COP28: Will a magic wand sweep away oil, gas, and LNG in favor of green agenda?

The stakes at COP28 are perceived to be very high, unpacking a flurry of activity focused on energy and finance with the unfolding of the UN climate talks. As a battle over fossil fuel language continues to rage, the pressure is not letting up on demands to phase out fossil fuels, with some arguing that climate change should be seen as a national security issue. The growing level of private sector engagement is perceived to be a much-needed game changer in coming to grips with climate challenges on the road to net zero, which could tip the scales in favor of renewables. Will the green push endanger planned oil and gas projects? How likely is the inclusion of language calling for an end to fossil fuel use in this conference’s final text?

While many continue to place bets on COP28’s ability to represent a turning point for the global fight against climate change and enable the step-change required for a renewable energy revolution, the situation on the field shows that the opposing sides in this high-stakes negotiation are yet to reach a unified position or some sort of a comprise on fossil fuel language that will be used in the final text.

This was confirmed by COP President, Dr. Sultan Ahmed Al-Jaber, who is also UAE Minister of Industry and CEO of ADNOC, when he noted that there were “still more areas of divergence than agreement.” Fear is rising within certain circles that the oil and gas industry will succeed in lobbying to elude regulations for its contribution to climate pollution.

The fossil fuels language, which acts as a linchpin for other negotiations, remains an essential part of discussions and disagreements at COP28. According to Politico, a draft text, which spans 27 pages, encompasses five different options on how to manage disputes over “phasing down” or “phasing out” fossil fuels.

Further proof that the gap between these parties remains wide open on key energy issues is the Organization of Petroleum Exporting Countries (OPEC)’s intervention at COP28 when the organization sought to block the language spelling out an end to fossil fuels, which galvanized no less than 80 countries to call for the inclusion of such a language in the final text.

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While Australia, the U.S., and the EU threw their support behind outcries to phase out fossil fuels, Russia and Saudi Arabia remain firmly entrenched in OPEC’s corner, heeding the call to focus on reducing emissions rather than coal, oil, and gas. Based on this, the inclusion of a definitive phase-out of fossil fuels does not seem likely in the final text. However, China’s change of heart is perceived to be a positive sign, as the Asian country recently expressed a desire to see an agreement between nations that would “substitute renewables for fossil fuels.”

One of the agreements that came as a welcome surprise for many during the early days at COP28 is the Oil and Gas Decarbonization Charter (OGDC), which saw a large number of National Oil Companies (NOCs), together with International Oil Companies (IOCs), pledge to cut down their emissions to zero by 2050 and to slash methane emissions to zero by 2030. A large number of countries also agreed to triple renewables by 2030 and triple emission-free nuclear energy by 2050.

Despite certain developments, concerns are on the rise about the inclusion of a reference to phasing out fossil fuels and the safeguards applied to “abatement,” which refers to the use of carbon capture and storage (CCS). If the language on CCS is not clearly defined, it is believed that it could further extend the use of coal, oil, and gas, as it would act as a lifeline for more fossil fuel developments, putting the goals of the Paris Agreement at risk.

Another move at the UN climate summit, which surprised the world was the one made by Colombia’s President, Gustavo Petro, who explained that his country was committed to stopping the expansion of fossil fuels while endorsing a global initiative for an exit plan from coal, oil, and gas, known as the Fossil Fuel Non-Proliferation Treaty.

It is no secret that Colombia’s economy relies heavily on exporting fossil fuels, so Petro’s backing of the treaty was unexpected but certainly well received by climate campaigners, especially since he underlined: “Today we face an immense confrontation between fossil capital and human life. And we must choose a side. Any human being knows that we must choose life.”

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In contrast, Haitham Al Ghais, Secretary General of OPEC, urged member countries to reject any agreements that target fossil fuels during the climate negotiations. Advocating for focus to be placed on reducing emissions rather than reducing energy, Al Ghais noted that “the undue and disproportionate pressure against fossil fuels may reach a tipping point with irreversible consequences, as the draft decision still contains options on fossil fuels phase-out…

“What we will continue to advocate for is reducing emissions, not choosing energy sources. The world requires major investments in all energies, including hydrocarbons, all technologies, and an understanding of the energy needs of all people. Energy transitions must be just, fair and inclusive.”

The African Energy Chamber (AEC) echoed Al Ghais’ views and is adamant that African countries should reject anti-fossil fuel policies at COP 28 while pointing out that “the hypocritical, biased and unjust climate agenda poses a direct threat towards Africa’s development, and countries should remain resilient in their efforts to defend their right to utilize oil and gas.”

According to the AEC, developed nations seem committed to phasing out fossil fuels, advocating for an anti-fossil fuel energy transition that does not take into account the needs of the developing world, which, if endorsed, would have “detrimental impacts” on Africa’s economies.   

Furthermore, the African Energy Chamber claims that Africa is seizing control of its energy future with the further development of oil and gas, as investments in these resources are anticipated to help the continent bolster industrialization, alleviate energy poverty, and strengthen its capacity to deal with climate change.

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The ACE emphasizes that the main sources of energy in Africa are oil (42%), gas (28%), and coal (22%), thus, if the continent were to phase out these resources, “it would be transitioning from dawn to darkness.” This view is reminiscent of Al Jaber’s recent Stone Age analogy.

NJ Ayuk, Executive Chairman of the AEC, stated: “The green agenda promoted by the wealthy nations continues to ignore how instrumental oil and gas is in Africa. Climate panic and fear-mongering continue to be alive and well, and Africa should remain strong in its commitment to utilizing oil and gas for the betterment of its people.”

Many things are at play during COP28 and the dialogue is being shaped by multiple complex facets, as summed up by William Tobin, Assistant Director at the Atlantic Council Global Energy Center, who highlighted that geopolitical friction and global fragmentation play a significant role in the drive behind climate goals, which could only be feasible if they take into account the global context and burning issues like economic and national security, which are certainly at the forefront of global agenda.

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Otherwise, no matter how ambitious climate aspirations are, there will be no chance to secure the financial infrastructure, funding, and supply-chain resilience needed to reach net-zero targets, which call for an accelerated deployment of the full decarbonization suite of available solutions, entailing wind, solar, and carbon capture, utilization, and storage (CCUS) alongside other emission-reduction technologies. With the high interest rates and rising inflation creating headwinds globally, the deployment of clean energy tools is lagging behind net zero requirements.

Therefore, ways to counteract those headwinds and enlarge affordable and reliable energy access call for additional climate finance, which the COP28 Presidency is trying to bring forth with its multifaceted approach to climate-related finance encapsulated in its Climate Finance Framework.

Addressing the perils of global warming was never going to be an easy feat, but if the private sector were to join in on the climate action bandwagon in droves and see it as a business opportunity rather than a hindrance, tackling climate change would be somewhat easier to manage.

With COP28 already in its final 48 hours, the clock is ticking for negotiators to hammer out a deal on emission cuts, renewable energy boost, financial support for vulnerable countries, and figure out what to do about the future of oil, gas, and coal – both unabated and abated. With this in mind, the UN Secretary-General urged COP28 parties to iron out a deal on the phase-out of fossil fuels, telling negotiators on December 11, that “now is the time for maximum ambition and maximum flexibility,” as UN climate talks in Dubai come closer to the final countdown.

António Guterres, the UN chief, advised government negotiators: “We must conclude the conference with an ambitious outcome that demonstrates decisive action and a credible plan to keep 1.5-degree goal alive, protecting those on the frontlines of the climate crisis.” 

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Guterres also warns of humanity’s race against time to secure the 1.5-degree limit per the 2015 Paris Agreement, explaining that even though COP28 is close to the finish line, there is still a “gap that needs to be bridged,” thus, “ministers and negotiators must move beyond arbitrary red lines, entrenched positions and blocking tactics.”

In a “fractured and divided world,” according to the Secretary-General, “COP28 can show that multilateralism remains our best hope to tackle global challenges,” therefore, he urged negotiators to go into “overdrive to negotiate in good faith and rise to the challenge” while cautioning them that any “compromise for solutions,” should not come at the cost of “compromising on the science or on the need for the highest ambition.”

Guterres, who is adamant that countries need to scale up their efforts to curb greenhouse gas emissions and deliver climate justice, stressed the “need to phase out all fossil fuels on a time frame consistent with the 1.5-degree limit – and to accelerate a just, equitable and orderly energy transition for all.”

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In line with this, the UN chief spotlighted three key pillars on the energy transition front, which cover a tripling of renewable power capacity, a doubling of energy efficiency, and a phase-out of fossil fuel; support, training, and social protection for those who may be negatively impacted; and consideration of needs of developing countries dependent on the production of fossil fuels.

While welcoming the “emerging consensus for a new framework on adaptation” and warning that a “framework without the means of implementation is like a car without wheels,” Guterres concluded that “the doubling of adaptation finance to $40 billion by 2025 must be an initial step towards allocating at least half of all climate finance towards adaptation.”

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A draft text on the first global stocktake under the Paris Agreement has run into opposition from multiple sides, primarily due to dropping the phase-out of fossil fuels, although the text does recognize the need for “deep, rapid, and sustained reductions in GHG emissions,” and lists a range of actions that countries “could” take to combat the climate crisis, which cover:

• Tripling global renewable energy capacity and doubling global average energy efficiency annual improvement rate by 2030;
• Rapidly phasing down unabated coal and putting limitations on permitting new and unabated coal power generation;
• Speeding up global efforts toward net zero emissions energy systems, utilizing zero and low-carbon fuels before or by 2050;
• Stepping up the deployment of zero and low emissions technologies, such as renewables, nuclear, abatement and removal technologies, encompassing CCUS and low carbon hydrogen to enhance efforts toward “substitution of unabated fossil fuels in energy systems”
• Curbing both consumption and production of fossil fuels in “a just, orderly and equitable manner” to reach net zero by, before, or around 2050 in keeping with the science;
• Upping the ante by substantially slashing non-CO2 emissions, including global methane emissions by 2030;
• Accelerating emissions reductions from road transport through a range of pathways, covering the development of infrastructure and rapid deployment of zero and low-emission vehicles;
• Phasing out of inefficient fossil fuel subsidies that “encourage wasteful consumption and do not address energy poverty or just transitions, as soon as possible.”

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“The COP28 Presidency has been clear from the beginning about our ambitions. The draft text reflects those ambitions and is a huge step forward. Now it is in the hands of the parties, who we trust to do what is best for humanity and the planet,” said Dr. Sultan Al Jaber, COP28 President.

This has triggered a backlash from a considerably large number of countries, as they placed their bets on the final text going all out and striking an agreement to phase out fossil fuels rather than just offering the option to reduce production and consumption of coal, oil, and gas.

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While the U.S. is adamant that the wording on fossil fuels in the draft text needs to be “substantially strengthened,” the UK claims that “there must be a phase-out of unabated fossil fuels to meet our climate goals.”

For Gustav N. Aitaro, Minister of State for the Republic of Palau, this draft text is “unacceptable,” while John Silk, Minister of Natural Resources and Commerce – Republic of Marshall Islands, goes even further in expressing dissatisfaction with the draft by saying: “The Republic of the Marshall Islands did not come here to sign our death warrant. We came here to fight for 1.5 and for the only way to achieve that: a fossil fuel phase-out.

“What we have seen today is unacceptable. We will not go silently to our watery graves. We will not accept an outcome that will lead to devastation for our country, and for millions if not billions of the most vulnerable people and communities.”

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The Alliance of Small Island States (AOSIS), which is currently chaired by Samoa, said on the latest draft: “We will not sign our death certificate. We cannot sign on to text that does not have strong commitments on phasing out fossil fuels.”

Bearing in mind that the phase-down of unabated coal was the only mention at the previous climate conferences, this draft text still represents a landmark plan of sorts as the first COP to mention a pivot away from all fossil fuels. However, whether or not it will be adopted, remains to be seen.

Most participants at COP28 agree that investments in climate solutions are needed – from renewables to nuclear energy, and from decarbonization to green tech – to enable emission reduction and ensure a more sustainable energy future. This year’s COP has already brought unprecedented agreements, which if executed and sustained, could enable tens of billions of dollars to sort out global climate woes.

While geopolitical tensions indicate that consensus among the 198 parties at COP will be elusive, the Oil and Gas Decarbonization Charter is a good starting point along with the prioritization of global methane emissions and flaring reduction, which COP28 has managed to bring to the forefront, even though energy security is still expected to remain the order of the day after the climate talks come to an end.

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