Economics and politics - comment and analysis
15. December 2023 I Heiner Flassbeck I Climate change, Ecology and Growth

The great illusion: COP 28 and the end of fossil fuels

After all, eight years after the Paris Agreement, most of the world has now realised that there is a problem with fossil fuel producers. The conference known as COP 28, which has just ended in a country that lives more than almost any other from oil and gas production, has agreed for the first time on a language regulation on fossil fuels. Better than a thousand declarations, this “agreement” shows why the world is not making an inch of progress in preventing climate change.

According to the final declaration, the aim is to transition away from fossil fuels in energy systems in a just, orderly and equitable manner, accelerating action in this critical decade to achieve net zero by 2050 in line with scientific evidence. That sounds good, but it is completely meaningless.

Even if it had been possible to include the word phasing out (of fossil fuels), which was desired by Europe and the so-called ambitious countries, in the declaration, the difference would only be marginal. The delegates to these conferences do not want to recognise what is obvious: if the world does not specifically agree on a “just, orderly and equitable manner” for phasing out fossil fuels, but simply writes these words down, then nothing has been agreed. The problem, which was already standing in the room like a white elephant at the Paris conference, has not been tackled or even clearly addressed: It has to be about instruments that have to be applied – discussing just targets is pointless.

Which of the 20 or so major producers of fossil fuels will now go ahead and decide that they will reduce their production of oil, gas or coal from now on because the world expects them and everyone else to do so? Every producer will ask: What about the other producers? In a world where oil, coal and gas are in demand like never before, why should I go ahead and forego income while others simply do nothing? There is no “just, orderly and equitable way” unless there is an agreement that determines exactly who cuts back their production, when and by how much. However, the world is just as far away from such an agreement after COP 28 as it was before the conference.

The USA as a pioneer?

Just imagine the USA, currently the world’s largest oil producer. The President stands before his people and declares that the USA, together with the other oil producers, will from now on phase out the production of all fossil fuels and reduce their production by five per cent every year, because they want to end the production of these energy sources completely by 2050 at the latest. This means, of course, says the American president in the next breath and without beating around the bush, that petrol “at the pump” will also become more expensive from year to year, so expensive that petrol prices will rise more than wages every year, because the so-called real oil price (calculated in purchasing power) must rise, not just the price paid “at the pump”. As this, the President continued, would naturally result in unacceptable hardship at the expense of the poorer section of the population, he would step on the toes of the rich with a large-scale tax reform and give the money to the poor in order to create a “fair” balance.

Or imagine a developing country in Africa where large oil and gas deposits have just been discovered in the coastal waters. Norway (member to the group of particularly ambitious countries), which has become rich through the merciless sale of oil, now tells the developing country that it has been unlucky. Oil production is an obsolete model and they should look for something else to export. After all, the Norwegian government would argue, free trade offers every country in the world the opportunity to capitalise on its specific advantages, even if the sale of oil no longer works out.

As you can see, “moving away from fossil fuels” is easy to say, but it is practically impossible to implement. Without an agreement that really intervenes directly in production, in which all producers make a binding commitment to translate an agreed phase-out into concrete action day by day and year by year, nothing can be done. But even such an agreement would not create security. What would we do if Donald Trump was re-elected and insisted on his position that man-made climate change does not exist? Then he could pull out at any time and any global agreement would not be worth the paper it is written on.

What should we do?

It is not expedient for 70,000 well-meaning people to meet for a fortnight and look for a “language” to deal with the producers of fossile fuels. The real task is totally different. We need a binding contract of the peoples despite the different interests of the governments. Anyone who, like the German Greens, believes that he or she can change the world with a 15 per cent share of the vote in their own country is making a huge mistake. Citizens all over the world need to be given a clean bill of health when it comes to the adjustments they will have to make when phasing out fossil fuels. If you then get elected and help the poorer countries of the world to an extent that we can neither imagine nor want today, there is a chance of real change.

If Norway, for example, were to declare that all the proceeds from its sovereign wealth fund built up through the sale of oil (which is said to be worth over a trillion euros) would from now on be made available indefinitely to a poorer country that does not use its fossil fuels, this would be a truly exemplary approach. If the western and eastern industrialised countries were to pledge in unison to supply the poorer countries of the world with the technologies needed to switch to renewable energy sources free of charge for the next forty years, they would gain considerable credibility. However, anyone who believes that they can also do good business with the conversion of poorer countries because they can sell the necessary technology is completely wrong.

In our part of the world, we are gradually beginning to understand the conflicts of interest that need to be overcome in order to manage the global phase-out of fossil fuels. However, there is a sheer illusion about the scale of the adjustment that this phase-out will require of us and others. We are not prepared to tell our population clearly that fossil fuels will have to become more expensive rapidly and in the long term and how drastic the domestic redistribution of income will have to be that accompanies this. Nor have we understood the enormous compensation that those who have built their prosperity directly or indirectly on cheap fossil fuels will have to pay in order to compensate those who will no longer be allowed to do so. Only when realism and openness are the order of the day on these issues will there be a chance of improvement. To realise this, we do not need an oversized conferences, but clear analysis and honest information for the mass of citizens.