The Taiwan Banker

With global temperatures hitting record highs, and extreme weather events affecting people around the globe, 2023’s UN climate change conference, COP28, was a pivotal opportunity to correct course and accelerate action to tackle the climate crisis. COP28 brought together leaders from governments, businesses, NGOs and civil society to take stock of progress on the Paris Agreement. The Paris Agreement, often referred to as the Paris Accords or the Paris Climate Accords, is an international treaty on climate change. Adopted in 2015, the agreement covers climate change mitigation, adaptation, and finance COP28 was meant to allow the world to chart a course of action to dramatically reduce emissions and protect lives and livelihoods even amidst the current wars and conflicts but it never really achieved those lofty goals and arguably was never going to reach them. Despite the naysayers, the UN, at least, says the science is clear. In order for the world to preserve a livable climate, the production of coal, oil, and gas must rapidly decline, and global renewable power capacity must triple (yes, triple) by 2030. Within 6 years, the world must triple wind, solar, hydro, geothermal energy and any other forms of clean energy that may be developed in the interim. On December 13, the COP28 climate talks agreed that the world must transition away from planet-warming fossil fuels. Whilst this should still be regarded as a significant step in climate change, it is one filled with legitimate questions about “when” and who will pay for the transition. The agreed COP28 text is also problematic as it still includes enormous loopholes that allow the US and other fossil fuel producing countries, including COP28’s host, the UAE, to keep expanding their use of fossil fuels resulting in the continued emission of carbon pollution. The efforts to triple global renewable power capacity require massive amounts of financing and to achieve the 2030 goals investments in climate resilience need a quantum leap. The major issue in the efforts to reduce emissions is the ever present need to decarbonize. Simply put, decarbonization isthe reduction of carbon dioxide (CO2) emissions through the use of low carbon power sources, achieving lower output of greenhouse gasses into the atmosphere. The ultimate target of decarbonization isto achieve carbon neutrality, meaning a return to levels of CO2 naturally present in the atmosphere prior to human intervention, a noble but staggeringly large ambition. Decarbonization, with its attendant reduction of human-induced CO2 emissions, should allow the world to combat the severe impacts of global warming. The challenge includeseconomic and social issues, energy supply security and sustainability. Some commentators simply suggest that a global carbon tax be imposed as a method to accelerate the decarbonization process, but there is no clear definition of how such a tax would be calculated, paid, and then ultimately and democratically utilized, somewhat akin to COP28’s transition away agreement. What is needed is long-term decision making in energy and political stability (something which was in short supply at the end of 2023). Decarbonization has also become one of the dominant topics in the global Environmental, Social and Governance (ESG) space, with many organizations and countries rushing to define net-zero strategies especially by 2050. ESG is an “industry” in and of itself and one full of argument and conjecture. However, there is no conjecture that decarbonization is part of the UN’s 17 sustainability goals (SDGs) – although there is really nothing simple about the SDGs. The SDGs orGlobal Goalsare a collection of interlinked objectives designed to serve as a shared blueprint for peace and prosperity for people and the planet, now and into the future. Of the 17 SDGs, decarbonization is part of the Affordable and Clean Energy and Climate Action goals. The Climate Action SDG aims to limit global warming to 1.5°C. At the present rate of global warming this means that emissions will need to peak as soon as possible, followed by rapid reductions. Global carbon emissions need to fall by a staggering 45 per cent by 2030 from 2010 levels and continue at a steep decline to achieve net zero emissions by 2050. Climate change is wreaking havoc on our planet. Droughts, floods, heatwaves, and other extreme climate events are directly impacting are people, species, and ecosystems and the source of this calamity is none other than the world’s addiction to fossil fuels. Both developed and underdeveloped countries remain addicted to fossil fuels despite all of the efforts being put into renewable energy sources. Through decarbonization we must find alternative ways of living and working that reduce emissions and capture and store carbon in our soil and vegetation. It requires a radical change in the world’s current economic model, a model which is is focused on growth at all costs. Despite the COP28 agreement, the world, both developed and undeveloped, must transform how energy is generated, how different sources of energy are used, how we build and move around, and how land resources are managed. Whether we burn fossil fuels directly or purchase carbon-intensive products, we must immediately and drastically reduce our consumption, or switch to low emission technologies and renewable alternatives. Renewable alternatives include, but are not limited to, zero-carbon electricity, green synthetic fuels, smart power grids and sustainable land-use. Agriculture and the land use sector are responsible for one-third of greenhouse gas emissions, the bulk of which is attributed to livestock production (methane), chemical fertilizers (nitrous oxide), and the destruction of natural ecosystems (CO2). Glasgow COP26 brought the nature agenda to the heart of climate negotiations. Several initiatives and pledges were launched to promote system change to recognize the value of nature and the important role that healthy oceans and healthy land play to achieve the 1.5°C goal, to guarantee water and food security, and to generate resilience. But even by the start of COP28, these COP26 initiatives and pledges were often at best “hot air” or only beginning to gain traction. Admittedly traction takes time, but arguably the world does not have time. Commentators on decarbonization argue that food systems must be redesigned and redeployed to ensure positive outcomes for nature and climate. There are arguments for a transition to local, plant-based diets but that smacks of egalitarianism when poverty and hunger still exist globally. There indeed may be merit in such arguments but we need practicality as well. How long would it take to transition the world to local, plant-based diets? Presumably much longer than the 6 years before the 2030 goal. The UN estimates that some US$700 billion is paid in agricultural subsidies each year, but only around 15% of this amount positively impacts natural capital, biodiversity, long-term job stability, and livelihoods. Why is that? Cynically, a lot of that money is likely lost to globally endemic corruption. Perhaps it is time to re-examine these subsidies and the method of allocation. Instead, let’s encourage farmers to adopt more sustainable and climate-friendly food production practices, such as regenerative agriculture. Regenerative agriculture enhances soil carbon storage and protects biodiversity, which sounds good from a decarbonization perspective. It is already a proven fact that conservation or no-till agriculture increases biomass and soil organic carbon as well as nutrient and water availability through agronomic and other resource-conserving practices. These practices protect soil structure, conserve moisture, suppress weeds and pests, and can create new, urgently needed carbon sinks over longer time scales. Many smaller scale farmers, in poorer undeveloped countries, have already adopted sustainable farming methods focused on soil health. The developed nations have lessons to learn from the undeveloped nations. Developed countries, the recurrent COPs and COP28 have a long history of “setting targets.” Targets are great for visual effect, great for media headlines, especially after global conferences. Targets are great for richer countries and bureaucrats that may have the chance of meeting targets. Targets look great in slide presentations and make for wonderful discussion panels. Some attendees at these global conferences can return home citing these “agreed” targets as concrete outcomes of the negotiations. However, poorer countries, and what is now being termed the Global South (meaning Brazil, India, Pakistan, Indonesia, China, Nigeria, and Mexico) are increasingly voicing concerns on the setting of targets, especially including those involving decarbonization levels. Why? These countries view these targets as stunting their economic growth before they have matured. These countries also point, quite validly, to the fact that developed countries are still emitting the majority of greenhouse gas emissions. The equation simply does not add up as it currently stands. Even before COP28 began, the UAE, as the host nation, confirmed it was poised to expand its fossil fuel production and the UAE is certainly not the only developed country to continue or indeed increase fossil fuel production and clearly the UAE (together with other major countries) has prevailed with its plans. Nevertheless, decarbonization cannot wait and despite COP28, the world remains perilously close to crossing irreversible tipping points. COP28 has set new targets, and agreed upon new global cooperation initiatives, but has been a disappointment to many. Yes, decarbonization implies transformational change. Decarbonization will require massive financial and manpower investments in science, green and blue technologies and infrastructure, land and soil restoration, renewable energy, and sustainable buildings, but the return on investment will be recouped many times over in socioeconomic benefits, jobs, and social welfare. Success can only be effective if supported by behavioral changes, new policies, and regulatory frameworks, greening of financial flows, international cooperation, and radical collaboration. Following COP28, when will the world have a further chance to change the trajectory we’re on in climate change and in biodiversity loss and make decarbonization a reality?