Energy crisis casts shadow over Cop 27 climate goals

World leaders are heading into the Cop 27 UN climate summit in Sharm el-Sheikh, Egypt, today having struggled to turn commitments made at Cop 26 last year into actions, and with energy security concerns heightened by Russia's war in Ukraine at risk of clouding climate ambitions during the conference.

Egypt, which has taken over the Cop presidency from the UK, has dubbed the conference "the implementation Cop", following last year's flurry of pledges. But there are fears that some countries could backslide on commitments, using the energy crisis as a pretext for prioritising energy security — and fossil fuels — over net-zero goals. One of the main commitments made in the Glasgow climate pact agreed last year was to revisit and strengthen 2030 emission pledges — so-called nationally determined contributions (NDCs) — by the end of this year to align them with the 2015 Paris agreement goal of limiting global warming to well below 2°C above pre-industrial levels, and ideally to 1.5°C.

But only around 25 countries of the nearly 200 parties to the Cop process have done so before Cop 27. More countries will head to Cop 27 with new targets — Chile, Vietnam, Turkey and Mexico have said that they would, and Brazil's new government will probably confirm its intention to strengthen goals — but it will remain far from enough. Under current pledges, the world is on course to reach 2.5°C of warming by the end of the century, according to the UN.

Delivering on finance is Cop 27's priority. Egypt wants to see progress on a headline finance target of $100bn/yr, a promise that developed countries were supposed to meet by 2020 to help developing nations hit their climate goals. The OECD estimates that the goal could be reached in 2023, but delivering on the target would make for a relatively small win in Sharm el-Sheikh, as Cop parties and observers are increasingly questioning the adequacy of the figure.

"Even if we multiplied the $100bn by 10, it would not even cover half of the funding gaps for developing economies to address climate change," UN climate change high-level champion for Egypt Mahmoud Mohieldin said, stressing that the topic of finance should not be limited to this amount. Cop 27 president-designate Sameh Shoukry said the aim of the summit is to "restore the grand bargain at the centre of the Paris agreement and our collective multilateral process", whereby developing countries agree to raise their ambitions in return for financial support.

Show me the money

Beyond the headline figure, developing countries want meaningful progress on adaptation and loss and damage, with the Group of 77 plus China — an inter-governmental organisation of developing nations comprising 134 members — pushing for funding arrangements on the latter to be put on the Cop 27 agenda. Adaptation refers to adjustments in ecological, social or economic systems, in response to climate change impact. Loss and damage refers to unavoidable, permanent and destructive climate change often affecting the lowest-emitting countries.

For the first time since the UN Framework Convention on Climate Change (UNFCCC) entered into force in 1994, loss and damage funding was yesterday put on the Cop agenda, following lengthy negotiations. Observers had feared that failing to agree on this could have derailed the summit from the start. But the issue needs to be properly addressed, after no new funding for loss and damage was agreed at Cop 26, and could still weigh on the outcome of negotiations.

Observers hope that the EU and the US will push the issue forward this year. European Commission executive vice-president Frans Timmermans talked, without mentioning concrete sums, of the bloc being ambitious and "building bridges" with developing countries, while US climate envoy John Kerry said Washington is committed to finding a path forward to address loss and damage.

Another cause of concern for the Egyptian Cop presidency is that, as well as Russia's invasion of Ukraine, strained relations between the US and China could be used as an excuse for backsliding on climate commitments. China, the world's largest emitter, last year secured with India a last-minute watering down of the language in Cop 26's text on coal. Although the US criticised the Chinese leadership's absence from last year's Cop, the two countries subsequently signed a climate pledge and agreed to work on methane emissions. But China has since halted talks with the US in response to US House speaker Nancy Pelosi's trip to Taiwan.

Kerry [said that the decision to restart discussions ultimately lies with Chinese president Xi Jinping]( https://direct.argusmedia.com/newsandanalysis/article/). "Until then we are in limbo." Observers expect further development from the two countries on methane, and hope that China will release a methane action plan during the conference.

Developed nations face a crisis of climate credibility at the summit, as they scramble to tame higher energy prices. Increased coal burning and the drive to secure fossil energy supplies in the EU in response to a gas shortfall resulting from Russia's war in Ukraine could cloud the bloc's position in negotiations, although Timmermans stressed this is only a temporary response. "Even if we use a bit more coal today, we'll be going much faster in our energy transition," he said.

Phase down, but not out

G7 countries in May committed to reaching "predominantly decarbonised electricity sectors" by 2035, taking further steps towards a phase-out of unabated coal-fired power generation. But discussions on coal-fired power generation could take an awkward turn in the near-term energy crisis context. Energy security issues are expected to push overall coal demand higher in the next few years.

Global coal consumption — comprising thermal and metallurgical usage —rebounded by 5.8pc to 7.9bn t in 2021, according to the Paris-based IEA, while the consumer country organisation expects 2022 consumption to increase to 8bn t, which would match a 2013 record high. China accounts for half of the world's production and consumption.

Some ground could be gained if discussions on potential Just Energy Transition Partnerships (JETPs) with Vietnam, Indonesia and India progress during Cop 27. India's coal demand is projected to grow to 1.3bn-1.5bn t/yr by 2030 — 63pc higher than current levels — coal minister Pralhad Joshi said in March. The partnerships would be similar to the $8.5bn finance deal signed between South Africa and the US, UK, France, Germany and the EU at Cop 26 to support Africa's second-largest economy in phasing out coal. In the meantime, Germany's coal imports from South Africa have increased eightfold.

European countries have also pursued new gas projects in Africa to cut their dependence on Russian energy. Coal, and fossil fuels in general, were directly targeted for the first time in a Cop text last year. But the global energy crisis has made the issue of gas as a transition fuel a flashpoint, with some African countries likely to ask for financial support to develop their resources and economies, as Nigeria did last year at Cop 26. Uganda's oil minister last week defended the country's planned oil projects, saying that developed nations cannot tell the developing world "to remain in darkness".

It will be the first Cop to take place on the African continent since Marrakesh, Morocco, in 2016, and Egypt will be striving to lead by example, but energy security issues, as well as a currency crisis, have weighed on the country's decarbonisation plans. Kerry said last week that Egypt could pledge to reduce its gas use during the summit and build 10GW of new renewable energy capacity. Egyptian oil minister Tarek el-Molla said last month that natural gas will continue to play a key role in the future energy mix, calling it "the cleanest hydrocarbon fuel" at a meeting of the Gas Exporting Countries Forum.

By Caroline Varin