Australia's new stance at COP28 is unusual for a large fossil-fuel-producing country, even if it’s not translated into policies.
COP28 is the first time that a United Nations (UN) decision acknowledged the need for the decline of not only coal, but also oil and gas, and called on all countries to work towards it. The fact that it was struck in the Gulf region, and presided over by an oil executive, might have increased the latitude for oil and gas but also sets an important marker.
The decision allows for a continued role for fossil fuels towards net zero, is vague in many ways and leaves plenty of wriggle room for any country. Nevertheless, it is important progress on an issue where huge economic interests clash.
The decision calls on countries to contribute to “transitioning away from fossil fuels in energy systems … so as to achieve net zero by 2050”. It also calls for “phase-down” of coal without carbon capture and storage. Together this is a big part of what is needed to limit climate change.
The words on the pages of COP decisions carry weight. They can become a point of reference for government decisions about policies and emission targets, and they echo in boardrooms and banks. This COP outcome makes it harder to justify investments that contradict climate change objectives.
To the extent that fossil fuels are used in a net zero emissions world, the resulting carbon dioxide would then either be captured and sequestered, or compensated by targeted removal of carbon dioxide from the atmosphere. This is a logical scenario to meet the net zero emissions goal cost-effectively.
“Even though not translated into policies to constrain fossil fuel exports, [Australia’s] overt emphasis on future clean energy opportunities sends a strong signal internationally.”Professor Frank Jotzo
The wording of the decision excludes the chemicals sector where oil and gas are used, and it might be interpreted to exclude the transport sector. Both have ready technological options to displace fossil fuels, namely clean hydrogen-based energy feedstock and electrification.
Midway through COP28, the phrase “fossil fuel phase-out” was mooted as an option. Much hope was pinned on this and much of the disappointment in the final wording relates to the comparison with this much stronger wording that didn’t make it, given pressure from oil and gas producers.
Ceasing fossil fuels altogether would accord with a strong overall environmental vision. It would avoid the risk of non-compliance with obligations to capture or remove carbon dioxide. It would also avert environmental damages in coal mining and oil and gas extraction and processing, and air pollution from combustion.
Complete fossil fuel phase-out would put the world energy system on a completely different footing and profoundly change trade and export revenue patterns.
That in turn is inconceivable and unacceptable to many large fossil-fuel-producing countries. Entire states are built on oil and gas revenue or rely on it heavily for government income. The fossil fuel industry itself typically wields huge power. Saudi Arabia is the vanguard but there are many other countries in this bracket.
Faultlines also run between developed and developing countries as users of fossil fuels. Many poorer countries fear that they will be stuck with extra upfront costs of a rapid shift to a non-fossil fuel system.
Fairness and the UN principle of “common but differentiated responsibilities” suggest that rich countries should pay for part of the costs of transition in poorer countries, but climate finance of any kind is not nearly as large as needed or hoped for. Poorer countries may also hope for fossil fuel prices to fall as global demand tails off.
Reflecting this, the COP decision text says that the transition away from fossil fuels is to be done “in a just, orderly and equitable manner” and “taking into account … different national circumstances, pathways and approaches”.
This leaves plenty of room for any nation to diverge from the overall goal. Still, the emphasis on equity is crucial in a deeply inequitable world and differentiation according to level of development and national circumstances is enshrined in the Paris Agreement and inevitable in any case.
Fundamentally, governments are unwilling to force changes that are against their national economic interests. Instead they seek economic upside in the transition.
Australia’s new stance illustrates this in a way that is still unusual for a large fossil-fuel-producing and exporting country. At COP, the climate and energy minister, Chris Bowen, argued that the phase-out of fossil fuels is “Australia’s economic opportunity” because of this country’s comparative advantage in renewable energy. Even though not translated into policies to constrain fossil fuel exports, the overt emphasis on future clean energy opportunities sends a strong signal internationally.
The obvious stance of fossil fuel producers is to prepare for the low-carbon future, yet to ride the fossil fuel wave for as long as possible. This naturally runs into climate change constraints. COPs can help make progress but will not overcome the fundamental difference between the interests of fossil fuel rich countries, rich and poor fossil fuel users and the climate.
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