Will Dubai be a good COP or a bad COP?
COP28 kicks off in Dubai this Thursday. What will this UN climate summit mean for automotive, and for corporate fleets in particular? Perhaps a more pertinent question: is COP still relevant? Because this year’s conference president is the CEO of Adnoc, the UAE’s state-run oil and gas company.
An oil exec chairing this year’s climate summit? That sounds like a fox running a henhouse. To be fair, Sultan al-Jaber isn’t just the chief executive of the Abu Dhabi National Oil Company (Adnoc), source of about 3% of the world’s oil; but also of Masdar, a smaller state-run company, focused on renewable energy.
Not all talk
It is that dual role that should eliminate misgivings about holding a climate conference in a petro-state. It reinforces the message that the UAE is using its considerable oil wealth to race ahead towards a zero-emission future. And indeed, the Emirates are definitely not all talk on that front: as we frequently report on Global Fleet, they pilot plenty of innovative mobility projects, autonomous, shared and/or electric.
So in that perspective, Dubai could actually be a good place to move the world further away from oil, coal and gas, with the ultimate aim of reaching net-zero emissions by 2050. In recent days, however, a whistleblower hinted at darker goings-on behind the scenes. A leaked 50-page document cited by the BBC and the New York Times indicates the UAE was planning to use its status as COP28 host to lobby for oil and gas deals around the world.
In one example of several listed in the news reports, UAE officials were to discuss with the Chinese delegation “LNG opportunities” in Australia, Canada and Mozambique. The revelation shocked many. “At this point, we might as well meet inside an actual oil refinery”, Joseph Moeno-Kolio, of the Campaign for a Fossil Fuel Non-Proliferation Treaty, reacted in the New York Times.
Al Wasl Dome
As delegates gather in Dubai’s Al Wasl Dome (pictured below) on Thursday, COP28 will have to struggle to clear a very low bar: the conference has to prove that emissions reduction is still its priority – and that means actively reducing the exploitation of coal, oil and gas, not treating hydrocarbons as an acceptable long-term alternative to renewables.
Fortunately, there’s another, more optimistic reading of the situation. The shock of the leaked document may actually energise the delegates to take radical action. And that would be good, because it is desperately needed.
In 2015, at COP21 in Paris, the world agreed to cut CO2 emissions to limit global warming to less than 2°C, and ideally no more than 1.5°C, above pre-industrial levels, this to avoid catastrophic climate change. But it turns out we’ve not done enough. As a result, global warming is increasing even faster than scientists anticipated.
Hottest on record
This summer was the hottest on record – already 1.2°C warmer than the 1950-1980 average, according to NASA. That’s perilously close to the 1.5°C threshold set in Paris. Unless urgent action is taken, some scientists predict the planet could be 3°C hotter by century’s end, which brings significant climatologic changes to our planet.
That dramatic fact is acknowledged by COP28, which in its communication urges delegates to “keep 1.5°C within reach”.
So, will COP28 be as transformative as the 2015 Paris summit, or as forgettable as most of the climate summits that have happened since? That depends on these three things to look out for in Dubai:
COP28 will feature the first-ever global stocktake: a country-by-country assessment of progress made towards the Nationally Determined Contributions (NDCs) agreed in Paris (2015). A preliminary report released in September shows some progress, but not enough: none of the 195 countries is on target. To salvage the Paris goals, COP28 should set more ambitious NDCs and secure their effective delivery. The most obvious way to do this is via carbon pricing and taxing, tighter regulations, and cutting fossil fuel subsidies. That is going to be difficult, as some countries have already started rowing back on prior targets due to domestic pushback against low-carbon policies.
Developed nations committed to offer $100 billion to developing nations for climate change mitigation and adaptation. That target has not been reached yet, but we’re close: $83 billion in 2020, with projections that the full amount to be delivered before the end of this year. Now, negotiations will start for a new amount: anywhere from $400 billion to $1.3 trillion – the final amount to be decided at COP29 in 2024.
Carbon credit markets
Rules for carbon credit markets were agreed at COP26 in Glasgow, but carbon credits still lack clear rules to assess projects and measure emissions, limiting the value of carbon credits and limiting the growth of carbon credit markets. COP28 should find a way to tighten the rules so greenhouse gas emissions trading can really take off. This means that companies and countries will be better able to buy international credits that count towards NDCs.
With the outcome of these three major topics, and many other ones, up in the air, what could (or should) the outcome of COP28 be for the automotive industry?
Glimmers of hope
A radical tightening of NDCs, with faster targets for reaching net zero, could quickly trickle down into tighter regulations at national and/or EU level for not just OEMs, but also for both fleet suppliers and fleet customers. On the other hand, greater clarity and transparency on carbon credits could offer ways to mitigate remaining emissions.
COP28 is set to close on 12 December, but may run over that date if necessary. While the overall climate picture may be bleak, and a positive outcome for COP28 is far from certain, there are some glimmers of hope.
- The cost of renewable energy has dropped so far that it is now cheaper than fossil fuels in many parts of the world.
- Thanks to a surge in wind and solar power generation, which now represent 14.3% of the total, global emissions from electric power generation may peak as soon as this year.
- While global emissions have not yet peaked – and they urgently should – they already have in many mature economies.
- EV technology is progressing to make batteries denser, ranges wider and vehicles cheaper.
- The number of countries where the TCO or running cost of an EV is more attractive than that of an ICE is steadily increasing.
- EV sales are set to triple from 10 million in 2022 to 31 million in 2027, and then double to almost 75 million in 2035.
The advent of cheaper EVs could further boost the pioneering role corporate fleets play in electrifying mobility. Such a boost is certainly necessary, as the increase in EV sales cited above, forecast by EV-Volumes, would result in no more than half of all light vehicles being EVs by 2042.
Meaning that, good COP or bad COP, corporate fleets and the supply chain are part of the solution and will have to find ways to keep doing better, if not to anticipate stricter regulations, then for the good of the planet.