The dust has started to settle following the UN's Cop 29 climate summit in Baku, Azerbaijan, last month, and the general sentiment is again of missed opportunities. This is despite an agreement to mobilise $300bn/yr in climate finance for developing countries. Clean cooking in sub-Saharan Africa and other developing regions also appears to have slipped down the agenda at the summit. Yet this did not stop the World Liquid Gas Association (WLGA) LPG Week conference in Cape Town, South Africa, dedicating much of its energy to the issue over 18-22 November. Argus spoke with WLGA chief advocacy officer Michael Kelly about Cop 29 and LPG Week.
What were your overall impressions of Cop 29?
The venue impacted the negotiations. Cop 29 was well organised. Baku is charming. It was well managed, it was safe and the number of protests was limited. It was also surprisingly big — nearly 50,000 people, which makes it one of the biggest Cops in history. But the outcomes don't seem to be that significant. The final negotiations stretched into Sunday [24 November] and some late text modifications happened that disappointed those with more ambition. And the entirety of the negotiations had a glum mood because of the US election, given [US president-elect Donald] Trump pulled the US out of the Paris Agreement [during his first term]. None of his allies followed him then, but this time they might, because you have other populist regimes around the world. For example, the Argentinian delegation pulled out. This may be a hinge point.
Did it meet expectations in terms of raising the clean cooking in Africa agenda?
Clean cooking didn't figure as prominently in Cop 29 as it did in Cop 28. There may have been more focus on clean cooking, but the US election scrambled the message, plus a lot of governments had other priorities going into Cop 29. There were also a lot of calls from developing countries to change the way future summits are structured so fossil fuel lobbyists like me have their influence reduced. So, it seems like the clean cooking in Africa agenda was not really pushed, and the only silver lining may be the adoption of articles 6.4 and 6.2.
Article 6.4 of the Paris Agreement concerns the creation of a global carbon market overseen by the UN, while 6.2 enables carbon credit trading between countries. Does this mean LPG could be included in a global credit scheme?
Our industry has yet to seize the opportunity offered by carbon credits. Some of our members are working on this and it has been a topic of discussion with a lot of interest, but nobody has been able to crack the code yet. There are new algorithms in place by [carbon credit registries] Verra and Gold Standard — the Gold Standard one is under consultation — that we've contributed to, and WLGA member Envirofit helped design the Gold Standard consultation. Verra and Gold Standard had already included biomass-to-LPG for clean cooking in their credit schemes, but they were very limited in what they would accept. This is theoretically what they are changing, to expand the scope for carbon credits, including LPG projects.
You flew from Cop 29 to LPG Week in Cape Town. Was the event a success?
The feedback has been very positive. We didn't think we would have as many local participants as we did. We had South Africa's mineral and petroleum resources minister Gwede Mantashe, who gave a fairly full-throated endorsement of LPG. The market in South Africa is growing pretty strongly, largely because of [LPG trading firm] Petredec's [Richards Bay import terminal]. It's a few years old now but [the company is] establishing a rail connection to Gauteng, which is the most populous province in South Africa, and it looks like the market is really poised to grow.
A core theme at LPG Week was cost. Are targeted subsidies a necessity in sub-Saharan Africa in areas where households cannot afford to cook with LPG?
We recognise that subsidies can be effective in expanding access to LPG, and the main example of this is in India. But subsidies aren't a realistic option for many governments in sub-Saharan Africa because they simply can't afford them. The other challenge with subsidies is that they're hard to remove. There are other tools in the toolbox that governments can use to encourage growth. Saying that, with all the risks acknowledged and taking advantage of technology the way India has through biometrics and direct benefit transfers, they can be very effective in targeting a particular population and minimising seepage.
Can carbon credits play a key role in the region?
Some of our significant members think they will in offsetting the costs for those making investments, not only in sub-Saharan Africa but in other developing countries. It seems like they're moving in the right direction. The recent moves by Verra and Gold Standard and the approval of articles 6.2 and 6.4 at Baku demonstrate this. But the proof will be in the pudding — it's going to take one of our members to get a few projects up and running and receiving credits to prove the concept. One thing that came out of a study that [US-based clean cooking non-profit organisation] Envirofit did for us last year is that in order for carbon credits to be effective for a company, they can't just be a bolt-on. They almost have to establish a new business unit or department focused on carbon credits to make them worthwhile. So there's a cost associated with getting the credits, and a learning curve, which means it will take time.
Cylinder ownership is a significant challenge in sub-Saharan Africa. Is the cylinder recirculation model the best approach?
Our official position is that the only model that works is the cylinder recirculation model. Even when you're using pay-as-you-go [PAYG] systems that allow people to buy small amounts of LPG, it's still a cylinder recirculation model. Because the marketer puts a sensor on the cylinder and owns the cylinder, and the consumer buys small amounts, controlled by a locking mechanism. Once the cylinder is empty, it gets replaced by the marketer.
What is holding back the adoption of PAYG technologies in the region?
There are two challenges PAYG systems face. One is the penetration of cell phones, which is a problem in rural populations in sub-Saharan Africa. And the biggest issue is the cost of the technology. You hope that as these technologies evolve, the costs will come down. But it's taking longer than anticipated when these things first rolled out about 10 years ago. Everyone thought they would be the iPhone for our industry. But it's yet to really take off the way we had hoped.
A soon-to-be-released report suggests 60mn-120mn t/yr of renewable liquid gases (RLG) can be produced by 2050. Do you think these levels are feasible?
Achieving these kinds of numbers is dependent heavily upon strong, supportive policy frameworks and access to feedstocks. But there is a significant risk that RLG production may only reach less than a quarter of this potential capacity. Furthermore, without the supportive policy frameworks, there's a risk that feedstock and product competition will restrict the market available to the LPG sector. What is going to happen with renewable fuels, not just RLG, is very hard to predict.
Does a Trump second term threaten the status of US RLG projects?
In a word, yes.
