Global energy and financing examines climate commitment

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DAVOS – Six months after the United States agreed to a bold, new goal in Glasgow with a new climate agreement, political and business leaders are grappling with an energy crisis, volatile markets and an economic downturn to reduce carbon emissions.

Amid rising oil and gas prices following Russia’s aggression in Ukraine on February 24, some countries are turning to other fuels, including coal, to meet their energy needs.

Meanwhile, financial market problems have complicated plans to raise the trillions of dollars needed to shift energy away from fossil fuels.

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US Climate Ambassador John Kerry stressed at the World Economic Forum (WEF) in Davos, Switzerland, that the energy crisis caused by the Ukraine war would not deepen the world’s dependence on fossil fuels for climate warming.

“If we make the right choices here, we can win all these wars: we can do what we need to do about Ukraine, we can do what we need to do about the climate crisis,” Kerry told those in attendance. Summit

He warned against increasing investment in fossil fuel infrastructure: “We cannot be persuaded to believe that this is an open door to return suddenly and do what we were doing that created the crisis in the first place.”

At the COP26 UN climate conference in Glasgow, Scotland in November, nearly 200 countries agreed to increase their national commitments this year to align global warming with the goal of capturing 1.5 degrees Celsius (2.7 Fahrenheit) above pre-industrial levels.

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To meet that goal, countries need to reduce their carbon dioxide emissions by at least 45% from 2010 levels by 2030. To date, annual global emissions have only ever increased.

“The schedule is questionable now. There’s a lot of debate about how many years we’re lagging behind, “Jay Collins, Citigroup’s vice chairman of banking, capital markets and advisory, told Reuters Global Markets Forum in Davos.

So far, none of the 20 developed economies group responsible for about 75% of greenhouse gas emissions has updated its CO2-cutting commitments this year, according to a report this week from the World Resources Institute, E3G and Energy. And the Climate Intelligence Unit.

More than 100 countries have pledged to reduce methane emissions by 30% by 2030, another major greenhouse gas, but most of them have yet to say how they will meet that deadline.

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“There is a short-term crisis going on right now, and I think it will ultimately accelerate the medium-term goals, but it may not seem like it,” said Carl Carrande, KPMG’s chief global adviser.

‘Staying the course’

At a time when countries are struggling to jump on the bandwagon, companies facing investor pressure for climate action are sticking to their commitment to sustainability, according to several business leaders in Davos.

“We’re on course,” said Alan Jopp, chief executive of Unilever, during the WEF panel discussion.

As the cost of fossil fuels rises and the cost of installing renewable energy decreases, “the economic benefits of investing in climate solutions are becoming clearer,” the COP26 progress report said.

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“When a company is committed to customers, employees, shareholders, (it) can’t just say, ‘Oh, it’s inconvenient now.’ These commitments are long-term, “Bank of America chief executive Brian Moynihan said during the panel discussion.

But for Amin Nasser, head of oil-producing Saudi Aramco, part of the problem is the lack of dialogue between the oil industry and policymakers on energy transfers.

“I do not think there is much constructive dialogue going on. Certain areas are not brought to our table. We were not invited to the COP in Glasgow, “he told Reuters on Monday.

Nasser said investors feared leaving so-called stuck assets, mainly due to the Ukraine conflict and the erosion of old fields around the world, prevented companies from investing in fossil fuels to fill supply gaps.

“We need more constructive dialogue. They say we don’t need you by 2030, so why would you create a project that takes 6-7 years? Your shareholders will not let you do that, “said Nasser.

At Shell’s annual shareholder meeting on Tuesday, investor support for goals consistent with the Paris Climate Agreement fell from 30% in 2021 to 20%, while votes against the company’s own climate plan doubled from 11% in 2021 to 20%. (Reporting by Dmitry Jdannikov, Divya Chowdhury, Jessica Dinapoli, and Leila de Kreetser, edited by Alexander Smith, Katie Diegel, and Mark Potter)