Carbon tax blunders, transition problems and wars will complicate matters at United Nations conference this month
On the United Nations’ official website for this month’s COP28 climate conference in Dubai, about four hours by plane from Gaza, the countdown is underway. At about the time this column was published, the official UN wait time for the opening of COP28 would have been 28 days, 12 hours, 39 minutes and 12 seconds. That’s not much time to overcome the current collapsing state of climate policy around the world.
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The reasons for policy turmoil are at once global, national and local across a range of developments and complications. They include the wars in Gaza and Ukraine, national policy meltdowns over carbon taxes, and major issues related to technology, science and economics.
On Monday in Dubai, the head of the COP28 event — United Arab Emirates Industry Minister Sultan Ahmed Al Jaber — called for international co-operation and compromise in the face of growing political and economic divisions over the UN plan to phase out the burning of coal, oil and natural gas.
Al Jaber’s concerns were echoed with stronger language of doubt from the European Union’s Climate Action Commissioner. Wopke Hoekstra said the only real item on the COP28 agenda is to reach a consensus on phasing out fossil fuels. Given the “geopolitically very troubling times,” it has never been harder to reach an agreement, he said.
Any review of developments over the past weeks points to a declining national and international climate policy environment that could lead to some kind of breakup. Such a prediction could be wrong, of course, but consider the following evidence from all over. In the G7 alone, the political climate in four member nations — Canada, the United States, Germany and the United Kingdom — is uncertain and filled with conflict over climate policy.
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• In Canada, the ruling Liberal government under Prime Minister Justin Trudeau last week launched a pullback in carbon taxation that most observers believe could undermine and even kill the Canadian carbon tax. Premiers and businesses are calling for scaling back on the tax. Even the carbon tax enthusiasts on the Globe and Mail’s editorial board see doom ahead. “Why would anyone make a costly energy-saving investment when the Liberals have begun to erode carbon pricing?”
• In coming days, British Prime Minister Rishi Sunak is expected to deliver a major speech announcing a significant pullback in climate change policies. The United Kingdom’s wind farm strategy is in tatters. In Germany, the government is reportedly in talks “to provide a multibillion-euro bailout to the engineering company Siemens Energy to shore up its balance sheet amid increasing problems at its wind turbine division.” In August, a German company began dismantling a wind farm in Westphalia to make way for a coal mine expansion.
• Electric vehicle economics keep getting rattled by weak prices and low demand. Ford CFO John Lawler said the company will delay some of its planned multibillion-dollar investment in new EV and battery production capacity, citing “tremendous downward pressure” on prices. Ford lost US$37,000 on each EV sold in the past quarter. General Motors is also making grim statements about the EV market, reflecting a major industry problem. EVs are the focus of multibillion-dollar government-backed investments in technologies, batteries and essential minerals — all of which could come under heavy questioning if the current price and demand trends are not reversed. But how could they be?
• While the goal is to end fossil fuel production, the oil industry is booming. Oil and gas prices are rising, with oil near 10-year highs and generating third-quarter profits for such giants as Exxon (US$9.1 billion) and Chevron (US$6.5 billion). The profits are down from the all-time highs of 2022, but the fossil fuel sector is still booming. Both Exxon and Chevron are also closing in on US$110 billion in takeover deals. Investor skepticism hangs over the deals. Still, the pro-fossil-fuel trends seem to be in place.
• Nobody likes fossil fuels — except many national governments around the world, if not most governments that represent most of the world’s population. Nations within the European Union are divided, with several countries (Poland, the Czech Republic and others) fighting to keep fossil fuels and, as reported by Reuters, forcing the EU to adopt a vague plan for COP28 filled with exemptions and with no end date to fossil fuel use. In China, new coal plants have been approved through 2023 at the rate of two per week. China now has 243 GW of coal power capacity, which experts say make it unlikely the country will be able to meet its 2060 fossil fuel control targets.
• A new joint report this week from the International Renewable Energy Agency (IRENA)and the COP28 organization starts off with a grim outlook. Despite all the policy moves, subsidies, regulations and corporate buy-ins, “the energy transition remains off-track and global greenhouse gas emissions have reached record levels.” As is typical of such reports urging decisive action, the IRENA paper is filled with urgent language on the need to “double down and triple up” the transition to renewable power by 2030.
But the IRENA report, like all the gung-ho calls for action at COP28, were produced before the Gaza attacks and before it became obvious that the climate crisis has been overtaken by wars and other crises — including inflation and recession risks that in the public mind rank way above changing the climate in 2050.
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