What will the COP30 climate talks mean for energy?

0:01Something like 85 % of the world's emissions are covered by net zero goals. a lot of those are pretty wishy-washy. A lot of them aren't really backed up by policies or even kind of official targets. So the real question in my mind is, is that the next frontier, which is moving carbon pricing forward? And will that be done through the so-called carbon club mechanism where countries that have carbon pricing join a network so that you could be trading carbon credits across different markets? Welcome to today's show brought to you by Engie. Your business has enough challenges. Energy shouldn't be one of them.

0:40That's why Engie builds tailored energy solutions around real business needs to support growth, strengthen predictability, and move businesses forward. Because real power comes from shared expertise and relationships that outlast the paperwork. Learn more at engieresources.com.

0:59Hello and welcome to The Energy Gang, a discussion show from Wood Mackenzie about the fast changing world of energy. I'm Ed Crooks and on today's show we're going to be talking about climate policy and what that means for energy and we're going to be looking ahead to the COP30 climate talks in Brazil in November. Certainly talks I think they're going to be held in pretty difficult circumstances and we're going to be getting into the reasons for that during this show. To do that I'm joined again by Amy Myers-Jaffe. Amy is the director of the Energy, Climate Justice and Sustainability Lab at New York University.

1:34Hi, Amy, how are you? I'm great, Ed. Great to see you. And it's also a great pleasure to welcome for the first time another new guest on The Energy Gang, Simon Evans. Simon is the Deputy Editor and Senior Policy Editor at Carbon Brief, which is a UK-based climate and energy news service. Hi, Simon. Welcome to The Energy Gang. Great to be here, Ed. Thanks for the invitation. Yeah, great to have you on. Now, tell us about Carbon Brief. What is the remit of that organisation? Yeah, so Carbon Brief, I mean, I've been there about 11 years now. So I went there from the End Report. Effectively, it's grant-funded journalism.

2:08We do lots of in-depth journalism on climate change and energy. And because we're grant-funded, we have this great privilege of being able to spend lots of time, you know, reading, talking, digging into things, doing our own analysis, all things that, you know, in the increasingly pressured world of journalism these days, it's very difficult for other journalists to be able to manage. Right. Now, as I say, we're going to be talking about COP30, looking ahead to those big annual climate talks, which are going to be held in Bolem, Brazil, this year. COP, sense of confidence of the parties. This is confidence of the parties to the UN Framework Commission on Climate Change.

2:45I saw you, I'm pretty sure, at the last COP, COP29 in Baku, Azerbaijan. You're presumably a regular attender of these things, are you? How long have you been going to COPs? Yeah, yeah, I've been going for a long time. My first was actually in 2015, the Paris summit, COP21, which was quite a baptism of fire, I guess you would say. But I've been to most of them since then. I missed a couple for, you know, important life events, babies, marriages, that kind of stuff. So Simon, has everything since Paris been a letdown? I mean, what's your perspective, having started with Paris, thinking maybe that it's an effective institution?

3:23Well, I mean, there's a bit of a pointed question there, Amy, which I'm not going to respond to. You should respond to it. Come on. Well, every year the COP comes around and someone posts a chart showing global carbon dioxide emissions and they keep going up, which is a problem because as long as they go up, the climate's going to get hotter. And people say, oh, well, look, this is when Kyoto was. This is when Paris was. You know, we don't seem to be solving this problem. But on the other hand, since 2015, since the Paris Agreement, projections of where we're going to end up this century have come down dramatically from, you know, three and a half, four degrees down to, you know, something two and a half to three degrees.

4:00So, sure, it's we've not solved this problem. We've got, you know, we've got a long way to crack it, but we're doing a lot better than we were. So Simon, just, you know, this is a really critical year because last year, there was a lot of discussion about whether the actual framework of consensus and the meetings was going to be the best way to get international cooperation. So do you see this as a pivotal year for the sort of institution of the COPs? I mean, so there are two ways in which this year is super important. Firstly, we already saw a lot of conversation heading into Baku last year at COP29 about the future of multilateralism, particularly since the election of Donald Trump.

4:48And that happened literally just before Baku, literally just before COP29. A lot of people saying, well, you know, how's this process supposed to make any progress? and it was pretty fraught let's be honest there were real struggles in terms of getting the agreements that they they wanted to get by the end of it but they did manage and I think that was sort of seen as a kind of reaffirmation of the you know the purpose and potential for progress through multilateralism but this year in you know in COP30 in Brazil it's going to be another test of all of that interestingly it seems like the US having said it's withdrawing from the Paris agreement may not even attend.

5:24So not sure what that will mean. But then you also alluded to this other question looming over the COP. So again, every year people talk about how we haven't cracked climate change and surely therefore there's a better way, you know, surely we need reform of the process. I sort of, I guess me saying it comes up every year is a hint of how I might go on that answer. Basically, it seems like it's a lot easier to say this process is failing than it is to come up with a credible alternative. So for sure, the Brazilian presidency has already talked about the idea of, you know, reform of the process.

6:00It's been on the agenda already at the intersessional meeting in Bonn in June, and it's going to be on the agenda officially in Bel-Em, which it hasn't been before. But I don't really expect kind of revolution out of that. I think there will be some little tweaks here and there. You know, they may agree a series of changes to try and make the process more effective and more efficient. And as I say, it's easy to carp, but it's pretty tough to come up with a better option. Yeah, so I definitely want to get into that whole question of alternative ways forward later in the show. Before we get to that, let's just go back to COP29.

6:33In the final analysis, what was your judgment of the way COP29 played out? First of all, I think there's always this sense, and it's sort of encouraged almost by people that participate in the COP, that it's like this one big, big bang moment every year where we're going to sort things out. And I just think that for all sorts of reasons, you know, not least the fact that you're trying to agree stuff by consensus among nearly 200 countries, it just doesn't work like that. Most of the, you know, genuine progress on the ground comes in, you know, in countries through national governments. And, you know, actually COP30 is a really good example of that like it's a really pivotal year for the Paris agreement because we're meant to be seeing all of these new national climate pledges nationally determined contributions out to 2035 and they're all supposed to have been submitted by February and they've got an extension until September and so by November when we're you know in Berlin we'll see what what those really stack up to but that's all before the COP right that's not at the COP and that's much more important in many ways you know that the sum total of effort that countries spell out through those plans is much more important and impactful in terms of emissions and and what's going to happen on the ground than any agreement that they could come to in in belm on the the climate finance deal you know i think if you had been following those conversations through through the months running up to the to cop 29 last year it would have been abundantly clear that the sorts of sums that people were talking about you know trillions of of dollars a year of climate finance to flow from rich to poor countries that was never ever going to happen and so you could see that as a failure and you know lots of people that wanted that that sort of thing to happen will see it as a failure but i also think that's just a totally unrealistic expectation right so you know the best process in the world can never live up to those sorts of expectations so i think you know I think that for me, in a nutshell, encapsulates many of the reasons why people get dissatisfied with the COP because they go into it with this idea that it's going to solve everything and it simply can't.

8:43So let me follow up on one point deconstructing that, because, you know, one of the things that's being debated is whether or not this so-called consensus framework is a barrier or a utility. At the last COP, you know, one of the things on this subject matter of the announced finance plan, India actually objected, correct? And I mean, there have been a major voice on how climate finance should function and what the obligations are for already developed nations. So take us a little bit down the story of what happened there and what do you think it means for Bellum? Yeah, so specifically what happened around that global climate finance deal that they agreed in Baku, it was gaveled through by the COP president, so the Azerbaijani leader of the meeting.

9:37He literally hit his gavel on the table and said it's so agreed. And everything is agreed by consensus. But what people tend to misunderstand is that consensus literally means everyone has to vote for it. That's not quite how it works. So effectively, you can agree things via consensus, even if one or two countries object. And indeed, infamously, something similar happened for the adoption of the Paris Agreement itself back in 2015. And so that doesn't mean there wasn't consensus. But then if we wind things back all the way back to the beginning of the UN Climate Convention back in the early 90s, it was the plan that they would be voting that they would seek to reach agreement on everything through consensus but in places where consensus couldn't be reached they would have a vote and it would be something like a two-thirds majority required to pass things you know if they couldn't reach consensus they would have a vote and it had to get you know a big majority now those rules of procedure which are very similar to the rules of procedure for most kind of other UN type meetings on all sorts of other topics.

10:44Those were never agreed, effectively because of fossil fuel lobbying. I mean, there's a whole backstory there. It's really fascinating. In fact, the play that's been running in the UK recently called Kyoto is kind of all about that backstory about why fossil fuel lobbying prevented the UN climate regime from having voting. So ever since then, people occasionally pop up and say, well, it's ineffective, it's lowest common denominator, it's really hard to get difficult things agreed because it has to be by consensus. And surely we should move to a voting system, as was always intended. The trouble is that to achieve that, you have to have a really big majority of countries agree to it.

11:24They'd never vote. Yeah. And then on top of that, you would have to have countries go back to their national parliaments and ratify the agreement all over again. So it's one of the ideas around how you might reform the COP to make it more effective. But ultimately, it's a relatively unconvincing and quite difficult to achieve one. And what was India's objection? I mean, they've been advocating for a really solid agreement on global climate finance. Yeah, I mean, fundamentally, they wanted more money to flow from rich countries to poor countries. That's the shape of it. And some of the nuance has been, you know, to get into a different topic.

12:00I think one of the ideas that were floating around was this idea that if there were carbon taxes or carbon pricing, that somehow some percentage of that revenue should not actually go to, say, the OECD countries, but should actually go to the developing world. Yeah, so one of the things that countries like India, like China, really object to that's happening recently in global climate policy is carbon border taxes. The EU is introducing a carbon border tax as of next year. And that means that anyone importing into the bloc has to pay a carbon price equivalent to the price faced by producers within the EU countries.

12:41that's seen as like a unilateral measure which you know the eu has done that unilaterally without getting agreement for anyone else and yeah countries as i say like india they're really unhappy about it i think it's quite an interesting one because it's actually ended up getting quite a few countries to to make their own moves you know so some countries for example have said well if my exporters are going to have to pay this carbon tax to the eu then why don't i have my own carbon tax and then I get the money instead, then they don't have to pay the tax when they export to the EU. Well, famously Brazil.

13:15Exactly, right. And so it's actually an interesting example of the kind of game theory around how you get different countries to act. Even if you can't kind of get them to agree, you can kind of nudge them into doing it. And China too, right? Carbon pricing in China is also making a lot of progress. So indeed, Ed, it didn't get much press because it was so vague. You know, China and the EU made a joint statement on climate change, one would imagine somewhat in response to the U.S. position. Quote, the EU and China consider climate action and the clean energy transition an imperative more than ever.

13:52They confirm their commitments under the historic Paris Agreement. So one of the things that they kind of mention in their statement is this idea that they would cooperate on emissions trading. Yeah, so that is really interesting, that statement. When did they say this? Yeah, so it was towards the end of July, the EU and China put out that statement. You know, it's really interesting, particularly in this world where people are questioning, you know, the point and the kind of progress being made through multilateralism. the EU and China are effectively reinforcing their commitment to that. And actually, there's not a huge amount of content in there, but the fact that they've done that and they've done it together is significant on its own.

14:34Yeah, I agree. I agree. So let's just pick up that story then. Since COP29 and then the run-up to COP30, as you say, the crucial point of this COP has been meant to be countries coming forward with new, more ambitious, nationally determined contributions, commitments to emissions reduction. What have we had so far of the, as you say, 200-odd countries in the world that signed up to Paris? How many have you, in fact, come forward with these more ambitious NDCs? Broadly speaking, very few of the biggest emitters have come forward with new climate pledges to date. China is definitely going to do it, but we don't know when, and it hasn't done it yet.

15:12The EU, again, they've kind of put out their number for 2040, but they haven't yet agreed on a 2030 target. and they're struggling to get that sorted. The US is obviously out. Countries like India, they also haven't put forward their new targets. So basically, Brazil, the UK, they've put forward their new targets. But the vast majority of the world's emissions are not yet covered by new 2035 targets. So that's, in a way, no matter what happens actually physically in Bel-Embra, is a lot less important, as I said earlier, than the collective sum total of those new pledges that are supposed to happen before the LEM.

15:50Amy, you've got that number, right? How many countries is it that have come up with updated NDCs? It looks like it's only about a little over 20 countries, and some commentaries are saying that one of those countries that submitted has actually been aligned with the 1.5 degree cap with a 2035 number. So I think 2035 is just a tough target for everyone concerned, you know, especially looking, taking the backdrop of the 2022 energy crisis and the sort of return to concerns about energy security. I think one of the things, the difference between, say, 2035 and the longer range goals for 2050 is that the cost and the implementation of renewable energy has really come down.

16:42same for batteries. And when you look at what China's doing in its economy and its export plans, it seems more realistic that the energy security thing will kind of peel away as we move forward. And we might have a better outlook for 2050. But I think it's hard for countries to lock that down in statements for 2035, because of all the politics, domestic politics surrounding energy pricing in many countries. Yeah, absolutely. And so Simon, And then given all that, given, as you're saying, most of the world's leading emitters, not yet having submitted NDCs, as they were saying, only about one in 10 countries in the world having submitted one in total.

17:24You were making the point that, OK, it's wrong to kind of get fixated on the talks themselves as the crucial thing in terms of international climate policy. It's not there that the global effort to tackle climate change kind of succeeds or fails. On the other hand, they are kind of focal points and they are kind of incentives and they set deadlines and they encourage governments to work towards these objectives, like coming up with their new NDCs, in order to be able to take part in those talks. I suppose viewed in that light, it does still make sense, doesn't it, to think about the question of is COP30 going to be a success or a failure?

18:12Yeah, sure. I mean, I'm not trying to say that COP's not important. Of course, it's like a vital part of that global, you know, it kind of coordinates. And it's like a moment when everyone checks in and says, how are we going? So, of course, it's, you know, it's important. It brings people together, literally, you know, tens of thousands of people will be going to the COP. and that's not just the negotiators that's all around you know and you've got businesses and you know governments and so on so of course all of that's important but i'm just saying like the nature of china's next ndc the nature of the 15th five-year plan which covers the next five years the way that the the huge growth in china's clean energy economy translates into it you know the way that it deals with other countries you know in terms of its bilateral relations but also multilaterally those are all much bigger and more important things that will affect how we're going to get on in terms of climate targets than you know whatever they they agree in Berlin I would say.

19:06In terms of what we can expect in terms of the issues that the COP's meant to be considering and as you say this big update to the NDCs realistically what can we expect do you think I mean, perhaps ask that question another way. What would success look like? What would make you come out of it at the end and say, yeah, that was a good COP that made the kind of progress we would want to see it making? So I think there's like a little bit like last year, in a way, there's a kind of de minimis. If they can't, you know, agree the stuff that's on the agenda, then that's going to look like total failure of multilateralism.

19:42And, you know, all the calls for COP reform and, you know, wider reform of the UN are going to just grow louder and louder. So, you know, there's stuff like the global goal on adaptation. You know, people will be familiar with the temperature target of the Paris Agreement, you know, well below two degrees and trying for 1.5. There's also supposed to be a global goal on adaptation and trying to, you know, prepare for the effects of climate change that we can't avoid. And they've never agreed that. And it's very complicated because it's, you know, it's very context specific. They're supposed to kind of finalise that goal in Bel-Em.

20:17That's one thing. If they can't agree that, that's not going to be a good look. Another thing is, as I mentioned, COP reform is going to be on the agenda. So you would hope to see something substantive, probably not going to be game-changing or dramatic, but there will be some elements of that. Sorry, just to jump in on that one. And what might that look like then if there is a reform? What might be different? So, I mean, one of the things that happens every year at the COP is there's like a million different things on the official agenda. and that makes things really tricky, particularly for small countries that have many negotiators.

20:49You know, you get these ridiculous kind of all-night sessions that always runs late by sort of 24 to 36 hours. So one idea is simply like, let's have less on the agenda. Let's not try and negotiate everything every year. You know, that seems like a bit of a no-brainer. But it's, you know, that's tricky because then you have to decide which things to do which year and people will always have their own priorities, right? It's particularly tricky this year because one of the things that some of the low-income countries are saying is that the price of accommodations is so high, they can't afford to bring a large delegation.

21:22So that puts them at a disadvantage to this process that you're describing. Yeah, absolutely. I mean, that's always a problem. You know, that's a problem every single year. And, you know, one of the problems with cops running late is that, you know, again, particularly the sort of less well-off countries, they tend to have small delegations. they tend to have firm bookings on their flights home and they start leaving. And so you get towards the business end of the cot where they're in a final plenary trying to hash out the big kind of banner deals, whether that's the global climate finance goal or whatever it is.

21:55And yet, you know, representatives of certain countries have already gone home because it's run over. So, yeah, I mean, it all compounds. It's not, you know, it's no one's idea of a particularly functional process. But again, as I said, it's hard to think of how you do it differently. Yeah, that's contextualized by the fact that in May, the UN announced that it had a$6 million budget cut to avoid a financial default. They had a$200 million cash shortfall last year, and they're trying to work out to reduce their risk or ameliorate the risk that if the United States doesn't pay its mandatory contribution on time or at all, that they can still function.

22:43And, you know, people that I've talked to within the UN system say, hey, listen, we agree there was a lot of waste, there's a way to cut costs. But, you know, one of the big things is they're moving more things out of New York City because New York City is so expensive to operate. They're moving people back to Nairobi and other locations. that's part of the process. This whole role of the U.S. thing, it's not just, you know, are we here advocating for climate accord? It's also just for the whole operation of the U.N. and this part of the U.N. Yeah, that's a great point, that the whole sort of infrastructure, the architecture of multilateralism is actually crumbling, being undermined.

23:23And that then is going to make it harder to achieve those kind of substantive outcomes in terms of international cooperation. Sorry, Simon, I interrupted you as well. You were listing off your list of things that might look like successful outcome for COP30. What was the other one? Well, I think the other thing that's happened increasingly in recent years at the COP is there's what's called the action agenda, which is like outside the formal legal negotiations, you get these kind of big, showy pledges. So there was like the Global Methane Pledge, like a big group of countries said they'd cut methane emissions 30 % by 2030, you had the, you know, some pledge on ending deforestation by 2030.

24:04You know, countries get together in smaller groups when they can't get agreement from all 200 countries. And they make these big showy pledges around the sides of the COP. But there's very, very seldom any follow up or any kind of real accountability or, you know, tracking. And there's no real links, no formal links between the negotiations themselves and that wider stuff. and so one of the things brazilian presidency of cop 30 has been talking about is trying to kind of more formally link the action agenda with the negotiations that might be done through some kind of reference to the to the action agenda in the within the formal outcome text um but also to kind of organize the action agenda around so we had like the global stock take you know a couple of years ago in the uae and there were a bunch of targets in there like tripling renewable capacity globally by 2030 transitioning away from fossil fuels you know all this kind of stuff but again like very little actual kind of tracking of progress and accountability so organizing of the action agenda around those targets which have been agreed so something that kind of sorts some of that out and you know of course we're in this world of now of moving from pledges to implementation um and so the action agenda where the action is supposed to be talked about and tracked and happening that you know I think they have the idea of trying trying to formalize that and that you know that that seems like it would be a positive set yeah that is very interesting and also raises another question more broadly that I'm very interested in which is this is an energy podcast we're very interested in implications for energy as you say when you look back at Paris in particular in terms of having a huge impact on the global energy system, the global energy industry, very much encouraging governments around the world to push ahead with policies that supported low carbon energy.

25:55Since then, it feels like, as Amy was saying earlier, for various reasons to do with energy security and the cost of energy rising up the agenda, some of that momentum has ebbed. It also feels like subsequent COPs do not have as much impact on the energy system, on the decisions that people are actually taking in terms of capital allocation, what gets built in terms of energy infrastructure and so on. Do you think that's right? And also question, when we look ahead to COP30, what might the consequences of that be? And in terms of how COP30 might change the global energy system, what would you be watching for?

26:38This is a really tricky question. And I guess in the same way as I kind of caution against the idea that the COP is a big bang that kind of can solve everything. Equally, I would say that, you know, you can't you can't necessarily draw an easy straight line between even something as big and momentous as the Paris Agreement. It's quite hard to draw a line from that to specific decisions that individual countries, governments or even companies take. like but but it's part of that kind of it's part of the conversation it's part of what sets the context for people to make decisions and it's it's pretty hard to to argue that that doesn't doesn't matter at all you know if the likes of Saudi Arabia thought that it didn't matter whether we said we were going to phase out fossil fuels or you know transition away from fossil fuels or whatever the wording was going to be then why did they put so much effort into trying to influence at COP28.

27:33Well, and why are they putting so much effort into diversifying into other kinds of forms of energy, even in Saudi Arabia? So, I mean, there is an impact. And I would take it a step further because countries have invested in the transition in big ways. India has put even a lot of money in solar and hydrogen production. So you see these trends. I think the interesting thing is that in the Chinese EU statement that I mentioned, they actually affirmed, reaffirmed their commitment to something called mission innovation, which again, Simon, to your point, was one of these things that was sort of a side initiative.

28:15But unlike some of the other ones you've mentioned, people have tracked mission innovation. It was a pledge to double R &D in climate solution technology. They didn't quite reach doubling, but a lot of countries, you know, U.S. and China, of course, at the time of the Paris Accord, because that's when it was announced, really increased their spending in R &D. But you also got other countries like Brazil and others that signed onto Mission Innovation that also put big increases. And we are seeing the impact of that. You know, we are seeing that in the lower cost for solar. I mean, just understanding where we're going in China in terms of the momentum of clean tech, not only in China, but as an export product.

29:00And then, you know, even though we've had this reversal of the Inflation Reduction Act by the big, beautiful bill, the United States is still doubling down on a lot of these technologies. And even, you know, you got to remember, like ExxonMobil invested in lithium, and the Chinese have these breakthroughs and other kinds of batteries. So we are really actually making progress. And it'd be interesting to see what happens with mission innovation, because the United States really is not going to want to give up its edge. And it's one thing, you know, what does the White House say about R &D? But it's also the Congress, which is very committed to US R &D.