Welcome to “Feet to the Fire: Big Oil and the Climate Crisis,” a biweekly newsletter in which we share our latest reporting on how the fossil fuel industry is driving climate change and influencing climate policy in five of the nation’s most important oil- and gas-producing states. In addition, we shine a spotlight on the financing of the fossil fuel industry, holding banks and other financial institutions accountable for their role and providing you with updates on their activities.
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The annual United Nations Climate Change Conference (this year’s edition is known as COP28) kicked off this week amid rising concerns over the accelerating pace of climate change and the lack of adequate financing for clean-energy projects.
It already seemed off-key for the conference to be taking place in the United Arab Emirates, one of the globe’s biggest oil-producing countries. And that was before revelations emerged that the nation planned to use its role as host of the climate talks to strike oil and gas deals at meetings hosted by COP28 president Sultan al-Jaber, according to leaked documents obtained by the Centre for Climate Reporting and the BBC. They include proposed discussions with 15 countries, including one for China that describes how the UAE’s state oil company, Adnoc, is “willing to jointly evaluate international LNG [liquefied natural gas] opportunities” in Mozambique, Canada and Australia. Another suggests proposing to a Colombian minister that Adnoc “stands ready” to develop the country’s fossil fuel resources.
Conducting business deals during the conference has been described as a serious breach of the standards expected of the climate conference president — who is also head of the United Arab Emirates’ state oil company. In a statement, the COP28 team told the BBC, “The fact that Dr. Sultan al-Jaber holds a number of positions alongside his role as COP28 president-designate is public knowledge and something we have been transparent about from the outset.”
Overshadowing the conference are findings of the global stocktake, the first five-year review of the performance of the 195 signatories to the 2015 Paris Agreement in meeting the climate targets set at COP21. The outlook is grim, with the world heading for 2.4°-2.6°C of warming above pre-industrial levels by the end of this century under current policies, well above its 1.5°C goal, per a synthesis report published in September. In addition, the countries seem almost certain to miss their goal of reducing C02 emissions 43% by 2030 in order to be on track for net zero by 2050.
One of the major discussions at the conference will be on the state of clean energy finance, which still lags far behind fossil fuel finance. In attendance will be representatives of the Glasgow Financial Alliance for Net Zero (GFANZ), a coalition of leading financial institutions committed to accelerating the net-zero transition. The group is expected to make some big announcements regarding private finance for climate action and release a report that outlines strategies to finance the transition to net zero. One of GFANZ’s more contentious proposals is its introduction of Expected Emissions Reductions — rather than penalize polluters, it “rewards financial institutions based on the estimated volume of emissions avoided due to their portfolio companies’ transition plans,” reports Offshore Technology. The group claims this change will incentivize fossil fuel producers to get serious about transition plans, though the nonprofit Reclaim Finance argues that rewarding energy companies already flush with cash based on “subjective, counterfactual guesstimates” is probably counterproductive.
To get the trillions of dollars needed to tackle climate change, governments could increase taxes on polluting activities and cut fossil fuel subsidies, said an advisory panel to the COP28 talks in Dubai. Emerging and developing countries will need $2.4 trillion of investment a year between now and 2030 to transition to clean energy and adapt their economies, according to a report published at the conference by a group of independent economists. Among those taxes could be levies on shipping, which accounts for nearly 3% of the world’s carbon dioxide emissions, and aviation, which accounts for 2%-3% of emissions and is not covered by the Paris Agreement. “We see great potential, particularly when it comes to taxing bad things internationally and using that money to generate predictable resources,” said panel member Amar Bhattacharya of the Brookings Center for Sustainable Development.
Negotiations at the conference will also be dominated by debate between two conflicting views on the transition. On one side are those who argue that developing countries should be able to exploit their resources and that the impact of fossil fuel extraction can be minimized using carbon capture storage and other developing technologies. Opposing them are environmentalists who want to rapidly phase out all fossil fuel production and consumption. Key to that debate is financing to help the developing world transition to clean energy. At the last COP, a loss and damage fund was established with money from wealthier countries, but it’s in danger of becoming “an empty bank account,” a delegate told Energy Intelligence. Negotiations over replenishing that fund have been going on for over 12 months — and this week some countries made commitments to add at least $429 million to such a fund.
One bright spot has been the rise of Just Energy Transition Partnerships, a multilateral source of transition funding for developing countries. For example, Indonesia received $20 billion to help transition from coal and South Africa is using $8.5 billion from the U.S. and E.U. to shift from coal to renewables in the power sector. The agreement on the loss and damage fund was hailed as “historic” by Avi Persaud, an adviser to Mia Mottley, the prime minister of Barbados: “It shows recognition that loss and damage is not a distant risk but part of the lived reality of almost half the world’s populations and that money is needed to reconstruct and rehabilitate if we are not to let the climate crisis reverse decades of development in moments.”
