Can COP28 really try to ignore fossil fuels?

Every summer the Scottish city of Edinburgh holds a high-profile theatre and comedy festival that is famous for its drama and laughter. This year’s event, however, will also feature an act that is too serious to be humorous: John Kerry, the US climate envoy, will speak on the future of climate negotiations and government policy.

It is a cleverly chosen — albeit novel — venue for him to deliver his message, since Edinburgh attracts a youthful (intellectual) crowd. The timing is also striking. For one thing, the speech comes as Britain’s government is unleashing a backlash against green policies, in a desperate bid to win more electoral support. Second, Kerry recently made a high-profile trip to Beijing in a bid to restart discussions between China and the US. Third, as preparations for COP28 in the United Arab Emirates draw closer, there is rising concern that this year’s summit “will be a washout”, as the FT highlighted in a recent podcast. So it will be interesting to see what Kerry’s message is about COP28.

We tackle the last issue — namely the COP28 talks — in today’s newsletter; do tell us what you think.

And see below for an intriguing intervention from the UN’s external auditor, which says that climate targets are becoming excessively complex and confusing — and thus risk being ineffective. We have considerable sympathy with this; the sheer number of acronyms and goals is confusing us too. Let us pray that COP28 can inject more clarity — and energy. Gillian Tett

How fossil fuel-rich UAE will handle COP28

A couple of weeks ago Sultan Ahmed al-Jaber, the chief executive of Abu Dhabi National Oil Company (Adnoc) who is also president of the upcoming COP28 talks in the United Arab Emirates, released a letter setting out the agenda for this year’s summit. It was, predictably, full of lofty statements.

Most notably, the meeting will focus on four “cross-cutting themes” of “technology and innovation, inclusion, front-line communities and finance” — thus mobilising a lot more money to channel transition and adaptation funds into the poorer countries of the world, while throwing resources at green tech in the developed world.

“The world must urgently accelerate the energy transition in an orderly, just and equitable way that accounts for energy security and ensures that finance and technology is available for developing countries to implement the transition,” it said.

This sounds sensible and commendable. But there is one catch: the headline release hardly mentions the term “fossil fuels”. Yes, the long-form letter recognises the need to “more than halv[e] oil and gas industry scope 1 and 2 emissions, including reaching near-zero methane emissions by 2030” as part of “the inevitable and responsible phase-down of all fossil fuels”. But this is deeply buried and overshadowed by a more visible debate around issues such as green innovation.

This is not surprising, given that the UAE has grown fabulously wealthy on the back of fossil fuels. Turkeys do not usually vote for Christmas — even with green investment projects. But, as Peter McKillop writes in a hard-hitting essay in Climate & Capital, which captures the mood of many activists, it is galling that during al-Jaber’s recent climate “listening tour” — on behalf of his COP28 boss António Guterres, UN secretary-general — Adnoc has been approving new gas investment projects.

“Your actual boss, of course, is His Highness Sheikh Mohammed bin Zayed al-Nahyan, ruler of Abu Dhabi and president of the UAE,” McKillop writes, in a mock letter to al-Jaber. “His plans to expand the Emirates’ oil and gas production are so aggressive that even your neighbor, Saudi Crown Prince Mohammed bin Salman (MBS), thinks MBZ ‘stabbed us in the back’ . . . Who needs 621 fossil fuel lobbyists when you can be the president of COP?”

The organisers of COP28 might retort that this is unfair. After all, they tell me, any meaningful climate transition will inevitably need to work with the fossil fuel industry since a transition will take many years. And since the UAE is sitting on oodles of spare funds, it is in prime position to channel money to developing countries by backing new blended finance projects. It is also using these vast funds to back green tech.

Moreover as a “crossroads” nation that is neither east nor west, the UAE might be better placed than others to organise an all-important US-China deal. Since al-Jaber is the first COP leader to emerge from the corporate sector, he might also be well placed to mobilise private finance. “We know that the current international financial architecture is fragmented and offers insufficient solutions,” he writes in his letter, pledging reform.

I fervently hope that these four points will enable COP28 to defy the critics. And it is striking how many chief executives and politicians who I have spoken with plan to attend the meeting in Abu Dhabi (not least because the region is a key player on the global stage). But the hard fact is that unless the UAE starts talking more prominently about reducing — and ultimately ending — usage of fossil fuels, popular cynicism will swell. This means discussing the role of natural gas more openly. It also requires a more prominent debate about methane emissions.

This will not be easy for al-Jaber to do, not least because he seems terrified about the idea of engaging with the global media in a dynamic way. And since there is a swelling backlash in the western world against green policies, al-Jaber might be tempted to think that the political pressure for action is receding.

But it is one thing to acknowledge that the world will need fossil fuels to power the developing world for a while; it is quite another to avoid mentioning the term in the headline COP28 letter. Let us hope this changes. (Gillian Tett)

Complex climate finance could become ‘unmanageable’

Is climate finance becoming too complicated? A member of the United Nations Board of Auditors warns that the growing number of climate finance initiatives runs the risk of becoming “unmanageable” for the organisation and could undermine co-ordinated efforts sorely needed to achieve the 2015 Paris agreement to limit global warming. 

“Everybody is aware about the growing complexity of climate finance, but nobody is tackling it,” said Pierre Moscovici, first president of the French auditing body, the Cour des Comptes, who is serving a six-year term as an external auditor of the UN. 

Moscovici is leading the team that is auditing the UN Framework Convention on Climate Change, as well as UN peacekeeping operations and the UN Development Programme, among others. A report by the auditors on the UNFCCC is expected to be released next September. 

In recent years, several UN global climate conferences have introduced new climate-focused financial instruments and frameworks. Most recently, last year’s COP27 brought an agreement on the establishment of a fund to compensate developing nations for climate change-driven loss and damage.

The UNFCCC already has various financial mechanisms under its umbrella such as the Green Climate Fund and the Global Environment Facility, which manages two other funds and acts as secretariat for another.

Better co-ordination and oversight was necessary for these funds, as there were “too many actors and no strong central body that is overseeing them”, Moscovici told Moral Money. He added that owing to its size, the UNFCCC’s secretariat was limited in what it could do.

In 2021, the auditors found a $20mn transfer from a UNFCCC-controlled fund to the World Bank’s Adaptation Fund that was not properly accounted for in their financial statements, which raised alarm bells for the auditors.

The UNFCCC’s limited resources, and the complex web of parties involved in mobilising the funds, could lead to confusion over accountability for the funds, damaging the UN’s reputation, Moscovici warned. Not only was there a risk that these funds would not maximise their full potential, but the destination of certain funds could even be “surreptitiously alter[ed]”, eg from mitigation to adaptation projects, he said.

For countries seeking funding, “the proliferation of climate finance mechanisms increases the challenges of co-ordinating and accessing finance, as well as its monitoring”, Climate Funds Update, a website tracking multilateral climate finance initiatives, pointed out. Accounting for the “effective and equitable use” of the funds also becomes challenging, it warned.

While it was still “too early to present detailed solutions” the auditors were likely to “call for a review of the existing instruments to simplify and better co-ordinate them” and address the question of the “best-placed entity” to do this, Moscovici said.

With September’s Climate Ambition Summit in New York fast approaching, followed by COP28 in November in Dubai, where details of the new loss and damage fund will be discussed, these warnings offer food for thought. (Kaori Yoshida, Nikkei)

Smart read

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