The COP28 concluded with the first ever Global Stocktake by calling on parties to contribute to “transitioning away from fossil fuels in energy systems […] to achieve net zero by 2050 in keeping with the science”. The final decision sets the direction of travel and with it clear signals regarding the prospects of fossil industries. It reinforces the norm that 2050 is about the right time to reach net zero (earlier than many countries are currently aiming for) across all major sectors of our economies such as power, transportation, industry and buildings.
On the positive side, with this language, it is the first time ever oil and gas was included in a COP decision – only two years after the first mention of coal at COP26 in Glasgow by asking to “accelerate efforts towards the phase-down of unabated coal power”. This is quite a development (which pushed OPEC to warn that ‘pressure may reach a tipping point’ and that ‘politically motivated campaigns put our prosperity’ at risk).
On the downside, we can see some old language in the GST, which did not change much compared to Glasgow, like:
- repeating the rather weak position on fossil fuel subsidies by call upon Parties to “phasing out inefficient fossil fuel subsidies that do not address energy poverty or just transitions, as soon as possible”, and also
- repeating the same position on methane by call upon parties to “accelerating and substantially reducing non-carbon-dioxide emissions globally, including in particular methane emissions by 2030” (in Glasgow, this was only an “invitation”).
The final declaration also recognizes that “transitional fuels can play a role in facilitating the energy transition while ensuring energy security” – gas is in and out and timelines are not really specified.
The Alliance of Small Island States, representing 39 countries, was not in the room when the deal was adopted as it was still coordinating its response. We should be clear here: the ‘UAE Consensus’ is not a consensus. It is rather a compromise reflecting different interests and powers representing them around the table and therewith it is also a direction of travel to be taken on for the months and years to come.
Reducing production of fossil fuels: The G20 members show no leadership
The G20 countries, as major economies responsible for three-quarters of global emissions, play a key role in taking the results of the COP28 and leading the path to reach the goals of the Paris Agreement. The essential piece is and remains to phase out fossil fuels (coal, oil and gas).
Despite the fact that coal-fired power generation must be phased-out by 2030 in OECD and by 2040 in non-OECD countries, only six G20 members (Canada, France, Germany, Italy, South Korea and the UK) have set a coal phase-out date so far. At the same time, G20 member states are home to 88% of the remaining global plans (‘pre-construction’) for new coal power capacity, with the largest share in China. A new IEA Report, which came out just after the COP28, highlighted that the global coal demand reached a record high in 2022 rising by 4% to 8,42 billion tonnes and is expected to go over 8.5 billion tonnes in 2023 (China, India and Indonesia keep reaching new highs while the first two account for 70% of global coal demand). The report projects global coal demand will reduce by 2% in 2026. This would be the first step into the right direction.
What is worse, the exploration and development of new oil and gas fields continues. The USA accounts for more than one-third of planned global oil and gas expansion through 2050, followed by Canada and Russia. Five countries – among them four G20 members: the USA, Canada, Australia and the UK – will be responsible for over half of all the planned expansions. These countries have the highest phase-out capacity and should move first and fastest to phase out their production and pay their fair share to fund a just global energy transition.
With regards to oil and gas the G20 countries consume almost three-quarters and produce nearly two-thirds of the world’s total output. The USA is the biggest producer and total consumer of oil and gas. It uses 21% of global oil reserves, with China closely following with 15%. The highest consumers of gas are the USA, Russia and China.
G20 members need to take more leadership! Responding to the call of the UN Secretary-General, António Guterres, calling on the G20 to super-charge efforts to achieve the Climate Solidarity Pact through an Acceleration Agenda, G20 countries should “phase out fossil fuels in a just and equitable way – moving to leave oil, coal and gas in the ground where they belong – and massively boosting renewable investment in a just transition.”
Reducing consumption by strengthening alternatives: Progress with room for improvements
However, it will not be mainly about limiting production of fossil fuels as we can see in the G20 and other countries, which are planning to expand the exploitation (with the USA leading the field). It will be about reducing demand and therewith sending strong signals to investors and governments to hop on the clean train to secure profits and limit risks. Here, the Outcome of the first Global Stocktake (CMA.5) calls on parties to contribute to the following global efforts on “tripling renewable energy capacity globally and doubling the global average annual rate of energy efficiency improvements by 2030”. The foundation for this decision had already been laid at the G20 Delhi Summit in September 2023.
In particular, the power sector needs to switch from fossil-based to renewable energy sources more rapidly to avoid significant commercial risks from stranded assets. Currently, almost half of the G20’s energy consumption still stems from oil and gas – in Saudi Arabia it is over 99%, whereas in South Africa 19%. In the buildings sector, where especially gas is used for heating, cooling, and cooking, increased electrification in conjunction with renewable energy will drive down emissions. For example, electric heat pumps offer a solution as they are three to five times more efficient than fossil gas boilers and furnaces. Switching to electric vehicles (EV) also contributes to reducing emissions coming from transport. This journey has already begun with China leading the way, where the record of over 6 million EVs sold in 2022 has been hit. With 8.4 million vehicles, the EV fleet in G20 members was already eight times as large in 2020 as in 2015, and continues to grow.
The G20 members at the COP
Apart from the official UNFCCC negotiations items, some G20 members used COP28 as a platform to highlight their non-negotiable climate action. Highlights of the G20 members at the COP28 related to the fossil fuel phase out include:
- The US announced to slash methane emission from oil & gas (read more) and will join the The Powering Past Coal Alliance (PPCA) (good news, but they are already on their way out anyway) – read more
- A pledge to triple nuclear capacity by 2050 which was signed e.g. by Canada, France, South Korea, UK and the US – read more
- Germany announced its Climate Club consisting of 36 countries to decarbonize industry (focus on steak and cement) – read more
- Global Renewables and Energy Efficiency Pledge to tripling worldwide installed capacities to at least 11000 GW and double global average annual rate of energy efficiency improvements to more than 4% by 2030 led by the EU, UAE and the US was signed by around 120 countries so far, including Brazil, Canada, Japan; (India and China signaled support but did not sign) – still a long way to go to include this into the final decision. – read more
In terms of finance:
- Commitments for the newly established Loss and Damage Fund from France €100m, Italy €100m, Germany $100 million, UK $50.5m, US $17.5m, Canada C$16m, Japan $10m and $245m by the EU which includes Germany‘s contribution (well, as start but by far not what it should be) – read more
- Vietnamese JETP Resource Mobilisation Plan announced – the international partners group include Canada, the EU, France, Germany, Italy, Japan, UK and the US – read more
- The US committed to pay USD 3b into the Green Climate Fund (the first time since 2014) – read more
Last but not least, President Modi proposed to host the COP33 in 2028 India. This would bring the COP after Brazil in 2025 to one of most important aspiring economic superpowers and to the country with the highest population.
On the road to the G20 Presidency of Brazil and COP29
Particularly the G20 countries need to show their leadership and take necessary and ambitious steps to achieve set goals. They should also, build up on the results of COP28, agree in November at the Summit in Brazil on phasing down fossil fuels to strengthen the COP28 outcome as well as set the tone for the COP29 in Baku.
Brazil’s G20 presidency (December 2023 to November 2024), is very timely to emphasize in the run-up to COP29 that financial commitments are fundamental for developing countries to accelerate efforts. Paragraph 80 of the GST notes with deep regret that the 100 billion goal was not met in 2021. Trust among parties is low and finance is the major point of division. This already casts a shadow over the next COP29 to be held in Baku, Azerbaijan, which will be the “Finance” COP that has to deliver a New Collective Quantified Goal (NCQG) on Climate Finance. The G20, representing 80% of the world’s GDP and emissions, offers a platform to pre-build consensus on the New Collective Quantified Goal (NCQG) on climate finance ahead of the “Finance-COP” next year.
Funding is there – it just needs to be redirected. During the COP, the estimated net income of global oil and gas industry summed up to over USD 95 billion (in less than two weeks!).
