bneGREEN: No fairness but some hope at COP27

bneGREEN: No fairness but some hope at COP27
/ bne IntelliNews
By Richard Lockhart in Edinburgh November 5, 2022

COP26 has not delivered so far on the promises made in Glasgow in November 2021, with companies failing to move towards zero emissions pledges and the world as a whole not meeting the targets and aspirations laid down.

As global leaders again gather for the annual UN climate conference, now known as COP27, in Egypt, relations between rich and poor governments are set to undergo major stress tests.

The global north is now exposed to accusations of hypocrisy and double standards by governments of emerging economies that have watched Europe buy up gas stocks in 2022 to replace Russian supplies, causing market volatility and a fuel price crisis that affects everyone.

The EU spent €57bn on Russian fossil fuels in the first 100 days of the war in Ukraine, even as European governments made policy announcements to accelerate transitions away from oil and gas towards renewables.


Europe’s initiative

Despite the binge on fossil fuels, European governments are taking an aggressive line at COP27 and are seeking to maintain the global leadership they exerted at COP26.

However, over the past year the fine words of the COP26 declarations have in the main not been turned into action.

Alok Sharma, the British chair of COP26, warned in Glasgow that action would be needed throughout 2022 to meet the goals of the Glasgow Climate Pact, especially the 1.5°C target.

In January after COP26, he warned: “There is no doubt that the commitments we secured at COP26 were historic. Yet at the moment they are just words on a page. And unless we honour the promises made, to turn the commitments in the Glasgow Climate Pact into action, they will wither on the vine. We will have mitigated no risks. Seized no opportunities. We will have fractured the trust built between nations. And 1.5°C will slip from our grasp."

However, Europe’s performance on the gas markets this year has not given cause for encouragement. Governments and traders have aggressively bought LNG cargoes. They have even circumvented sanctions on Russia by buying cargoes from China that in fact originated in Russia, while also using complex swap deals to gain access to gas that has a Russian provenance.

Despite the buying, New IEA analysis identifies a challenging 30bn cubic metre supply-demand gap next summer at a key time for refilling EU storage if Russia halts all pipeline deliveries and China’s LNG imports rebound.


Missed targets

At stake at Sharm el-Sheikh is the 1.5°C target, laid down in 2015 in Paris, which requires far more commitment, and more importantly action, from governments and corporation.

Even just after COP26, Our World in Data, which uses data from Oxford University, warned that the Paris 2015 target of keeping temperature rises to 1.5°C would be missed, while temperatures would rise to between 2.7°C and 3.1°C by 2100 instead, unless emissions are cut by 15% a year from now on.

However, the UN Environment Programme warned at the end of October that there was “no credible pathway to 1.5C in place.”

The UNEP’s Emissions Gap Report said that the world was instead now heading for a 2.8°C rise in global warming by 2100 unless governments urgently improved their emissions targets. Urgent action is needed, otherwise the window of opportunity to take the required climate action will slam shut.

United Nations Secretary-General António Guterres warned that nothing less than a “rapid transformation of societies” was needed to limit the impact of climate change.

Meanwhile, in the month leading up to COP27, there have been a number of warnings that the world is now far from achieving 1.5 degrees.

UN Climate Change said in its 2022 NDC synthesis report that although countries were managing to bend the curve of global greenhouse gas (GHG) emissions downwards, it was not enough to reach 1.5°C. It forecast 2.5°C of global warming by 2100 if the current combined climate pledges of 193 governments were followed through.

However, the report’s only bonus was that emissions would level out before 2025.

In the longer term, UN Climate Change said in a separate report that with long-term, low-emission development strategies that GHG could be roughly 68% lower in 2050 than in 2019, if all the long-term strategies are fully implemented on time.

Meanwhile, in January, the International Renewable Energy Agency (IRENA) found in its own assessment of the NDCs that the pledges would limit global warming by 1.8°C by 2050 and 2.1°C by 2100. This means that current NDS are nowhere near those required to meet the 1.5°C target for 2100, or the 2050 net-zero target.

Finally, the International Energy Agency (IEA) said in its 2022 World Energy Outlook, published ahead of COP27, that carbon emissions would peak in 2025, dubbing the date a “historic turning point.”

While all these pre-COP27 forecasts spell doom and gloom, they do offer some forms of hope for progress.

The Russian invasion of Ukraine is the single event with the biggest impact on global energy markets, and by extension carbon emissions and climate change.

The IEA said the invasion would be a turning point for the global energy market. Renewable energy will grow and the global demand for hydrocarbons will now plateau, the IEA predicts.

Russia's share in the global oil and gas market will fall by 50% by 2030, while Capital Economics forecasts Russia oil production will drop 10%, or by 1mn barrels per day (bpd), in 2023 alone.



Meanwhile, the EU’s emissions of CO2 from energy use fell by 5% between August and October. compared to the same period in 2021, new analysis from the Centre for Research on Energy and Clean Air (CREA) showed.

Carbon Tracker said that demand for fossil fuels in Europe was decreasing owing to high prices and strong wind and solar output, contrary to fears of a resurgence due to the energy crisis, said Lauri Myllyvirta, from the CREA.

This fall in emissions follows a 16-month surge that began in the wake of the coronavirus (COVID) pandemic.

Myllyvirta told bne Intellinews in July that the problem holding back emissions cuts was that deeper policy developments were needed to drive forward to energy transition and to meet the EU’s targets.

“The bottlenecks for meeting the target that the EU has, in other words the thing that we need to be on the lookout for, include permitting and supply chain issues, which are quite separate from the Ukraine war, these are the key issues in order for the clean energy targets to become attainable.”


Global South

Compared to Europe’s gas crisis, it is the poorer countries of Africa and Asia that are feeling the deepest impacts of climate change. They are reporting the most loss and damage caused by climate change, as people’s lives, especially those of the world’s most vulnerable, are already being harmed irrevocably.

Extreme weather events in Africa have killed at least 4,000 people and affected a further 19mn since the start of 2022, Carbon Brief warned.

Africa produces only 4% of global emissions; however, it has to face the brunt of climate change head on, suffering the most loss and damage.

As such, COP27 is taking place in Africa, and the devastating, real-time impact of climate change on people’s lives, and the attempts to deal with loss and damage through such UN-led programmes as adaptation, mean that the global South will have strong moral as well as economic and scientific arguments with which to extract a fairer deal from the wealthier West.

Put simply, the North must provide more climate finance that they have provided so far. At COP26, the figure of $100bn per year had still not been met, and this issue is likely to dominate at the conference.


Major players

At COP27 in Egypt, European players are expected to make some of the running. The EU said on November 4 that COP27 should find ways to meet the targets of COP26, meaning limiting global warming to 1.5°C and respecting the Paris Agreement.

The EU said it would focus on concrete actions, including through the adoption of a Mitigation Work Programme to scale up mitigation ambition and implementation in this critical decade.  Brussels also aims to achieve clear progress towards the Global Goal on Adaptation (GGA).

This will depend on nature-based solutions, meaning protecting and strengthening the natural environment to enable adaptation to climate change while preserving biodiversity.

Egypt’s close neighbour across the Gulf of Aqaba, Saudi Arabia, is also pursuing a sustainability agenda at the conference, as is the United Arab Emirates (UAE). Both are major investors in green projects at home and worldwide thorough the Saudi PIF and UAE’s Masdar, among others.

However, as both countries said at the ADIPEC oil conference in October, this green thrust will be parallel with continued oil production expansion.

Both insisted that oil remains a cornerstone of energy supply, but said they were working to lower emissions and increase production from renewable or less-polluting sources.

“We and the UAE are increasing our production capacity. We and the UAE are increasing our refining,” Saudi Energy Minister Prince Abdulaziz bin Salman told ADIPEC.

“We and the UAE are going to be the exemplary producer: hydrocarbon producer, but also achieve all the sustainability goals,” he added.

At COP26, Russian and China were criticised by US President Joe Biden for “not turning up,” and they did not take much initiative.

India famously watered down the conference’s coal policy in a last-minute intervention, replacing the target of the “phase out” of coal with the “phase down” of coal, a semantic distinction that hides the major role that coal still place in the economies of India and China.


What lies ahead

The Egyptian presidency has said it will prioritise reaching a deal on loss and damage finance in a bid to reduce the impact of climate change on poorer countries. Cairo has appointed Germany’s Jennifer Morgan and Chile’s Maisa Rojas to spearhead these talks, green think-tank E3G noted.

In terms of climate finance for the global South, the target of $100bn per year is still not yet met, and the West will be under pressure not only to meet this goal, but also to push through reforms to the global financial architecture to meet the needs of green investment.

E3G also expressed concerns that given the energy crisis this year, some leaders might press for maintaining fossil fuels to provide a pathway out of the energy crisis, instead of doubling down on climate action.

Other prospects include US climate envoy John Kerry’s proposal to accelerate climate finance by allowing private companies to offset their emissions by investing in the transition from coal to clean energy in developing countries. This would form part of the Just Energy Transition Partnerships (JETPs).

However, given the experience of the major JETP to emerge from COP26, $8.6bn for South Africa’s transition from coal, this could be difficult. Talks between South Africa and the West have been difficult, and Pretoria claims that it doesn’t know when any money will arrive.

Add in some indecision from the UK, the outgoing COP26 president, and nothing is certain ahead of the meeting in Sharm el-Sheikh. UK Prime Minister Rishi Sunak has changed his mind at the last minute and will go, while King Charles will not.

The outlook is gloomy for COP27, with the potential for a repeat of India’s last-minute damper on proceedings in Glasgow.