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The global race to net-zero carbon emissions is due for its annual checkup in just a few months in a summit that will have to fight for attention in a world of energy shortages and surging prices.
COP27 takes place in Sharm el-Sheikh, Egypt, in November, the next instalment in a three-decade run of meetings since the United Nations Framework Convention on Climate Change was established. There, world leaders will try to find more consensus on taking action to slow global warming and deal with its effects in developed and developing countries.
In the lead-up, the meeting is getting nowhere near the attention that last year’s conference in Glasgow received, even though scientists see the imperative to slash greenhouse-gas emissions as more crucial than ever. Indeed, another year of drought, heat waves, wildfires and floods provides more than enough evidence that the changing climate is bringing ever more dire consequences around the world.
The meeting will focus on how countries are making progress in enacting the necessary policies to live up to commitments they made in the 2016 Paris Agreement, which is designed to limit the average global temperature increase by 2050 to 1.5 C above preindustrial levels.
It will also act as a temperature check on the world’s finance industry, which set priorities last year to align its activities to the Paris climate goals. Financial institutions, insurers and asset managers, representing assets of US$140-trillion, have banded together in the Glasgow Financial Alliance for Net Zero. Environmental activists remain skeptical of the industry’s commitment.
The group, led by UN climate finance envoy and former central banker Mark Carney, is in the process of finalizing a series of policies and recommendations for lenders and investors for accelerating the shift to a low-carbon economy. This includes dealing with the painful economic impact of phasing out high-emitting assets, such as coal-fired power plants.
Here is where it gets messy this year.
At the time of last year’s summit, the effects of inflation were just coming to the fore as demand picked up after the lockdowns in the early part of the pandemic. Since then, it’s reached crisis proportions, and nowhere more so than Europe.
Russia’s invasion of Ukraine has disrupted the natural gas industry, and the effects of shortages are expected to get worse as winter draws near. Russian President Vladimir Putin has cut gas flows to Europe by as much as 80 per cent, and prices for the fuel have skyrocketed tenfold from a year ago.
Olaf Scholz, the Chancellor of Germany, is on the search for alternative supplies to make up for the loss of Russian gas, and travelled to Canada last week as part of that quest. Mr. Scholz said Germany is looking far and wide for liquefied natural gas suppliers, though Canadian shipments are still a few years away and much of the talk involved future potential hydrogen opportunities.
Meanwhile, the country has enacted rules to keep the thermostats at 19 C in public buildings and to shut off lights used for aesthetic purposes at monuments and the like. But even worse, Germany has reactivated some of its coal-fired power plants in attempts to avoid blackouts in the coldest days of the winter.
In Britain, consumers are set to pay nearly triple what it cost to heat their homes last year, which could push many households into poverty. Renewables account for a rising proportion of power generation in the country, but gas remains the dominant source.
There are some positive signs, though. Amid the gloom, the United States – long a barrier to major global emissions cuts – this month passed its most expansive climate legislation to date in the form of the Inflation Reduction Act. That legislation includes US$369-billion in climate and energy spending, with the aim of slashing U.S. emissions by 40 per cent by 2030. President Joe Biden can attend the summit on a high note.
The struggle to shore up the world’s energy systems at a time of catastrophe makes the long-term problem of reducing emissions much more difficult, as countries are forced to turn their immediate attentions away from climate considerations.
But this makes COP27 all the more important, even if it may not rate as highly on the global agenda as previous summits. The puzzle of how to get the climate-change fight back on track once the current crises are over will require extra strategic thought and tough decisions.
Jeffrey Jones writes about sustainable finance and the ESG sector for The Globe and Mail. E-mail him at jeffjones@globeandmail.com.
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