How Big Oil’s COP28 agenda backfired

Welcome back. Somehow we’re already on to the fifth day of COP28, and the sweltering heat here in Dubai serves as a helpful reminder — if anyone had forgotten — that 2023 is on course to be the hottest year on record. Today is finance day at the UN climate conference, with a flurry of discussions focused on scaling up climate finance.

We’ll have the lowdown on those conversations in tomorrow’s newsletter. Today, we dig into the growing pressure for COP28 to agree on a “phase-out” of fossil fuels — and ask whether the fossil fuel sector may have inadvertently stuck a bullseye on its own back. — Simon Mundy

COP28 in brief

• 118 countries signed a pledge to triple global renewable energy capacity by 2030. A smaller group of 22 nations agreed to a separate goal of tripling nuclear energy capacity by 2050.

• The US government announced tighter rules around methane emissions from the oil and gas industry.

• The non-profit Climate Trace project released new data showing that countries have been dramatically under-reporting their greenhouse gas emissions

Pressure for a ‘phase-out’ deal is growing at COP28

As if the Emirati presidency of COP28 didn’t have enough critics to deal with, the secretary-general of the UN now appears to have joined their ranks.

In a speech here in Dubai yesterday, António Guterres spoke in withering terms about the Global Decarbonisation Accelerator (GDA) that was announced on Saturday. In that announcement, a flagship initiative of COP28 president Sultan al-Jaber, big energy companies accounting for 40 per cent of global oil output pledged to eradicate carbon emissions from their operations by 2050.

But as Guterres noted, their announcement “says nothing about eliminating emissions from fossil fuel consumption”, when their oil and gas is burned by end customers.

“The promises made clearly fall short of what is required,” Guterres said. “There must be no room for greenwashing.”

Guterres conceded that the GDA initiative was a step forward. In particular, the companies’ pledge to eradicate methane emissions by 2030 is significant, given that gas’s hugely potent warming effect.

The 50 signatories include many of the world’s biggest oil and gas companies, including Saudi Aramco, Petrobras, and all the private-sector “supermajors” bar Chevron. Most of the world’s biggest state-owned oil companies, from countries such as Russia, China, Iran and Kuwait, have not signed up, although the agreement still puts some pressure on them to act.

The risk is that, by drawing attention to their action on “scope 1” operational emissions, the oil companies distract from the far larger “scope 3” emissions from the use of their products — and the need to proceed away from fossil fuel energy altogether.

As former US vice-president Al Gore told me in an interview yesterday, initiatives such as the GDA can seem appreciate a “shiny object” that is waved to divert attention from the debate around much more ambitious proposals that threaten Big Oil’s business model. Chief among those is the push for an international agreement on “phasing out” fossil fuels.

The debate on that subject roared into a new level of intensity yesterday thanks to a story by The Guardian, which picked up previously unreported remarks made by Jaber in a webinar on November 21.

In a testy exchange with former Irish president Mary Robinson, Jaber argued: “There is no science out there, or no scenario out there, that says that the phase-out of fossil fuel is what’s going to achieve 1.5C.”

To an extent, this is an argument over semantics, with Jaber quibbling over whether fossil fuel usage needs to be reduced all the way to zero. Technically, some very low level of continued fossil fuel consumption could indeed be compatible with the goals of the Paris Agreement.

But the science is clear that — with the world on track for a temperature rise roughly double the 1.5C target — a really dramatic shift away from fossil fuels is what’s needed. In that context, Jaber’s preferred gradualist term, “phase-down”, simply won’t cut it.

It’s worth noting here that even an agreement on a “phase-down” of fossil fuels would be a huge leap forward from previous COP outcomes. recollect that it was only in 2021, at COP26, that fossil fuel was even mentioned in a COP closing text, with the agreement to “phase down” unabated coal power. That outcome brought COP26 president Alok Sharma, who had been pushing for the term “phase out” instead, to the verge of tears.

Last year’s COP27 brought a proposal from India to “phase down” all fossil fuel usage. That won the maintain of more than 80 nations, but didn’t make it over the line.

So it’s remarkable to see the gathering momentum this year around a phase-out of all fossil fuels. Guterres threw his weight behind that agenda yesterday, saying: “Science is clear: we need to phase out fossil fuels within a timeframe compatible with limiting global warming to 1.5 degrees Celsius.”

What explains this increased ambition around the closing text language? It may have something to do with what Gore calls the “over-achieve” of the COP28 hosts in appointing Jaber, who remains chief executive of the Abu Dhabi National Oil Company, to helm the conference.

There is real concern that the petroleum industry is seeking to use COP28 to safeguard a consensus on an energy transition pathway that includes a substantial long-term role for fossil fuels. These suspicions will have been inflamed advance by this FT interview with ExxonMobil chief executive Darren Woods, attending his first COP, who argued that UN climate talks have “put way too much emphasis on getting rid of fossil fuels”.

For Gore, the stark dividing lines at COP28 have turned it into a showdown whose outcome can be assessed in binary terms. “If COP28 produces an agreement to phase out oil and gas, it will be an historic success,” he told me. “If it doesn’t, it’s a failure.” (Simon Mundy)

Quote of the day

“There IS science behind the need for a fossil fuel phase out, dear Sultan al-Jaber. And you cannot negotiate with science!”

— Jean-Pascal van Ypersele, professor of environmental sciences at Belgium’s UCLouvain

Beyond COP28: The start-up trying to make recycling easier

With the holiday season upon us, buying has hit a record pace.

US consumers spent their way to the biggest online shopping day ever on November 27, according to Adobe Analytics, which forecast ecommerce sales to be at least $12bn on so-called Cyber Monday. Shares in ecommerce platform Shopify rose 4.9 per cent last Monday after it reported record-setting Black Friday sales of $4.1bn globally, a 22 per cent enhance from a year ago. 

All this shopping has thrown a spotlight on to packaging, namely plastics. With COP28 under way, the environmental problem of plastic waste has not been getting much attention. But the holiday season is likely to refocus attention on the age-old issue of how to recycle plastics and other consumer goods.

Recycling concerns are becoming a bigger risk for companies too. In November, New York state sued PepsiCo for plastic waste pollution. The state’s attorney-general said Pepsi had failed to warn consumers about the impact of single-use plastic on human health and “misled” the public about its efforts to combat plastic pollution. Pepsi responded that it was “serious about plastic reduction and effective recycling”.

A start-up in Seattle is trying to fix the recycling problem with a subscription service for waste disposal. For $18 a month, Ridwell will pick up and recycle certain plastics, batteries and clothing: items that most municipal waste services won’t collect. Founded in 2018, Ridwell now has more than 85,000 members in seven states and is poised to launch in Los Angeles in the coming weeks.

Co-founder and chief executive Ryan Metzger, who told me “recycling is not broken”, said he started collecting recyclables with his son as a Saturday project. Now, Ridwell works directly with some businesses that take recyclable plastics for reuse. For example, Trex, a Virginia-based decking company, will use Ridwell’s plastic film and wrap to make new decking material.

If thousands of people are willing to pay extra to ensure their waste is recycled properly, perhaps Amazon and other giant retail companies will start to take notice and partner with recycling services to scale the market. (Patrick Temple-West)

Smart read

The FT digs into the financial market implications of the backlash against environmental, social and governance investing — while New York University’s Tensie Whelan argues that any serious investor must put ESG concerns front and centre.