Countdown
With a limited amount of carbon budget left to burn, Dubai’s COP28 will force us to focus on the largest, fastest, and cheapest sources of greenhouse gas emission reductions and energy security.
The clock is ticking.
In a month’s time, delegates and world leaders descend on Dubai for the 28th Conference of the Parties of the UN Framework Convention on Climate Change (COP28).
Time is of the essence. While there is, essentially, a consensus that climate change needs to be addressed urgently, there are vastly different attitudes as to how long it will take and how it should be done. There is also, very possibly, a difference in views as to what problems need to be solved. The problem is often described in terms that imply that we don’t have enough renewable energy, which is true. However, a crucial problem, which is too often overlooked, is that the world is wasting so much resource. This is the largest source of greenhouse gas emissions as well as being a tragic waste of money and a challenge for energy security.
Expectations for success at the Dubai COP28 are seasonably low. But perhaps this is actually a foundation from which they might just be exceeded.
Dubai itself offers a setting riddled with contradictions. The UAE, of which Dubai is part, is a petrostate. It was the first of its kind in the Middle East to set a target to achieve ‘net zero’ carbon emissions by 2050, but also plans a massive expansion of fossil-fuel production. The average temperature in Dubai is roughly twice that of the global average surface temperature of the Earth, which itself has experienced one of the hottest years on record thanks to a cocktail of climate change impacts caused by humanity’s excessive greenhouse gas emissions and nature’s El Nino-Southern Oscillation (ENSO) cycle, which tends to peak in December, in time for COP28. The President-Designate of COP28 is one the most experienced and influential energy executives in the region. He is at the same time the CEO of the Abu Dhabi National Oil Company (ADNOC), and the UAE’s Special Envoy for Climate Change, which his chairmanship of Masdar, one of the world’s first major cleantech hubs, uniquely qualifies him to do. I first met Sultan Al Jaber at Masdar in 2008, in a portacabin office, surrounded by experimental solar panels and with ambitions to create an ‘eco-city’. 15 years later, Masdar hosts a university for artificial intelligence (AI) and is being reimagined as a hub for renewable energy and green hydrogen.
Just as oil and gas production in the Middle East is ramping up, so there are signs of a renewed bull market in oil and gas in the United States. The recently (largely) energy independent United States has now become the largest producer of oil and gas in the world. In the Middle East, only Saudi Arabia, for oil, and Iran, for natural gas, make it into the ranks of the top 5 global producers, on the same league table as the United States. Disruptions of supplies of oil and gas from Russia (number 3 in the world for oil and number 2 in the world for gas) after it invaded Ukraine pushed up prices to levels that upended economies and contributed to a global increase in energy and food prices, inflation, cost of living crises, interest rates and socio-political instability. Europe, which hitherto sourced 40% of its natural gas from Russia, was forced to diversify fast into other markets, and turned to the United States in the process. In October this year, a bull market was being signalled when two major mergers were announced. Chevron would buy Hess for US$53 billion, and Exxon Mobil would buy Pioneer Natural Resources for $59 billion. The ESG narrative on Wall Street was being seriously challenged.
Dubai COP28 will conclude a ‘global stocktake’ of the implementation of the Paris Agreement of 2015, a process that happens every 5 years and that aims to assess the world’s collective progress towards its climate goals. There will be some great wins and some disappointments. But overall, oil, gas and coal use has continued to grow. Fossil fuels still dominate the world’s energy system. Oil, gas, and coal still represent over 80% of energy supply. Renewables, although growing fast, are growing from smaller base, and are not displacing fossil fuels, or at least fast enough on their own to make the definitive difference to reduce emissions at the speed and scale we need.
The difficult truth is that current government policy frameworks are unlikely to substantially change this trajectory. Or at least not any time soon. Scientists and analysts point to only 7 years left before we run out of ‘carbon budget’, that is the amount of carbon dioxide that can be emitted beyond the Earth’s capacity to absorb it, while keeping the world’s temperature at or below a limit of 1.5C above pre-industrial levels, beyond which humanity may lose what remains of its influence. We are already looking at 1.2C. Net zero targets in the 2050s, 2060s and 2070s help little with the IPCC’s stated objective to cut 22 gigatonnes of carbon emissions by 2030. Indeed, according to the International Energy Agency (IEA) in its 2023 World Energy Outlook published last week, the current trajectory under current policy scenarios is for oil, gas, and coal to remain at 73% of global energy supply in 2030. Renewables will help but in which timeframe and at what cost? If the landmark Inflation Reduction Act is successful, it is expected to green some 60% of the electricity system in the United States by 2030. But what about the rest of it, and what about the other 80% of the energy system that isn’t electricity?
In the meantime, the other factor that isn’t changing fast enough is the amount of all this energy that is being wasted, while the world rushes to create ever more of it. Energy efficiency has so far made it up the priority list into the same sentence, but behind, renewable energy. Many other critical themes will be debated at COP28. How are countries faring under the global stocktake? How will this latest great energy transition be financed and who will pay for the loss and damage inflicted on disadvantaged states? How will we adapt to climate change? How are going to protect natural capital. But in the meantime, the world is wasting some 75% of its energy, around half of its food and a third of its water. On the energy side alone, over 60% of primary energy is lost through the extraction, conversion, generation (as heat), transmission and distribution process, even before it gets to the point of use. The inefficiency of fossil fuel use from fertiliser to transport in the food sector is even worse. Demand for all these resources is intimately interconnected and they are all interdependent. If we are honest about the time, cost and resources associated with building the clean energy system of the future, we will need to prioritise how to do more with the same or less. This involves a step change in the efficiency with which we use existing energy resources, including the oil and gas on which transport, industry and so many other essential societal functions depend.
The solutions will need to come as much if not more from efficiency than generating more. Cost effective solutions abound now. They do not depend on any new inventions or substantial subsidies. More efficient and cheaper supply can be achieved by generating energy closer to the point of use, for instance through heat recovery, cogeneration, on-site renewables, and storage. Efficiency at the point of use can be delivered by upgrading mechanical and electrical infrastructure such as lighting, heating, ventilation, air conditioning, motors and controls. These measures can reduce costs and carbon, at the same time as improving the resilience of supply. They can be implemented in months in many cases and, collectively can be one of the largest sources of reductions in greenhouse gas emissions and energy costs, and improvement in energy security by 2030. When the clock is ticking, speed as well as scale counts. COP28 will call for a doubling of the rate of energy efficiency improvements as well as a tripling of renewable energy capacity by 2030.
Could Dubai therefore be a cathartic moment? Chances of achieving a commitment to phase out fossil fuels in a growing petrostate must be, at best, limited. But could this be the moment that we start to put efficiency first as a filter to prioritise crucial policy and business decisions?
Perhaps there are two directions that the Dubai COP28 could take:
Hands are thrown up in the air. People despair that oil and gas is hosting, that too little is being done, that the platform is burning and that no one cares or does or means anything serious. The COP process faces an identity, or reputation, or even existential crisis. Paris Agreement 1.5C goals appear to seem like a fantasy when we are 1.2C already. Promises seem empty. World leaders congregate in Dubai but are meeting and talking about Israel and Gaza and Hamas and Hezbollah and Iran and Saudi Arabia and Russia and Ukraine how to stop World War III. What’s left of the climate story is that the COP process isn’t working, and nor is climate action and that nothing much is agreed. It falls flat and fails; or
The conference is a crucial opportunity to inject realism. It’s a global stocktake after all. Progress on renewables is recognised and celebrated. The role of the oil and gas sector is considered carefully and solutions to decarbonise the sector, rather than demonise or ignore it, become a more integrated part of the agenda. We can examine what’s worked in the past (coal to gas), what is struggling (carbon capture), what can’t work (switch it all off now, because everyone’s lives depend on it) and what works best and soonest for decarbonisation and security: efficiency – including efficient and decentralised generation of energy (‘Edge’).
For many reasons, Dubai’s COP28, against the background of the ticking clock and the heat, may be the most important in recent history. It offers at once a paradox, and a pathway for the future.
My book, ‘The Edge: How competition for resources is pushing the world, and its climate, to the brink – and what we can do about it’, examines these issues in detail. The countdown to its publication in the United States has started. It is released on 5 December, which is Energy Day at the Dubai COP28.
For more information about investing in energy efficiency, visit: www.seeitplc.com.