COP28: Who’s in Charge of How?
The UN’s annual COP extravaganzas produce both a low common denominator for climate action that literally everybody will accept, and the highest of human aspirations to save our home from our own ravages. They are somehow “a stab in the back” and an inspiration at the same time. Weird events reflecting weird times.
This year’s COP 28 was no exception. With the fossil fuel team out in force, the disappointments are easier for climate activists to see. But the inspiration may turn out to be real, and the debates could help clarify what has been fuzzy thinking by opposing sides on climate justice issues related to the varying ways in which pressure can be applied to abandon fossil fuel in favor of clean energy and less energy. What should get cut first, oil and other fossil fuel demand? Or oil supply? Why does it matter?
The COP 28 pledge likely to have the biggest practical, measurable impact over the next few critical years is doubling energy efficiency and tripling renewables, signed onto by 130 nations as of the conference’s end. Oil company pledges to achieve “near-zero” methane emissions compete by this measure. In both cases, it’s possible much of this would have happened anyway, but these pledges will get much of the credit — and having such pledges in place may bolster resolve.
On a less concrete plane is the Dubai confab’s call for “transitioning away from fossil fuels in energy systems, in a just, orderly and equitable manner.” It’s surely better than saying nothing for yet another year about the source of climate change. But is this first-ever COP mention of fossil fuels a big enough deal to justify days of argument and the CO2 emitted in getting thousands of people to air-conditioned buildings in a desert oil state? And is there any real difference between “transitioning away from” and “phasing out” fossil fuels?
To anybody who wasn’t involved in the talks — and not a few who were — it all seems silly at best, if not tragic. Indeed, most of the extensive verbiage issued in COP28’s name will be forgotten. Island nations and others aren’t wrong to see it as an insult to frontline peoples in the climate catastrophe.
But the odd phase in obsessively word-picked COP documents does end up making a difference. The 1.5℃ goal for capping global warming is a case in point. It got stuck into the 2015 Paris Agreement almost as an afterthought. The formal “goal” was to keep the global rise above pre-industrial temperature levels to “well below 2℃,” with 1.5℃ tacked on as a vague aspiration. Yet 1.5 has come to be the benchmark everyone cites. Temperature rise will probably exceed 1.5℃, nonetheless. But it provides a powerful and important rallying cry.
COP28’s explicit mention of fossil fuels as the problem, however it’s phrased, may in time take on similar importance. Everybody knew long before COP28 that fossil fuels are the chief source of the carbon and methane emissions that are changing the climate and that these fuels will have to be replaced if we aren’t all going to bake or drown. Still, it’s important to be clear. Humanity has finally said it out loud: fossil fuels are the problem, not the solution that economic growth advocates have for so long proclaimed them to be.
Even if we now understand that ending our addiction to oil is the end-goal, however, critical questions remain. How do we get from here to there? Who gets jettisoned and who gets saved when things go wrong along the way, as they inevitably will?
How Words Matter
This is where differences start to emerge between “transition away from” and “phase out.” If you promise to phase something out, you promise to gradually get rid of it. Many would see it as a “supply-side” approach implying an obligation to cut oil production in order to ensure that less oil is burned. Or that’s what oil exporting countries like Saudi Arabia and oil companies such as Exxon tend to think.
“Transition away from” is closer to neutral. It could mean reducing supply, but it could equally mean reducing demand, or some combination.
This is the key fear for some —hope for others — that lurked behind oddly emotional debates about this apparently esoteric wording issue: Should we force oil companies and countries to reduce fossil fuel extraction and let demand fall in response? Or should we rely on renewables, electrification, and regulation to shrink demand for fossil fuels and assume supply will fall in response?
Most climate activists insist that the supply of fossil fuels should be forcibly reduced. They don’t like oil companies. What better way to get rid of those distasteful entities and punish them for the very real damage they have done and the very real lies they have perpetrated than to order them to quit doing the thing that earns them so much money and power? Activists also advocate for demand reduction — less driving, less flying, more solar, EVs and such like — but not with the same vehemence they direct at oil producers.
Likewise, oil companies and countries fight tooth and nail against measures aimed at reducing supply. They want to be free to pump as much oil or natural gas “as the market demands.” They realize that measures explicitly aimed at reducing that market demand — such as the efficiency and renewables pledges made at COP 28 and government incentives for EVs — could shrink their business. But they don’t oppose these with the same vehemence as production controls.
Part of the reason may be that both sides see supply constraint as more effective than demand reduction. Functionally, it’s easier to order a few oil companies to gradually reduce production than to get billions of people to change their patterns of energy consumption. Also, few oil executives believe that what they often see as a bunch of tree huggers and extinction rebels can come up with a functioning, politically acceptable alternative energy system. Certainly not one that’s cheaper and healthier than theirs.
Who’s In Charge?
There’s a lot of emotion wrapped up in the positions different individuals and institutions take on this question of supply-side versus demand-side actions. Some amount of demand-side action is already in-train. Solar power is being installed. EVs are on the roads. Insulation and heat pumps are going into a lot more buildings. So is some degree of climate-related supply constraint, imposed by investment funds and a few governments, often under pressure from climate activists. But much, much more is needed and what should the balance be?
This is not a simple question, and it seems that, with emotion running so high, neither side has properly thought through the implications. Different approaches to phasing out humanity’s dominant energy sources have hugely different impacts on different groups of people. It matters for the lives and livelihoods of billions of people not only that we quit using coal, oil, and natural gas, but also how we do it.
We don’t live in a centrally planned world economy. For better or worse, we live in a market economy. In the world as it currently operates, what limiting fossil fuel production would do is inflate the price of oil. That hurts low-income people in rich countries, and it hurts low-income countries that have borrow to pay full price for oil and often subsidize the sale of oil products to citizens who couldn’t otherwise afford to cook or get around to work, school, or healthcare. For richer people, high gasoline and other oil and natural gas prices may be irritating, but they are generally affordable. It’s the poor that suffer from costly fuel. Is that really what climate activists want?
High oil prices also raise oil company earnings and oil country revenue, at least in the near-term. In the long-term, it will hurt these companies and countries by reducing the volume of oil they can sell. Indeed, as noted above, cutting supply below levels of existing demand is arguably the quickest way to reduce that demand. It may hurt, but it works. In the meantime, though, it will leave oil producers fat, happy, and influential — just as they are at the moment.
Ironically, the reason oil companies and countries have done so well recently is that some of them are reducing production with the more-or less explicit intention of propping up oil prices by keeping supply “in balance” with demand. Those like the Saudis who fought hardest at COP28 against any whiff of supply constraint to fight global warming are the same ones who are constraining supply in the name of “market balance.” They’re seeking “stability” at a price level of their choosing, however. That’s very different from being ordered to cut.
It’s a question of who is in charge. Opec has been regulating oil production for much of the time for many decades. The major international oil companies known as the Seven Sisters did so before that, as for a time did the Texas Railroad Commission. Oil pricing has rarely been a matter for free markets. All these efforts were in the interest of keeping oil industry prices and profits high, and they worked amazing well. Nor did they notably reduce demand when there was no alternative.
The Western oil companies have used the influence gained from their high-earnings of the last couple of years to push the notion that placing the kind of constraints climate activists seek on oil production would hurt everybody, but especially poor people and countries who can’t afford those high prices. If fossil fuel use is going to fall, demand should fall first, ahead of supply. The oil lobby also stresses the importance, as they see it, of ensuring that economic growth isn’t slowed by the energy transition.
What’s Right?
Their tears may be crocodile, but the Western oil companies aren’t entirely wrong. In the near-term, poor people are hurt by high oil prices. Demand-side measures to aid adoption of alternatives at all income levels can and should be designed to require that the wealthy adapt along with everyone else. This should be the first line of attack in the struggle to “transition away from” fossil fuels.
I’m confident that the oil companies are wrong to think that the rest of us can’t develop a better, cleaner energy system that will put them out of business. I’m confident that humanity can do that in a way that is fairer than fossil fueled development was. A way that allows the Global South to dump colonial- and post-colonial-era debt and find new modes of social and economic development that won’t make the planet unlivable. A way that looks like degrowth rather than GDP growth for the over-developed world.
We can do all those things. But will we? That’s the really hard question.
