It is not easy to look beyond the present crises to see what the future holds for our energy system. COP26 saw agreements on important issues, but that sense of urgency has not been reflected since then in national policy plans or actions. So how will we shift mindsets as we approach COP27 and balance our drive for energy security and affordability with long-term agreements on climate change
Following the huge fanfare and anticipation that heralded COP26 in Glasgow in November last year, the world looks a different place one year on. Russia’s invasion of Ukraine has underlined how vulnerable energy supply is and the cyber-attacks and the sabotage of the Nord Stream pipelines are brutal reminders of how energy can be weaponized. Governments, businesses and citizens alike, who were just recovering from the impacts of COVID are now dealing with sky-high energy costs. Last year gas prices were already climbing, nudging €200/MWh, and in August they reached just over €350/MWh, due to the war in Ukraine. This coupled with increased inflation and mounting national debt means that short-term priorities have shifted.
At the same time, the very clear and visible impacts of climate change, such as the floods in Pakistan and Florida, are daily reminders that we cannot let the climate agenda come under threat from the forces of energy security and affordability.
Can COP27 change short-termism to enable the energy transition to happen in time?
DNV believes it can. But it will require unprecedented levels of action and coordination across the entire energy value chain. Our analysis indicates that the war will have only a short-term negative impact on the energy transition. The loss of Russian gas is now a long-term constraint that will be built into future energy security decisions. And as such, the emissions reduction trajectory to 2050, while not on a 1.5oC pathway, has not shifted from its pre-war direction. But this still means much more needs to be done to massively scale-up renewables, on cost reduction and innovation to drive hydrogen, on investment in grid infrastructure, and on CCUS for oil and gas decarbonization. Only then can the world get back on to a pathway that can reduce emissions to required levels and stave off disastrous climatic impacts. The Intergovernmental Panel on Climate Change (IPCC) indicated that global emissions must reduce between 2020 and 2025 and halve by 2030 to keep 1.5oC within reach – but emissions are in fact rising.
COP26 left us in both positive and negative territory
Antonio Guterres, the UN Secretary General, said at COP26 that “Promises ring hollow when the fossil fuels industry still receives trillions in subsidies”. At the same time, we heard positive voices, for example from Frans Timmermans, First Vice President of the European Commission, “It's really encouraging to see that those countries that were at odds in so many areas have found common ground on what is the biggest challenge humanity faces today. And it certainly helps us here at COP to come to an agreement.”
So, where did the Glasgow Climate Pact leave off?
- 1.5oC. Reaffirmation from the signatories to a global temperature rise as close as possible to 1.5oC, though not a commitment by each country to reach net zero by 2050.
- NDC ambition. Countries agreed to "revisit and strengthen" their NDCs by the end of 2022 and set clear actions for GHG reduction to 2030.
- Fossil fuel. Around 30 countries committed to end foreign financing of fossil fuel development and more to stop subsidies for fossil fuel projects outside their country.
- Financing for developing countries. Pledges from developed countries have yet to hit $100bn.
- Private sector. COP26 saw strong engagement from CEOs, a positive change from past COPs.
The Egyptian Presidency at COP27
It is unequivocally clear that we must move from ambition, the cornerstone of previous COPs, to action, and with urgency and scale, if we are going to show meaningful environmental stewardship of this great planet. The Egyptian Presidency sees this as “the Implementation COP”. Along with this will come:
- A strong focus on Africa as a continent in urgent need for support on their energy transition journey
- Demands for developed nations to pay for loss & damage
- Adaptation
- Mitigation.
With only 19 countries having submitted updated NDCs, there is clearly more urgency needed to demonstrate that global leaders are doing all they can.
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