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COP28 and the Just Energy Transition

Image: Credit: COP28 / Anthony Fleyhan

Guest blog by Greg Cook, Carbon Counts

The 28th UN Climate Change Conference, held in Dubai in December 2023, has widely been reported as marking the “start of the end” for fossil fuels. Gregory Cook from Carbon Counts reflects on the outcomes of COP28 and what it means for coal.
The Road from Paris to Dubai

That initial mood of optimism soon saw its first of several setbacks as President Trump withdrew the USA from the Paris Agreement (the first country to do so) in June 2017 in the run-up to COP23. Despite agreement on a Paris “Rulebook” reached in Katowice in 2018, laying out the nuts and bolts of how the Paris Agreement would actually work, it was the Glasgow COP26, held in 2021, that saw some life breathed back into the process with agreements reached on accelerating action and mobilising finance. Glasgow also saw countries agree for the first time to a “phase-down” of coal power and a “phase-out” of inefficient fossil fuel subsidies. This was accompanied by a whole raft of announcements, initiatives and partnerships aimed at shifting out of fossil fuel use, and in particular coal, most notably the Glasgow Financial Alliance for Net Zero (GFANZ), a global coalition of over 500 financial institutions committed to “accelerating the transition to a net-zero global economy.”

Fossil fuels on the agenda

COP28 was important for several reasons, not least in marking the culmination of the first Global Stocktake designed to check countries’ collective progress against the Paris goals. A ‘synthesis’ report released by the UN in the run-up made grim reading, concluding that emissions were rising and global efforts were definitely not on track, thereby raising expectations for a shift in gear for political commitments and actions.

The role of fossil fuels was always set to be a major focus of the talks, with a growing number of OECD, African and island nations pushing in advance for an agreement on a fossil fuel “phase-out”. Fossil fuels were further pushed into the eye of the media with the controversial appointment of head of state oil company ADNOC, Sultan Al Jaber, as COP President. Seeking to address wide-spread mistrust, Al Jaber announced that he was “laser-focused on keeping 1.5C in reach”, followed by an unusual joint statement with the International Energy Agency (IEA) acknowledging that “fossil fuel demand and supply must phase down this decade”.

Negotiating the energy text

Tasked with overseeing the development of the “consensus” negotiating text, co-chairs UK and Singapore had the unenviable role of boiling down hundreds of submissions on fossil fuels into a workable set of options. A first attempt to do so called upon countries to take further action towards… “an orderly and just phase-out of fossil fuels”. The use of the term “phase out”, which had been blocked in the closing hours of COP27 by China and India, set the cat among the pigeons, with OPEC writing to member countries urging them to oppose the text and a large bloc of developing countries also objecting to the term.

Three days of intense high-level negotiations followed, resulting in a new version of the text, this time with no mention of a fossil fuel “phase-out”. Instead, countries would take actions that “could include,” among other things, “reducing both consumption and production of fossil fuels”. This use of “could include” provoked an angry response from many, with the EU’s lead negotiator threatening to walk out of the talks and the World Resources Institute (WRI) calling the text a “choose-your-own-adventure approach to climate action”. Cue more high-level diplomacy, with talks moving long past the official deadline into the early hours – now somewhat customary for a climate summit.

The UAE Consensus: What was agreed?

In the end, the final text calls on all countries “to contribute to” a list of goals, including “transitioning away from fossil fuels”. Although falling short of the full “phase-out” many considered necessary to deliver on the Paris goals, there was however broad support for the compromise which was greeted by a standing ovation and loud applause across the plenary hall. This lead UN Climate Head Simon Stiell to conclude that, “While we didn’t turn the page on the fossil fuel era in Dubai, this outcome is the beginning of the end” while UN Secretary General António Guterres stated that phasing out fossil fuels was now “inevitable”.

Positions on transitions…

This may be true, but the diplomatic wrangles over the language on fossil fuels reflects some deep regional divisions over their role within the energy transition. For coal-fired power in particular – the main focus of anti-fossil initiatives such as the Powering Past Coal Alliance (PPCA) – there is now a clear gulf between OECD Europe and North America retiring their aging coal fleets and coal-dependent emerging economies of Asia such as China and India expanding their coal capacity. This increasingly bipolar trend is reflected in domestic energy policy and bank lending rules. For example, while OECD-headquartered commercial banks are almost all now signed up to GFANZ and other initiatives restricting lending for new “unabated” coal, no such restrictions apply to domestic banks. These include the “big six” state-owned banks in China currently financing almost all new multi-GW coal facilities. Even with ambitious action on renewables and the roll-out of multi-billion dollar financing packages such as the Just Energy Transitions Partnerships (JETPs), baseload coal looks set to remain a major part of the energy mix in these energy-hungry economies for some time to come.

Source data: BP, 2022; Energy Institute, 2024

The ambiguous “transitioning away” agreed in Dubai allows countries to each interpret something different from the same text, the final language serving as a kind of Rorschach inkblot whereby each country can “transition” according to the realities of its own domestic politics and energy needs. However, while the timing and scale of the transition may vary by region, there is global consensus on the need to achieve net zero.

The critical challenge therefore is aligning net zero ambitions with a continued reliance on coal, a resource upon which many millions of workers rely worldwide. Countries representing over two thirds of global coal use in power currently have net zero pledges but no specific commitments on coal use or key mitigation technologies such as carbon, capture and storage (CCS).

Ensuring an “orderly and just” transition towards net zero while keeping the lights on in these regions will take considerable political leadership and ingenuity in the design of climate finance and incentives over the coming years.