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Missing the Low Bar - My Take on COP 27

The most significant takeaway from the conference is that the ability of sovereign states to coalesce around the course of action in the face of a universal threat is very limited so expectations around multilateral solutions to the global impact of climate change should always be muted. Let’s set the scene:

The Backdrop

The geopolitical and macroeconomic background of the moment is acutely unfavourable to any bold outcomes from this gathering. Much of the Western world is becoming painfully aware of the fact that much of our energy security is maintained by countries with materially different value structures. The failure of the concept of democracy and convergence by contact is becoming ever clearer with each Ukrainian civilian that perishes in conflict. This has added another element to the unsustainability of the current world order – environmental impact aside. The ongoing disengagement with Russia is perhaps an excellent example of where diverging value systems can create conflict that results in universally suboptimal outcomes.

In a curious irony, the diminishing of a major hydrocarbon producer has simultaneously strengthened the geopolitical hand of those remaining integrated into the centre of our existing global energy infrastructure. In fairness, the concept of a world weaning itself from its dependence on hydrocarbons must be unsettling for regions that have built their entire modern civilization on the flows of those immense profits. Their position is the essence of Damocles’ sword – powerful but perilous. Social unrest and political instability are entirely foreseeable consequences and those leaders are, in a sense, right to feel obliged to leverage whatever influence they have to secure the best outcomes for their quasi-electorates. After all, there is no alternative able or willing to subsidise the lifestyles of heavily oil-reliant states, like some Gulf states for example, as a substitute for their historically successful modus operandi. Furthermore, as our economic structures begin the hydrocarbon weaning process, there will be the need for reliable bridging solutions and all leaders must manage this transition delicately to avoid incentivizing nations especially vulnerable to the risks of the sustainable transition acting against their own best interests due to dangers, real and imagined.

Motivated Money

I don’t know that money talks but it certainly affects. The fossil fuel industry ensured that their record windfall profits over the last 12 – 18 months were appropriately allocated towards ensuring the sustainability of their future profits. This was inevitable. The term of action of climate change is both too long and too short for fossil fuel companies to perform the necessary pivots. The assets and investment timelines the industry requires to generate its incredible profits are extremely expensive and long-term (20 – 25 years) but current-day productivity lowers their long-term profitability.

So deep pockets today, coupled with obsoletion risks tomorrow results in near-term inertia, and the world we leave to our children be damned.

The Vanguard

Coming ever closer to the foreground though are those countries on the climate vanguard. From Pakistan to Tuvalu, countries are finding themselves in an increasingly urgent position where climate change is becoming an existential threat, even at the current levels of warming baked in. And their leaders are becoming less and less patient with the reluctance of bigger, wealthy nations to:

· first, accept that there is a problem,

· second, that they caused it as a by-product of the wealth generation processes that is the foundation of their outsized influence in world events,

· thirdly, climate change is therefore the responsibility of the polluters to fix the problem, both by action within their borders and within those at the tip of the receiving end of those consequences and

· fourth, that the changes that are now required mean that the relatively easy path of exploitation of resources that fuelled the economic rise of the existing superpowers is not available to those who are now on the rise.

These are, sadly, not new talking points. The sense is growing that the world that chose not to respond in COP 26 or 25, when we all had more economic space to make the necessary investments but not the political desire to do so, now finds itself without either. Rising inflation globally, and its second and third-order effects, are tightening the availability of capital by squeezing budgets and borrowing costs. Economic difficulties often result in governments looking more inward and this makes it more likely that even where a sympathetic ear is found, the effect is similar to a deaf one.

That said, I acknowledge that this is clearly an oversimplification; the world’s political and economic landscape is complex, multifaceted, and disparate. There are many themes at play here. However, for these reasons primarily, the bar was set extraordinarily low for the achievement of any meaningful outcomes during COP27. In that respect, the conference over-delivered – there were actually some meaningful agreements struck. We will explore a few of these in the next article.

Wrapping It Up

As a closing point, this article attempts to provide a more balanced perspective on the issues surrounding the difficulty of coalescing around an effective climate change action plan. Balanced perspectives lend themselves to evolutionary, rather than revolutionary change but the age when we had the luxury of slowly moving toward a sustainable future was about 35 – 40 years ago. Now, the Prinz-Adalbert iceberg is clearly in sight and, with each passing moment, the angle that our planetary Titanic must swerve to avoid disaster becomes more severe. In fact, the most vulnerable communities are already paying a price for decisions being made in the cushy captain’s quarters. The thing about truth though is that it ultimately comes home to roost everywhere. We just have to hope that it is not too late to act by the time those with their hands on the wheel decide to turn, rather than just talk about turning.

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