The geoeconomics of the modest COP26 Agreement: more discussion needed of transition period

While leaders of most of the world’s advanced nations gathered in Glasgow in early November, Russian President Putin was busy manipulating the flow of natural gas to European and Chinese markets. Chinese President Xi Jinping was in Beijing for a meeting of the Chinese Communist Party Central Committee tasked with elevating him to the same Mount Rushmore -like status of Chairman Mao and Deng Xiaoping in the Middle Kingdom’s historical record.

China emits more CO2 than all other OECD countries combined, and Russia is the largest culprit for methane released to the atmosphere. US President Biden had to leave Glasgow after a few days to tend to his faltering domestic agenda, which was endangered in part by higher energy prices and accompanying inflationary pressures. To ease energy shortages as his team ratchets back domestic oil and gas production, he implored Russia and Saudi Arabia to increase their production.

The two weeks of negotiations did produce the underwhelming results of making best efforts to reach “net zero” globally around mid-century, creating a global carbon trading system, and reducing coal-fired electrical generation by unleashing moral suasion and new regulations to undermine the financing and “inefficient subsidization” of fossil fuels. The lack of commitment from Russia, and the lack of credibility of Chinese promises, contributed to the disappointing conclusion of the conference.

American ambitions were curbed not only by the recognition that a costly shift to a greener energy mix would undermine its huge domestic oil and gas sector and shift jobs to Chinese solar and wind turbine producers, but also due to a failure to convince the American electorate to prioritize this shift. Election day polling in two Democratic states on November 2 (in the context of off-year local elections) put climate deterioration behind at least four other issues in the eyes of voters: the economy and jobs, education, COVID management, and education. Only 12% of voters in Virginia listed climate as the most pressing problem for political leaders.

The three major powers (and producers of greenhouse gases) were hardly alone in their cautious approach to taking on the economic and political costs of a more aggressive, near-term agenda. India resolutely opposed stronger commitments on reducing the use of coal. As a leading producer of this traditional energy workhorse with more limited internal oil, gas, nuclear and renewable alternatives, the world’s third largest economy in terms of purchasing power parity, and one harboring ambitions to raise per capita income and compete on the world economic stage with China, India was the final obstacle to a more robust commitment to phase out coal energy in the coming decade.

China too was not eager to pledge elimination of its coal-based electrical generation industry, which is still growing as the country seeks to shore up its manufacturing economy in the face of a faltering, overleveraged real estate sector which can no longer drive China’s growth agenda. Earlier this year Xi pledged to at least double per capita income by 2035 and will not want to endanger this goal before he faces reaffirmation of his leadership in 2022. His country is also grappling with energy shortages, plant shutdowns and rolling blackouts this year as it tries to reinvigorate growth.

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Africa, South America and other developing regions have been frustrated by the failure of wealthier countries to honor existing pledges, much less increasing them as part of an overall COP26 agreement, to transfer $100 billion annually to aid in the energy transition of their regions. Ugandan President Musaveni issued a warning just before the opening of the Glasgow talks in a Wall Street Journal editorial piece: “Africa can’t sacrifice its future prosperity for Western climate goals…My continent’s energy choices will dictate much of the climate’s future.” The African leader asserts that energy use in this continent will surpass that of Europe by 2050. The presidents of the two energy giants of South America, Brazil and Mexico, did not bother to attend COP26. Both nations are trying to increase oil and gas production. Poorer nations in South America depend on fossil fuels for development.

Although European nations were the most vocal proponents of stronger action at Glasgow and have advanced further than other regions toward renewable power, they were not able to muster enough internal political support to meet or increase the pledge for subsidizing developing countries’ renewable energy sector. Given the increase in energy prices and the damage they are doing to the industrial economies of Europe, it is unclear if even German, French, Italian and British leaders can bolster their commitments to faster and bolder actions. President Macron felt the pressure internally with the gilets jaunes unrest earlier in his term, and Germany’s economy barely regained levels achieved before the Great Recession in 2009. Its crucial manufacturing industry remained 9% below 2015 levels in the fall of 2021.The poor performance of wind, solar and hydroelectric power in Europe in 2021 has complicated thinking as energy prices rise even more and as Germany is forced to import coal for electric power. Coal-fired electricity grew by 38% in the first half of 2021 in Germany.

In short, global economic and related political considerations suggest that the COP26 accomplishments, which do little to advance previous commitments to limit temperature increases by century’s end, are the best possible at this historical juncture. Climate leaders must come to terms with the requirement of convincing their voters, at least in democratic states, that the longer term good of stopping the increase of greenhouses gases in the atmosphere outweigh the considerable short and medium-term economic and development costs.

Read also: Why we need a green social contract to make decarbonisation just

Having expert agreement alone is not enough to ensure necessary political commitment. This suggests that future discussions pay more attention to the transition period. The advantages of natural gas over coal, of the role of nuclear power, of adaptation tactics, and of more advanced energy technology research, including geoengineering, deserve more attention than they received in Glasgow.