Forecast bright for Cop28 as the world nears ‘peak green’

Ron Adar/Sopa Images/Sipa USA via Reuters Connect

Are we witnessing the dawn of “peak green”?

It might seem a crazy question given the increasing importance of climate change in geopolitics and the countdown to the Cop28 summit in the UAE.

But the actions of governments and corporations in many parts of the world, especially in Europe and North America, suggest the tired simplicities of the environmental activists, which for a few years captured Western policymaking, are being ditched in favour of climate pragmatism and energy economics.

This is not, as the green lobby would have you believe, a betrayal or a surrender. Rather, it is a much-needed recognition of the complex nature of the climate challenge – as energy experts in the Middle East have recognised all along.

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If you undertook a snap “green” inspection of the world at the end of September 2023, you would find the following:

• In the UK, Rishi Sunak’s government is rowing back on pledges made by former prime minister Boris Johnson. Bans on new petrol and diesel-fuelled cars, as well as oil-fired boilers, have been pushed back by five years and nine years respectively.
• In France, President Emmanuel Macron has asked the EU for a “pause” in the introduction of climate-related regulations, much to the chagrin of Brussels bureaucrats smitten by the green agenda.
• In Germany – the heartland of the European green movement – industry is using more “dirty” oil and coal than ever before as a squeeze on Russian gas imports continues. Perversely, the closure of nuclear facilities, a fixation of the German environmentalists over decades, is now complete, even as Berlin begins to question its own extravagant target of net zero by 2045.
• In the US, the Inflation Reduction Act has ushered in a new era for investment in renewables (with massive tax breaks), but the country remains the biggest producer of hydrocarbons in the world. America is also a major consumer of polluting oil, gas and coal products. It will take a long time for all those windmills, solar panels and electric vehicles to have a big effect.
• The US is also the home of the investor rebellion against ESG (environmental, social and governance) principles, which have done so much to crimp investment in traditional energy sources but are now facing stiff resistance, especially in emerging markets.

Sensing a change in the global wind direction, multinational oil companies have also begun to row back on pledges they foolishly made when the green lobby was sweeping all before it.

The reasons for the backlash are varied. Electoral politics play a part in countries where voters may be philosophically sympathetic to environmentalist aims, but baulk when the bills come in.

Another salient factor is the new energy economics of Europe, particularly as it manoeuvres to escape reliance on Russia. Then there is the inescapable position of China, India and many other parts of Asia – countries that do not have the luxury of choosing their power sources, but do sit on mountains of coal.

Observers in the oil-exporting countries of the Middle East could be forgiven a quick “We told you so.”

Policymakers in the region have long held the view that, while climate change is a real threat that demands urgent attention, it is counter-productive and damaging to try to meet that challenge by stopping new investment in hydrocarbons, as the Just Stop Oil lobby proposes.

Their stance all along has been that security, accessibility and sustainability in energy depend on ongoing investment to ensure that global economic growth continues while we get down to tackling greenhouse gas emissions, using all the technology and innovation we can command to solve the problem.

If I am right and we are living through the high-water mark of the global green movement, it should make for a more productive and impactful Cop28 as the over-ambitious ideals are ditched in favour of pragmatism and implementability.

Frank Kane is Editor-at-Large of AGBI and an award-winning business journalist. He also acts as a consultant to the Ministry of Energy of Saudi Arabia