20 December, Oshani Perera, Carin Smaller and Francine Picard

The downside of the CoP 28 decision on transitioning away from fossil fuels

On 14 December 2023, the global climate talks at CoP 28 concluded with governments agreeing to transition away from fossil fuels.  Many stakeholders have hailed this decision as a historic moment, that such a transition marks the beginning of the end of the hydrocarbon era.   

We, at the Shamba Centre, are not so sure. 

We do we agree with our fellow climate compatriots that, indeed, this is the first time that the text of the United Nations Framework Convention of Climate Change contains provisions on transitioning away from fossil fuels. Where we do not agree, however, is how it will play out in practice.  To transitioning away without prescribed targets and timelines to guide and track progress is of little value. Governments, industries, and markets do not respond to broad statements.  Rather, they seek the predictability and certainty that are provided by timelines and targets that can, in turn, translate into increased ambition and investment on net zero by 2050.  The CoP 28 decisions provides no such certainty and, as such, we are back again at square one.   

To illustrate this point, let us revisit the text of the key articles, 25, 27, and 28 of the United Nations Framework Convention on Climate Change: Draft Decision: Outcome of the first global stocktake (Figure 1). 

• Article 25 acknowledges that four-fifths of the total carbon budget have already been depleted. This means that we have little space to increase investment in coal, oil and gas. 

• Article 27 recognizes that emissions must be lowered by 43% by 2030 to remain on a 1.5°C trajectory. This reiterates the reality that we cannot continue to investment in coal, oil and gas as emissions cannot decrease if the use of fossil fuels increase.  

• Article 28 contains points calling for transitioning away from fossil fuels, improving energy efficiency, and scaling renewables in a nationally determined manner.  This article stops short of providing target and timelines for this transition.   

To put these articles further into perspective, let us now consider some of the other fundamentals on the transitions towards net zero by 2050.  

• Global energy demands are rising, but at a slower pace. According to the International Energy Agency (IEA) in its World Energy Outlook 2023, global energy demand is growing at an average annual rate of 0.7% (half the rate of energy demand growth of the last decade) and will continue to increase through to 2050.  But the World Energy Outlook also notes that the rate of increase for global energy demand may flatten as countries electrify and make energy efficiency gains. In its Net Zero Emissions by 2050 Scenario, the IEA suggests that primary energy could decline by as much as 1.2% per year to 2030.  This indicates that the energy transition is both technologically feasible and cost effective.  It is hence timely to accelerate its pace through bold policies and targeted concessional finance. 

• The World Energy Outlook 2023 also shows that investment in clean energy is on the rise (see Figure 2).  But the World Energy Outlook 2023 also states that increasing spending on clean energy alone will not secure a net-zero emissions pathway, that it has to be accompanied by the phasing out of fossil fuels: The development of a clean energy system and its effect on emissions can be reinforced by policies that ease the exit of inefficient, polluting assets, such as ageing coal plants, or that restrict the entry of new ones into the system. But the urgent challenge is to increase the pace of new clean energy projects, especially in many emerging and developing economies outside China, where investment in energy transitions needs to rise by more than five times by 2030 to reach the levels required in the [Net-Zero Emissions by 2050] Scenario.

  This reiterates the need for not just increasing investment in alternative energy as indicated in the CoP 28 decision, but accompanying it with timely and targeted phase out of coal, gas and oil. 

• Greenhouse gas emissions are not declining. According to the UNEP Emissions Gap Report, greenhouse gas emissions grew by 1.2% in 2022 to a new record of 57.4 gigatons of CO2 equivalent (GtCO2e), with two thirds coming from CO2 emissions caused by fossil fuel combustion and industrial processes (see Figure 3).  The Global Carbon Budget report, released during COP 28, suggests that fossil fuel CO2 emissions rose a further 1.2% in 2023.  

• The International Renewable Energy Agency (IRENA) reports that solar is now one of the cheapest technologies. According to IRENA, two-thirds of all wind, solar, and other renewable energy projects that came online in 2020 were cheaper than the cheapest new fossil fuel power plants (IRENA, May 2020).  

Renewables technologies are now coming of age, but they require renewed incentives to accelerate innovation and wider deployment. Investment must hence shift from fossil fuels to renewable alternatives but, without strong policy signals that the era of fossil fuels is over, investors and markets will not respond. 

The above trends indicate that the more societies decarbonise, the cheaper and faster the transition is likely to be.  It is therefore critical to accelerate the ongoing transition and add momentum through ambitious policy signals that reward the front runners.  The CoP 28 outcome fails to do so.  As countries can transition away from fossil fuels considering their ‘different national circumstances, pathways and approaches, they could well, as a part of their transition, increase the use of fossil fuels with end-of-pipe solutions to reduce emissions. This is already the case. At the time of writing, the President of CoP 28 confirmed that the Abu Dhabi National Oil Company will continue to invest in fossil fuels as a ‘responsible, reliable supplier of low carbon energy’ on the premise that the UAE extraction technologies are more efficient that elsewhere (The Guardian, December 2023).  

Given the absence of stronger commitment to phase out fossil fuels, along with targets and timelines to guide this transition, a low-carbon future remains unrealistic.  Policymakers and markets need clear signals to advance the deep decarbonisation of value chains. The CoP 28 outcome, in this regard, remains insignificant.  More worryingly, it also discredits other important and hard-fought decisions on food and agriculture (included in a UNFCCC decision for the first time), deforestation, nature-based solutions, technology transfer, just transition, and climate finance.  

The need for a real global commitment 

Without a global commitment to phase out fossil fuels, petro-states will continue to subsidise and invest in them to maintain their grip on global energy markets, ensure cheap energy for domestic economic growth and remain relevant on the geopolitical stage. They are also likely to exploit nascent voluntary carbon markets for dubious credits in the form of vast land deals in poor countries (The Guardian, November 2023). 

The biggest challenge in international negotiations on the global commons is the practice of reaching agreements by consensus. At CoP 28, more than one hundred countries supported stronger language on the phase out of fossil fuels but a few petro-states, led by Saudi Arabia, refused. Similarly, at CoP 26 in Glasgow, an otherwise unanimous proposal to phase-out coal was struck down by India. It is time to support calls from Al Gore and Mary Robinson that a single nation cannot be allowed to veto progress agreed by the rest of the world. Instead, a benchmark agreement of 90% should be considered.  

Impact on agrifood systems 

As agrifood systems are intrinsically linked to fossil fuels, this CoP 28 outcome is particularly problematic. The farming of crops and animals, harvesting, storage, processing, transport, retail and managing food loss and waste all require energy and derivatives from oil. Without the right market signals on the phasing out of fossil fuels, agrifood systems cannot be decarbonised in an inclusive and cost-effective manner.  

The CoP28 UAE Declaration on Sustainable Agriculture, Resilient Food Systems and Climate Action, which called for food and agriculture to be built into nationally determined contributions and adaptation plans, has now been signed by 159 countries. The FAO Global Roadmap to achieving SDG 2 without breaching the 1.5 threshold, launched during the final days of the conference, presented milestones in this direction. But all these efforts are compromised as investments in fossil fuels will continue – worse, even, as they continue under the guise of being net-zero aligned.  

References

Earth Systems Science Data (2023). Global Carbon Budget 2023.  https://essd.copernicus.org/articles/15/5301/2023/  

IEA (2023). World Energy Outlook 2023. IEA, Paris https://www.iea.org/reports/world-energy-outlook-2023, License: CC BY 4.0 (report); CC BY NC SA 4.0 (Annex A)  

IEA (25 May 2023). Clean energy investment is extending its lead over fossil fuels, boosted by energy security strengths. https://www.iea.org/news/clean-energy-investment-is-extending-its-lead-over-fossil-fuels-boosted-by-energy-security-strengths  

IRENA (2020). Renewable Energy Power Generation Costs in 2020. https://www.irena.org/publications/2021/Jun/Renewable-Power-Costs-in-2020  

UNFCCC (2023). Draft decision -/CMA.5,  Outcome of the first global stocktake. https://unfccc.int/sites/default/files/resource/cma2023_L17_adv.pdf  

The Guardian (30 November 2023). The new ‘scramble for Africa’: how a UAE sheikh quietly made carbon deals for forests bigger than UK. https://www.theguardian.com/environment/2023/nov/30/the-new-scramble-for-africa-how-a-uae-sheikh-quietly-made-carbon-deals-for-forests-bigger-than-uk  

The Guardian (15 December 2023). CoP 28 President says his firm will keep investing in oil. https://www.theguardian.com/environment/2023/dec/15/cop28-president-sultan-al-jaber-says-his-firm-will-keep-investing-in-oil