Forget the wording of this COP26 deal. follow the money

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For all the weeks of negotiation and harsh diplomacy that goes into the text of an international agreement, the words that ultimately result in magic is not magic,

Will the release stemming from the Glasgow Climate Conference promise “a phase-down of coal and accelerate subsidies for fossil fuels” (as the initial draft proposed) or instead “the phase-down and inefficient phase-down of coal power”? Efforts towards phase-out of ” Fossil fuel subsidies,” (in the soft language of the final agreement), will barely change what the world’s big emitters do in the coming years.

Also, the governments that sign such agreements explicitly recognize that words have the power to enchant. Why have there been 26 meetings to set aside fossil fuels to make it into the terms of the climate agreement? The language crystallizes the more important reality emerging away from conference halls in power stations, industrial facilities and government offices around the world. In its humble way, it also helps to take that process forward.

The most important of all those soft phrases is almost certainly “inefficient fossil fuel subsidies.” Although nearly every kilowatt of fossil energy on the planet is by definition inefficient (because it doesn’t pay for the cost of pollution on human health and the global climate), this scary formula is so pervasive that it gives a political excuse with almost no support.

Much can be justified in the name of efficiency. The difference between a country with a stable and secure supply of energy and a country without it is the difference between the 18th century versus the 21st century in China and sub-Saharan Africa, or Glasgow. Even the modest energy crisis we have seen in the coal and gas markets of China, India and Europe in recent months is indicative of the enormous social value of a functioning energy system. An efficient subsidy is all about providing it in the cheapest possible way, though – and that calculation has changed quite a bit.

At the time of the Paris climate conference in 2015, renewable energy was the most economical way to provide new electricity generation in only a handful of European countries, and were not competitors. Anywhere with existing fossil power. Now, they’re even reducing pre-connected generators – a reason we’ve found the likes of Indonesia, Vietnam, Poland, and South Korea Sign up to end coal-fired electricity on which they are dependent.

Read also: India calls COP26 a ‘success’, says summit summed up concerns of developing world

The same is true with transportation. BloombergNEF, one of the more bullish forecasters for electric vehicles, projected in 2016 that global sales would rise to 2 million in 2020. In practice, that figure was 3.1 million, and is projected to rise to 5.6 million this year. NS Cost of owning an EV That’s already less than an equivalent petroleum-powered car in several major markets, and sales have already reached 12.8% in China and 17% in Europe as part of the total this year.

Other areas will follow in the coming years. Green steel, which was considered slightly better than science fiction a few years ago, should be competitive with a conventional product of the type of carbon prices prevailing in the European Union. Green Hydrogen, until recently another pie-in-the-sky notion, is already seeing Planned Projects of 213.5 GWAlmost equal to Germany’s electricity generation capacity. In industry after industry, the emerging reality is that fossil fuels are no longer as essential to modern life as we thought. The cheapest and most efficient route to energy security is zero carbon.

However some things remain the same. Technological change means that India and China’s coal-fired power stations are already unviable – but to replace them, wind and solar plants must first be built, which will also require financial and political change. Coal India Limited, the world’s largest miner of solid fuels, resembles a state within a state in some ways, operating hospitals, schools and colleges and employing over 250,000 people. Indian Railways, the huge state-owned rail operator, can only provide cheap transportation for passengers because it Charges heavy duty on coal transport,

To talk about this only in the context of subsidies makes sense in some ways considering how deeply integrated fossil fuels are into the structure of their most enthusiastic producers and consumers. These are not mere exits, but the arteries of the economy through which flow finance, employment, politics and influence. The surgery required to remove them would not be straightforward.

The $8.5 billion package announced in Glasgow to accelerate South Africa’s transition away from coal provides a model for how it could be done – but it is not certain whether it will be successful, and that in a country Concrete accounts for less than 3% of the emerging world. fuel consumption. India has already $1 trillion price tag Funding is needed to accelerate its energy transition this decade.

However something must be done. The cost of subsidizing fossil fuels increases with each passing year, making them difficult to give up even if they do harm. In a world where annual energy investment moves $1.9 trillion or so a yearThe problem is not that there is a paucity of funds, but that they are going to the wrong places.

Despite the lack of investment capital in developing countries deprived of zero-carbon power, even if they are more and more affected by the shock of climate change, the biggest inefficiencies are not in the subsidies that underpin our energy systems. . If we fail to provide the planet with clean, affordable energy, which is now within our grasp, it is a loss of human potential.—bloomberg

Read also: Why climate finance is a big deal, and where talks at Glasgow COP26 take place

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