The Message from COP 28

The Petrostate COP-Out?

Depending on your point of view, the communiqué issued at the conclusion of the latest UN Conference of the Parties – COP-28 – on 13 December represents a turning of the page on the era of fossil fuels and the beginning of the end for oil; or it amounts to an empty form of words contrived as a fig leaf for the global oil industry to continue with business as usual. The target set at the 2015 Paris Conference that mankind must act to prevent global warming in excess of 1.5 Celsius above pre-industrial levels is now attainable, say the optimists; or, it has been tacitly abandoned, heralding a world that could be three degrees warmer by the end of the century. What are we to believe?

Well, let’s take a look at the supposedly historic “UAE Consensus” which inspired a standing ovation from the representatives of 197 nations and territories in attendance. (Over 90,000 delegates attended the 13 days of talks in sunny Dubai – more than double the number who came to gloomy Glasgow two years ago. Why would that be?). It referenced “transitioning away from fossil fuels in energy systems in a just, orderly and equitable manner…so as to achieve net zero by 2050 in keeping with the science”. As opposed to “phasing out” fossil fuels – a phrase opposed by Saudi Arabia, amongst others.

So, oil and natural gas are to be entirely superseded by alternative energy sources by some unspecified date in the future. This may seem inconsequential but, say the agreement’s enthusiasts, it is a milestone in that it forces producers of hydrocarbons to confront the reality that the days of black gold are numbered (even if the exact number escapes us). On the other hand, this formulation will not persuade anybody to close a coal-fired power station or to abandon plans for further oil exploration in the near future.

China and India, with a combined population of over 2.8 billion, or 35 percent of all the people in the world, are between them opening new a new coal-fired power station about every three days. For its part, the USA now produces more oil each year than Saudi Arabia: in September it pumped a record 13.2 million barrels of crude oil per day. And yet John Kerry, President Biden’s climate envoy, was everywhere to be seen in Dubai preaching the Gospel of net zero. And Brazil has plans to overtake the USA in oil production by 2030. None of this sounds like global CO2 emissions might be cut in absolute terms anytime soon.

Consider that at COP-17 in Durban in 2011, the attendant luminaries agreed that there would be a legally binding treaty to reduce global carbon emissions by 2015, and that it would come into force by 2020. And, at COP-21 in Paris in 2015, there were a series of national pledges on the reduction of CO2 emissions, few of which have been achieved. Since then, the volume of annual carbon emissions has only continued to rise. In 2000, according to the Energy Institute, 84 percent of the world’s primary energy came from fossil fuels. Last year, after 23 COP-fests, that figure was down to 82 percent. If one were a cynic one might be tempted to say that the annual COP jamborees are more about optics than substance.

COP-28 President Sultan Ahmed Al-Jaber hailed the deal as “historic” but added that “We must take the steps necessary to turn this agreement into tangible actions”. This was the man who, at the beginning of the conference, claimed that there was “no science” to substantiate that it was necessary to phase out fossil fuels in order to restrict the global temperature rise to 1.5 Celsius. But then, disarmingly, he is also chief of the UAE’s state-owned oil company. Conflict of interest, anybody? Delegates boasted that they went everywhere in Dubai in electric vehicles – even though electricity in the UAE is overwhelmingly generated by gas turbine power plants. How green is that?

Sultan Al-Jaber knows that the world will continue to pump oil for the foreseeable future. Cement, steel, plastics and synthetic fertilisers all require inputs from hydrocarbons in their manufacture. Most decision makers understand that we could not just stop using hydrocarbons tomorrow without reverting to pre-industrial levels of poverty and probably mass starvation. But the disciples of Greta believe that the full phase out of all fossil fuels is the only way to save the planet – so a form of words had to be found to placate them.

In the end, the markets can only be fooled short-term. Now that we know that we are “transitioning away” from hydrocarbons, what has happened to the shares of the oil majors? They have more or less flatlined. Even the eco-conscious UK is committed to new rounds of oil and gas exploration in the North Sea. We shall be living with the oil majors for some time yet.

Reading The Runes

COP-28 was punctuated by warnings of climate catastrophe unless drastic action were taken immediately – not least by HM King Charles. This is now standard practice at these events: the millenarian tendency broadcasts that the end of the world is nigh. And if you are living on a low-lying coral reef it must seem that way. The lead negotiator for the Alliance of Small Island States criticised the final deal as “unambitious”. But she did not object to “the need for deep, rapid and sustained reductions” in greenhouse gas emissions.

The deal advocates a tripling of renewable energy production capacity by 2030 and a massive expansion of carbon capture technology. Over $5 trillion has already been spent globally on the roll-out of renewable energy infrastructure over the past two decades, so this would represent a huge additional outlay. Moreover, the International Energy Agency (IEA) countered that reliance on carbon capture was unrealistic given that this technology is currently highly energy intensive. So the “net” part of the net zero carbon equation is in doubt.

In mid-October this year, a study by the National Infrastructure Commission concluded that in order for the UK to achieve its 2050 net zero CO2 target we would have to spend £2 trillion on infrastructure over the next 27 years. How are we going to afford this? That is the question the politicians are ducking.

In the UK, prime minister Sunak has put back the date for the demise of petrol and diesel-powered cars to 2035. But the Conservative government still insists that one in five cars sold next year must be electric and four out of five by 2030 – even though Britain accounts for less than one percent of global carbon emissions. Many of those EVs sold in the UK, of course, will be manufactured in China which has enjoyed a second industrial revolution in satiating the West’s determination to decarbonise at all costs. China now produces about three quarters of the world’s solar panels, three quarters of lithium-ion batteries and most of its wind turbines. We shall be forced to buy their products.

The UK has just closed its last blast furnace for steel manufacture and one of our six oil refineries. Our last aluminium smelters and fertiliser plants disappeared some time ago. Our gas storage capacity is pitiful as compared to our neighbours. We could yet pioneer large-scale battery storage for renewable power and carbon capture and storage using extinct gas wells in the North Sea; but the arbitrary and unrealistic net zero by 2050 policy incentivises UK PLC to outsource its carbon emissions to foreign agents, some of which are unfriendly.

Reasons To Be Cheerful

What about the good news at Christmas? Last month it was revealed that the UK was the first G-20 country to have halved its carbon emissions since 1990. That is an achievement which ought to be better known – not least by the Just Stop Oil people. The average British household uses 40 percent less energy than it consumed thirty years ago.

As a result, our air is much cleaner than it was. And indeed, it is exponentially cleaner than it was in the early 1950s when everyone heated their homes with untreated coal. I can say that as someone whose maternal grandfather died in the Great Smog of London of December 1952. Admittedly, we have much more to before we can safely swim in our rivers; but the Thames in London back in the 1950s was considered so toxic that to fall into it risked death.

Moreover, despite our acute cost-of-living crisis, the world is getting richer. This year the world finally recovered from the pandemic and global output reached an all-time high. Ten years ago, about 850 million people lived in extreme poverty according to the World Bank; this year that figure fell to 610 million. And most of those unfortunate people are victims of internecine conflicts such as those raging in Yemen and South Sudan. These result from political, not market, failure.

The main reason why aggregate global carbon emissions are still rising is not that advanced countries aren’t cutting their emissions fast enough. Rather, it’s because developing countries are growing their economies rapidly and their populations are expanding, not least because of falling levels of infant mortality. (The population of the world is currently growing by well over 150,000 souls every single day according to the World Population Clock).

For that reason, CO2 emissions are likely to rise for at least the next three decades before they start to fall. It is not reasonable to demand that countries in Africa which have been reliant on burning firewood, cow dung and crop residue for domestic cooking to transition directly to renewables and to bypass hydrocarbons altogether.

Periodic heat waves, such as the one that hit the UK in late July 2022, when temperatures in the South east and East Anglia reached 40 Celsius, will become more common. But these, given adequate planning, are quite survivable. (I was hosting a lunch party on 17 July 2022. We had to retreat from the terrace to the summer house because my guests complained it was too hot! That was a first in Norfolk). Catastrophists claim that the 2022 heat wave cost the UK 2,000 excess deaths; but many more excess deaths in Britain are caused by extreme winter cold than extreme summer heat.

Water management will become a major issue in the UK and even more so in the Global South. That will be a constraint on Labour’s proposed housebuilding programme, as I shall discuss next year. On the other hand, higher carbon dioxide levels and higher rainfall are increasing crop yields at temperate latitudes. We do need to talk more about adapting to global warming because it’s going to happen – good COP or bad COP.

That said, globally, longevity is increasing along with levels of public health – notwithstanding the uptick in levels of diabetes and obesity in countries such as the USA, the UK and Mexico. And at the end of the year in which we all became acquainted with AI, as we know, technology is advancing at break-neck speed which promises further advances in medical technology.

Evidence for climate change continues to accumulate. Spain has been enjoying or enduring (depending on your point of view) the warmest December on record, with temperatures in Malaga in the high-20s last week. Globally, this has reportedly been the hottest year on record. Labour is planning to mitigate the effects of climate change by spending an additional £28 billion a year in the second half of the next parliament – paid for, no doubt, by increased taxes. But then Labour believes that green spending will spur economic growth. Ed Miliband, Labour’s cheerleader for climate change, appears to believe that all investment in green energy is self-financing. Some of us remain dubious as to whether that money will be well spent.

I foresee that the Labour government elected in 2024 will create a backlash to the net zero by 2050 agenda as ordinary people perceive their living standards to be eroding as a consequence – much as the white van men are already in revolt against mayor Khan’s ULEZ regime in greater London. And that is where things will get interesting.

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Next week I’ll offer some predictions about how 2024 is likely to unfold. About one quarter of humanity will go to the polls next year in a plethora of critical elections. What will be the outcome? Will we manage to escape recession? What is the next phase of the deployment of artificial intelligence? And much more. Stay tuned.

In the meantime, here’s wishing my readers a merry Christmas.