they are met. Based on current actions, we are on track for more than 2.7°C of warming. Catastrophic carbon sink tipping points are looming.

This analysis implies that virtually no progress has been made over the past year, but as a separate study by the Energy and Climate Intelligence Unit made clear yesterday, that is not entirely true.

Thanks to a combination of still plummeting cleantech costs in China and India, the passage of President Biden’s climate bill, and the EU’s significant boost to its clean energy plans in response to Russia’s invasion of Ukraine, the world’s four most strategically important markets are arguably ahead of schedule with decarbonization efforts set out in the Nationally Determined Contributions (NDCs) they submitted to the UN. To take just two examples, China is on track to install 25% more renewable energy and double its electric car sales this year, while the deployment of wind and solar in the United States suggests that the country could produce 85% of electricity from renewable energies by the end. of the decade. These recent reports from the IEA predicting that global emissions are very close to peak seem more plausible on a month-to-month basis.

As former UN envoy Rachel Kyte observed: “Between Putin’s energy supply shock and the irresistible case of renewables, the major powers could outrun their NDCs. With every crisis comes an opportunity. It is the one that we cannot fail to grasp.

And yet, by not even considering strengthening their NDCs, the economic superpowers risk doing just that. Meanwhile, smaller countries are making the exact same mistake: failing to react to rapid changes in global energy markets to update their national climate action plans and embrace the obvious, cost-effective deployments of clean technologies that are increasingly available.

Underestimating the real world and potential progress towards net zero acts as a drag on broader climate negotiations, robbing them of the momentum that a greater sense of progress would bring. If the summit had started with governments recalibrating NDCs to properly reflect policy and technological changes seen over the past year and taking greater advantage of the various industry-led initiatives to address emissions from high-intensity sectors carbon and accelerate the clean energy revolution, then he would now be in a stronger position to fend off cynical attempts to dilute the totemic 1.5°C warming target.

Making progress on climate finance is obviously still a bigger challenge, but again it seems that governments are failing to maximize the progress that could be made.

It may sound naive, but it’s hard to believe that a form of words can’t be found that offers increasing levels of funding to address the very real climate-related loss and damage facing the world’s most vulnerable countries. without the industrialized nations accepting responsibility for these losses. If divorce lawyers can do it, the best diplomats in the world really should be able to find a way, especially when it’s in everyone’s interest to get a deal done. As BusinessGreen Editor-in-Chief Michael Holder pointed out this morning, the Paris Agreement already states “that Article 8 of the Agreement does not imply or establish any liability or compensation”.

Likewise, if a major increase in climate finance through treasury bills is a failure, why isn’t there more momentum behind the kind of eminently practical climate finance reforms proposed by the likes of Mia Mottley? from Barbados? Relatively simple reforms of the IMF and multilateral development banks could have an outsized impact on global climate finance flows, but few governments are taking up the cause with enough vigor.

More drastically, it remains bizarre that treasurers are looking for ever more labyrinthine ways to mobilize climate finance flows without hitting domestic taxpayers while the fossil fuel industry’s record profits just sit there. Windfall profits have now reached such a level that even some oil and gas executives publicly accept that windfall taxes are unavoidable and justified. If every government taxed fossil fuel companies at the rate imposed by Norway, a country renowned for its economic success and stability, a significant portion of the climate finance gap could disappear overnight. The polluter pays maxim has never been so relevant.

It is a useless cliché to state that all that is needed is political will. But all it takes is political will. COP27 provides disturbing echoes of climate policy at national level, including the UK: Obvious, cost-effective and popular policies remain on the shelf as governments gently pedal climate action in which they insist on s engage, and all because of a combination of political inertia and fear of upsetting vested interests.

Decarbonizing the global economy in three decades is an epic challenge defined by technological barriers, stranded assets and many thorny issues. But it becomes even more difficult if governments don’t take the easy wins ahead of them, many of which are in full view at COP27 this week. They could start by telling people about the good things they’re already doing and doing the good things they’ve already announced.

A version of this article first appeared as part of BusinessGreen’s overnight news email, which is available to all BusinessGreen members.

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