COP28, pledges, STEPS, and realistic public policies

Jorge Costa Oliveira

As this article is being written, COP28 is still in progress, with some tangible results – such as the agreement to create a Climate Impact and Response Fund – amidst a flurry of statements and various pledges made at COP28. These pledges include strengthening the Green Climate Fund, various climate funds (like the one to be established by the UAE and BlackRock), a pledge to triple the production of renewable energy by 2030, and a pledge to triple nuclear energy production by 2050.

It is important to remember that the term “pledge” means “promise”, not “commitment”. For example, the pledge by the U.S. Vice President to bolster the Green Climate Fund with 3 billion dollars will require the agreement of the U.S. Congress…

Meanwhile, we have also learned of fantastic initiatives that allow for better monitoring of greenhouse gases (GHGs).

One example is Climate TRACE, an independent initiative launched by Al Gore, providing granular tracking of GHG emissions, which is apparently accounting for 352 million (!) emitting assets. It’s also worth following the Energy Transition Accelerator – a carbon credit and financing platform revealed by the U.S. and “philanthropic giants” at COP27 – which has finally produced a core framework detailing how this innovative platform will work, intended to catalyze financing to accelerate a just energy transition in emerging and developing economies.

In the negotiations at COP28, it seems a given that accelerating the energy transition, whose goals and action timetable are outlined by the International Energy Agency (IEA), is necessary. However, the IEA, in its World Energy Outlook 2022, apart from the ideal “rosy” Net Zero Emissions by 2050 (NZE) scenario, continues to outline an Announced Pledges Scenario (APS) – which assumes that all aspirational targets announced by governments are met on time and in full, including their long-term net-zero and energy access goals – and an [increasingly realistic] Stated Policies Scenario (STEPS), which shows the trajectory implied by current policy settings.

The comparison between STEPS and NZE shows a huge discrepancy. For example, in the STEPS scenario, projections for the demand for fossil fuel energy sources in 2050 show a slight increase in gas, similar demand for oil, and only a one-third reduction in coal compared to the current situation. The severity of this scenario is evident.

However, instead of histrionic outbursts or symbolic eco-activism (throwing paint at buildings or political and business leaders), it’s important to calmly analyze the reasons for this in defining [realistic] public policies. Bearing in mind that there is an ever-increasing global energy demand (in particular in emerging countries), as well as significant constraints stemming from the limited disposable income of most people and businesses to fund the energy transition. For instance, a road map that assumes that low-income individuals (the vast majority of people in the world) will be able to afford switching quickly to electric vehicles is not very realistic…