Digital Economy Weekly - November 24, 2024

Story of the Week

COP29 – The Week that Never Was?

The most recent United Nations Conference of the Parties (COP29), also known as the Climate Change Conference, was held this past week in Baku, Azerbaijan. Unlike last year's COP28 conference in Dubai, which issued a thundering call for a tripling of nuclear energy in the world by 2030, this year's event seemed beset by general kvetching, along with specific concerns about an authoritarian leadership trend throughout the world, a lack of progress in reaching climate-change goals, and fraught negotiations over subsidies from developed nations to the developing world to abate climate change.?

The annual COP series began in Berlin in 1995, with the foundational Kyoto Protocol issued in 1997 and Paris Agreement hammered out between 2011 and 2015. These documents, and the COP series itself, focus on limiting global warming through the reduction of CO2 and related greenhouse gases, through developing sustainable energy and materials, energy usage efficiency, and sequestering carbon. The digital infrastructure industry is a key target in this endeavor – it produces about 1 percent of the world's total emissions, but also plays the key role in developing sustainable Digital Economies. There has been recent criticism of hosting recent COP events in petroleum-friendly countries, especially Azerbaijan, Dubai, and Egypt the past three years. Next year's conference will be held in Belém, Brazil, the gateway to the Amazon region. This week's links (below) report on key developments throughout the week in Baku.

Links of the Week

“Failure is on the Table” at COP29

A report from Bloomberg filed during the final hours of COP29 outlines an impasse among diplomats at the meeting, a $1 trillion price tag proposal to achieve significant change, and concerns that progress made at last year's COP28 in Dubai may be wiped out and forgotten. Read here.

US and India Lead Emissions Reduction, According to Guardian Report

With this week's COP29 in Baku, Azerbaijan in the background, the British newspaper the Guardian released a report that shows substantial progress from the United States and India in reducing CO2 reductions. This optimistic dollop contrasts with an air of general pessimism in Baku. The two countries are the world's second- and third-largest emissions producers, with a combined 20 percent of the world total.

The Guardian report found that over the past decade the world's G20 countries (a group in which the US is number on and India number five) reduced emissions by almost 7 billion tons more than projected, a reduction of almost 20 percent from those projections. Read here.

“Sleight of Hand Accounting” Alleged in COP29 Climate-Change Abatement Plans

The issue of the world's “haves” subsidizing its “have-nots” to address climate change was raised again this year at the UN's annual COP meeting. Talk of providing $1.3 trillion annually was in the air, with some claiming “sleight of hand” accounting produced this large number, with the real subsidy being promised totaling more in the range of $200 billion.?

One issue is whether subsidies will be in the form of grants or loans, with the latter option adding debt servicing to the load developing nations would need to bear, as reported by Siobhan Wagner for Bloomberg.?Read here.

Increased 2024 CO2 Emissions Reported at COP29

The world's nations are on track to put 37.4 billion metric tons of CO2 into the atmosphere this year, up 0.8 percent from 2023, according to Global Carbon Project, presenting at the COP29 summit in Baku. Meanwhile, several United Nations reports say the globe must cut emissions by 42 per cent by 2030 to to be in with a chance of limiting warming to the internationally agreed-upon threshold of 1.5deg C. Read here.

US-China Relations Hover Over COP29 Subsidy Discussions

The gigantic nature of US-China relations permeates the atmosphere of any geopolitical talks, including conversations about emissions reduction at COP29. This year's event in Baku, Azerbaijan is notable for the absence of the former lead negotiators for both countries, John Kerry of the US and China's Xie Zhenhua, both of whom are now retired.

The world's two largest emissions producers are responsible for 47 percent of the world's emissions, and many more percentage points than that when taking into consideration emissions produced by nations that feed their economies. Past COP events have supported the notion of a $100 billion finance pledge from large economies to developing nations, but China is now objecting to the idea on the grounds that it itself is still a developing nation.?Read here.

Is Failure an Option in COP29 Climate-Change Financing Talks?

UN Secretary-General Antonio Guterres resolutely declared that “failure is not an option” in determining how global climate-change abatement will move forward, yet that word has been in the air all week.? An official UN report said negotiators “remained at loggerheads over a new climate finance goal to help developing countries combat flash flooding, drought, wildfires and other natural shocks made worse by human activity.”

Guterres added that a lack of progress in Baku will “undermine near-term efforts and complicate preparations for COP30 in Brazil” next year. Read here.

New $250B Subsidy Proposal Decried as “Breadcrumbs” at COP29

A European report quotes the Climate Action Network Europe as decrying a proposed $250 billion subsidy for developing nations to address clmate-change abatement as “breadcrumbs.” The bureaucratize for the proposal is “new collective quantified goal,” or NCQG, and is the result of two weeks' worth of negotiations.?

The proposal has the kick-the-can aspect of many international agreements, saying it will replace the current, seldom-attained $100 billion annual goal of support from the developed world to $250 billion annually by the year 2035. A “wide variety” of sources, including public and private funding, are envisioned by the COP29 statement to be included in the annual total. Read here.

Heard in the Industry

"We cannot accept the view that, for some, the previous COP did not happen." – Wopke Hoekstra, EU Climate Chief, speaking at COP29 in Baku in reference to pledges at COP28 to reduce the use of fossil fuels over time.

Heard in the Aisle

“At the current rate of global emissions, the remaining “carbon budget” for limiting long-term global warming to 1.5°C with a 50% chance (around 250–275 billion metric of CO2) would be depleted by 2030.”? – Statement from the United Nations at COP29 in Baku.

Country Snapshot: Azerbaijan

This year's COP meeting host, Azerbaijan is a small country in the Caucasus Mountain region of Asia. It was part of the Soviet Union for much of the 20th century, albeit with very deep, Persian and Turkic roots dating back through millennia.?

Azerbaijan's neighbors today include Russia, Georgia, Armenia, Turkey, and Iran. The country is about the size of the US state of Indiana, with about 11 million people. Its economy is still largely driven by the petroleum business and agriculture, even as it strives to develop its technology and finance sectors, and occasionally makes grand statements on the world stage such as a hosting an annual Formula One event.?

As a small country, Azerbaijan produces only about 0.1% of the world's CO2 emissions, although with an economic efficiency less than half that of the United States. This efficiency is in line with other oil-producing nations in the Middle East. Its use of sustainable energy is minimal, so far, with renewables providing about 6 percent of its electricity.

Azerbaijan scores below the world average overall in the IDCA Digital Readiness Index of Nations. Its overall score of 39 trails the world average of 47. Its relative lack of digital infrastructure results in an Economy score of 50, well below the world average of 67. Its petroleum-drive economy results in an Environment score of 16, trailing the world average of 41. Its general economic parity within its population gives it a very high Social score of 65, well above the world average of 43, even as its Governance score of 32 trails the world average of 44.

The petroleum business drives its per-person income level to more than $7,000 per year, higher than might be expected. This puts Azerbaijan into the third tier of IDCA Research analysis, classifying it as an Emerging Country, the most dynamic group of nations within the Digital Readiness Index. Expectations for Azerbaijan are thus quite high.? Thus, the government of the small country of Azerbaijan pushes high-profile events to keep it from getting lost in the shuffle.?

The country has a slightly-below investment grade bond rating, which is roughly in line with what IDCA Research data shows. This makes the country comparable to Colombia, Mexico, and Serbia in its global risk profile. Its location as a potential fulcrum point between Europe and Asia does offer an interesting perspective that the government can continue to develop as it works to transition its economy to being more Digital, sustainable, and consequential.?

Inside IDCA

Digital Infrastructure & Application Ecosystems, Wed, Dec 18, 11am-noon eastern time The days of data centers sitting somewhere processing bits and bytes mindlessly are rapidly disappearing. Data center designers, builders, and operators must increasingly think about the Application Ecosystem that data centers serve. Operators must consider the Application Architecture, Availability, Security, Integrity, Efficiency, Reliability and Performance, Capacity and Maintainability, I/O Processing, and Business-Specific Metrics.

Registration is free: https://events.zoom.us/e/view/QhszwC9uSdKztOmnwYx8eA