Net zero consensus will not be put back together by COP28

We have just barely survived a month of crisis in the Middle East without the Israel-Gaza war boiling over into a general – potentially nuclear – conflagration. The forgotten conflict in Ukraine might still turn septic. Apart from the over-heating US economy, the rest of the world is on the highroad to recession. And Donald Trump is gearing up for a second spell in the White House ready to introduce new anti-trade tariffs and dump Nato.

Hello chaos.

But it is on the climate front that the collapse of the global order is most pronounced. Last week saw the preliminary diplomatic horse-trading that precedes the full COP28 climate summit, to be held in the United Arab Emirates at the end of this month.

The preliminary, private discussions are designed to reach an agreement on the next stage of carbon reductions so that when the presidents and prime ministers turn up on November 30 for their photo op, a deal will already have been prepared.

Unfortunately, no such deal emerged last week. In fact, any consensus on how to reach net zero has well-nigh disappeared. And that makes events in the Middle East seem like a temporary blip.

Let’s recap because the Israel-Hamas war has temporarily removed the climate crisis from the front pages. A sudden spike in global energy prices was triggered by the outbreak last year of the Russo-Ukraine conflict. Wars eat energy and cause everyone to panic.

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At the same time, the West imposed sanctions on the export of Russian gas. And just to add a bit of drama, somebody blew up the gas pipelines between Russia and Europe. Unfortunately, cheap energy is what underpins economic growth and higher productivity. So there is now a global rush to find new sources of cheap fossil fuels, to keep the wheels of the international economy spinning.

It is important to stress this new reality because in the liberal media in Europe, the UK and Scotland, there is still a view that a world consensus exists to reach net zero. That, folks, was yesterday’s agenda. To be clear: this writer is a proponent of achieving net zero carbon emissions as soon as possible. But instant net zero is no longer an agreed goal.

The present inflation and economic emergency, coupled with the collapse of globalism, has shattered the net zero consensus. COP28 will not put Humpty Dumpty back together. Rather than moan, we need to understand more clearly what is happening.

An added complication is that the 2015 Paris COP21 (which I attended) committed the international community to rapid reductions in fossil fuel burning – particularly of coal, the cheapest form of energy production. In addition, a number of countries committed to ending nuclear power generation.

All this was well and good, but headline-grabbing cuts to coal and nuclear ran ahead of green substitutes. The result is that many countries are restarting coal burning in order to tackle the present energy shortage and cost inflation. Chinese coal burn is up 15% on a year ago. Drought in India has led to that country substituting coal for hydro this year. In short, the world is burning more coal than ever.

And that precisely was the break point in last week’s pre-COP28 negotiations in Abu Dhabi.

A group of 15 nations spearheaded by France, Spain, Ireland and Kenya tried to accelerate the phasing out of coal burning. Additionally, they argued that reductions in fossil fuel use should not be delayed until carbon capture technology improves. In other words, fossil fuel reduction should not be dependent on successful abatement policies.

But these proposals were kicked out of touch as a variety of vested interests came into play.

First, the Americans decided to support coal reductions as a way of hurting China, which has had to turn back to coal in a big way. But everyone knows the US is now self-sufficient in gas and is expanding gas output.

The big American oil giants have switched from focusing on investing in renewables to buying up independent gas fracking companies. Last month alone, Chevron spent $53 billion buying a gas company called Hess, and Exxon forked out $60bn for Pioneer Natural Resources. This represents a massive consolidation of the US fossil fuel industry, which is backing Trump’s return to the White House.

This obvious American hypocrisy will do nothing to discourage China, India and the Asian economies from burning more coal. And one obvious fallout from the US involvement in the Israel-Gazza conflict is that the Arab countries are not going to agree to tougher cuts on their own oil production. In fact, the president of COP28 – who is actually the boss of the UAE’s state-owned oil company – is arguing that the road to net zero should focus on cutting emissions and not fossil fuel production per se. As if you can have one without the other.

But what of renewables?

Again, last week brought catastrophic news. The world’s biggest offshore-wind developer is the Danish Orsted company. But Orsted’s share price has dived by 26% after it abandoned major projects in America, writing off a $4bn investment.

The entire US offshore generation industry is broken as a result of permit delays, inflation and competition from gas. Anyone who thinks the days of Big Oil and Gas are over needs to think again.

I am not hopeful that the full COP28 will improve matters even if some diplomatic fudge is announced. We are trapped between wishful thinking and the reality of global energy capitalism. What to do?

Faithful readers will know that I do not favour Scotland simply ignoring this reality and ending fossil fuel production instantaneously. That is utopian. We need to take Scotland’s massive energy resources into public ownership – fossil and renewable – and use one to finance the transition to the other in measured time. Our strategically important energy industry also gives us a place at the diplomatic negotiating table.

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Why give that away? Carbon capture and storage is by no means a settled or cost-effective technology. Scotland could use its continuing stake in oil and gas to pioneer in that technological field. The North Sea has some of the best underground sites for carbon capture – so-called “saline aquifers”.

None of this precludes achieving net zero by circa mid-century. However, the focus should be on emission control, mitigation and reduced production – in that order. To achieve emission control, we need a better international system of carbon pricing – taxing the worst pollution by a higher amount.

But we also need an incentive as well as a stick, if we are to persuade coal users to switch. That might involve giving the Asian economies freer trade access to America and Europe. However, I doubt if a Trump White House would be keen on that.

Sadly, there will be no independent Scottish representation at COP28. King Charlie will give an anodyne opening address. Rishi Sunak will fly out in his jet. There will be a lot of posturing. But posturing is no longer sufficient.

Otherwise, we could replace coal burning with diplomatic hot air.