Phase out or phase down? Just aim high

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??This week: As climate negotiators from around the world gathered in Dubai to debate whether to adopt language calling for a “phase out” or “phase down” of fossil fuels, COP28 president Sultan Al Jaber said there is no scientific basis that a phase out is necessary for limiting global warming to 1.5 degrees Celsius.

Al Jaber, who also heads the Abu Dhabi National Oil Company, isn’t wrong; but he seems to have missed the point of scientific consensus. It might be extremely difficult for the world to wean itself off fossil fuels, but it is imperative that it tries as hard as possible to do so.

In a report on limiting global warming to 1.5 deg C, the scientist-led International Panel on Climate Change (IPCC) assessed 85 scenarios that had 1.5-degree pathways. They found that the median share of primary energy supply from fossil fuel among those scenarios was about 33 per cent, down from a median of 83 per cent in 2020. There was sizeable variance in the pathways, with the share of fossil fuels in 2020 ranging from 8 per cent to 61 per cent.

Al Jaber is correct when he says fossil fuels still have a role to play on a global level for at least the next few decades. It’s an important point, because renewable alternatives are not always economically viable. This is especially relevant in developing countries, where a lack of energy supply hinders improvements in quality of life.

That difficulty in developing sufficient renewable supply has led to growing acceptance of natural gas as a transition fuel in regions such as South-east Asia. While natural gas is far from perfect – its methane emissions, which have a greater greenhouse effect than carbon dioxide, are particularly concerning – it is widely seen as the only practical alternative in the interim.

Outside of those areas of need, however, it is difficult to reconcile climate goals with the continued use of fossil fuels as a major source of energy.

The pathways and scenarios present possibilities at a global level, and it would be a mistake to attempt to apply a global pathway to local circumstances. Less wealthy countries and those with physical limitations will find it more challenging most of the time to switch out of fossil fuels and into renewables.

If oil and gas proponents cite a “just transition” as a reason to continue using fossil fuels, by extension they should also advocate for the wealthier nations to phase out fossil fuels. The more developed countries can cut their fossil fuel use, the more of the global carbon budget that can be used to ease the developing world’s transition towards a cleaner future.

There is also significant uncertainty in the assumptions behind the many net-zero pathways. Given the stakes of global warming, the more prudent approach might be to err on the side of keeping temperatures down.

Furthermore, relying on pathways that allow for significant fossil fuel use can be risky. Many of them hinge on carbon capture and storage (CCS) becoming cheap enough and effective enough to remove much more carbon from the atmosphere than is currently happening. Carbon dioxide removal, whether by CCS or by increasing forest biomes, is highly untested.

The IPCC report stated that carbon dioxide removal “deployed at scale is unproven, and reliance on such technology is a major risk in the ability to limit warming to 1.5 deg C”.

Indeed, the latest IPCC analysis, in its 2023 synthesis report, found that fossil fuel CCS will cost the most and reduce the least amount of emissions compared with other mitigation options for the energy sector.

The oil and gas industry has been a big advocate for CCS because it could neutralise oil and gas emissions. The numbers show that the feasibility of the technology is far from proven, though. In the meantime, there are better-established and significantly cheaper ways to reduce energy emissions.

In picking a path towards net zero – and deciding how to invest – there is a strong case to be made that phasing out fossil fuels in the long term in favour of more-sustainable energy sources may not only be more economical, but more effective as well.

Not all the challenges in phasing out fossil fuels are technological. Solar, wind, nuclear, geothermal and hydropower technology, for instance, are fairly mature.

Building up enough renewable energy supply in many places is more a matter of financing, or the lack of it. Green infrastructure needs much more investment than is currently flowing into the sector. That’s not a problem of feasibility, but a failure of economics.

?? Top ESG reads:

1. COP28 president Sultan Al Jaber is urging a “spirit of compromise” by negotiators at the United Nations climate change conference as a common stance on fossil fuels remains elusive.
2. Knowledge and technology transfer is more important than just funding for developing countries in addressing global warming, says Singapore Senior Minister and Coordinating Minister for National Security Teo Chee Hean.
3. South-east Asian countries made a big push to advance transition finance in the region with new initiatives and a number of coal phase-out projects.
4. Singapore should raise its carbon tax even higher than the planned 2030 target of S$50 to S$80 per tonne, says outgoing Monetary Authority of Singapore managing director Ravi Menon.
5. South-east Asia could have a naturally dynamic carbon market because a major offtaker – Singapore – sits alongside credit producers, says Dharsono Hartono, head of Rimba Makmur Utama, which manages one of the largest carbon projects in Indonesia.

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