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Politics vs climate: COP28 fossil fuel deal threatened by national interests

World leaders are unsurprisingly divided on the idea of drafting an agreement to phase out oil and gas. The lack of alignment between policy makers and solutions to the environmental crisis is profound.

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One of the most pressing topics on the table at COP28 is draft text outlining how, and when, the global economy might start weaning itself off highly polluting fuels like oil and gas.

The Netherlands has been central to a new coalition of countries committed to publishing an inventory of every fossil fuel subsidy they currently pay, building on an agreement struck at COP26 in Glasgow to reduce ‘inefficient’ subsidies. The Dutch government recently confirmed it spends around $40billion supporting the industry annually. 

According to the International Monetary Fund, the worldwide cost of subsidising oil and gas companies is now in the trillions. That figure has risen significantly in the past two years, reaching record levels during 2022.

China alone provided $2.2trillion in subsidies, or 12.5% of national GDP. Meanwhile, the same year saw many of the largest companies in the sector post significantly higher year-on-year profits as energy costs rocketed, hitting taxpayers hard. 

‘We cannot phase out fossil fuels without tackling fossil fuel subsidies,’ said Dutch climate minister, Rob Jetten, at the U.N. climate summit COP28 in Dubai. ‘We must ensure the right economic incentives are in place.’

It had been hoped the US would join the Dutch-led coalition, with President Joe Biden resurrecting a former-Barack Obama campaign to tackle fossil fuel subsidies. The States is believed to pay out around $760billion to oil and gas giants each year in subsidies. Despite White House support to bring that figure down, the closely divided Congress has been a battle ground for debates on the matter, placing international agreements out of reach until a domestic consensus. 

Meanwhile, in the past few days Haitham Al Ghais, Secretary General of OPEC – the Organization of the Petroleum Exporting Countries – caused outrage with an unprecedented intervention at COP28 when he instructed member states to reject any and all proposals to phase out fossil fuels. This removes the possibility of any such plan receiving backing from nations including Algeria, Iran, Iraq, and United Arab Emirates – host of this year’s UN environmental summit.

OPEC member Saudi Arabia has been criticised in particular for leading attempts to block  serious negotiations for a deal in this area. Germany’s climate envoy, Jennifer Morgan, described the country as being in a state of ‘panic’ over the potential agreement. She also pointed to Al Ghais’ instruction as a clear sign that climate talks pose an existential threat to the oil and gas industry’s business model.

A document obtained by Politico revealed Saudi Arabian officials at COP28 had been asked to raise concerns around ‘lifecycle emissions’ linked to clean energy infrastructure in a bid to de-legitimise transition. Instead, the world’s second largest oil producer advocates continued extraction of fossil fuels and a reliance on carbon capture and storage – a technology many argue remains unproven at any meaningful scale. 

‘They obviously felt they needed to engage,’ Morgan told a group of reporters in response to a Politico question regarding the OPEC instruction. ‘Whether it was a bit of panic, whether it was a bit of realisation of how far the discussions are. That’s my take on that.’

 

 

 

 

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