During June 2022 UN climate negotiations in Bonn, Germany, UWEC co-editor Angelina Davydova, along with Boris Schneider from the Clean Energy Wire CLEW spoke to Bill Hare, founder and CEO of Climate Analytics and one of the leaders of the Climate Action Tracker, about the current state of UN climate change negotiations and the global decarbonization agenda. This is a transcript of the interview, which first appeared in the Eurasian Climate Brief podcast, hosted by Angelina and Boris along with Natalie Sauer, an English-language editor for The Conversation.
Davydova: We’re meeting here in Bonn, during the UNFCCC intersessionals, and it’s the first UN negotiation session since the beginning of the war in Ukraine. So, how would you say that Russia’s invasion of Ukraine is influencing these negotiations now? Which consequences do you see?
Bill Hare: In Glasgow last year it was agreed that the whole climate process would focus on increasing ambition, but now what we’re seeing in Bonn is a complete deflation of the pressure to increase ambition, and that’s a consequence in significant part of the energy crisis induced by the illegal invasion of Ukraine by Russia. The problem that’s happening here is that a lot of governments are now focused, they say, ‘on energy security’ rather than the clean energy transition, and that’s leading to a disappearance of ambition from the agenda. We have a number of other countries, including Germany, focused on decreasing natural gas supplies. As far as we can calculate, natural gas supplies from Russia are being replaced, more than replaced, and that’s leading to serious concerns about the lock-in of carbon-intensive infrastructure. So the politics of this meeting in Bonn are very disappointing, because of multiple countries basically not wanting to talk about or promote ambition anymore, so the whole objective of trying to close the emissions gap between where current commitments from countries are headed in 2030 and where they need to be on the Paris Agreement, and the agreed pathway is, basically, disappearing from the agenda.
Angelina: That all doesn’t sound like very good news at the moment. From what I hear a lot in the negotiations, there are also quite a lot of concerns that climate finance for developing countries (both for mitigation and adaptation) would not be accumulated in the amount that was promised before and that is actually needed. Do you also see this as a concern, that financial resources are being allocated for military purposes and other purposes but not for development aid and climate finance?
Bill: The climate finance issue is a long-standing problem – that developed countries have not met the commitments they’ve made, four hundred billion dollars – and that remains to be a significant problem. The economic issues induced by the Covid crisis and now also by the war in Ukraine are leading governments to be very reluctant to increase climate finance, rightly or wrongly, and I think that’s going to be a significant political problem for the conference of the parties in Egypt (COP27), I think that the two issues are coupled, increasing ambition and action needs to be also supported by additional financing. If that doesn’t happen, it will create a very bad political environment in Egypt for sure.
Angelina: So what should happen before Egypt, so that the world can be back on track for more climate ambition? And how could that happen? And what kind of effort do we need from which parties? When do you see this possibility?
Bill: Well, I think to improve the outlook for ambition and action– real action –by the conference of the parties in Egypt, there are several opportunities. We have the G7 coming up in a few weeks, we have the G20, and we have the United Nations General Assembly, which would be dominated by Climate Week in September. So these are high-level opportunities for governments to re-assert their commitment to increasing climate action. And so one would look to the G7 leaders and then the G20 leaders, and then governments turning up at the United Nations in September to really re-assert their commitment to act and to move past the Ukraine energy crisis in a positive way, and by ‘positive’ I mean – what government should really be doing now is doubling down and accelerating renewable energy and clean technology, and they should be doubling down on providing financial support for developing countries to reduce their emissions and also for adaptation. The conscience that we see now is very dangerous, because what we are seeing is an increase in the amount of finance going to very large liquefied natural gas projects, not only, but particularly in Africa, and at the same time we’re seeing decline in the amount of investment in renewable energy in that region. And at the same time we’re seeing a retreat in energy access for Africa. So what that means is at the very time when we should be seeing renewable energy investment growing, we should be seeing energy access, energy poverty issues being overcome in Africa, we are seeing a massive and supported investment in fossil fuels, not just by the private sector, but directly or indirectly led by Northern governments. And that doesn’t speak well to the future. What it does tell us is a very old story that massive fossil fuel investments in developing country regions rarely ever bring serious benefits to the real people, they bring benefits to the elite, they bring benefits to the companies who repatriate their profits to shareholders often in Europe or North America, and that’s a really big problem that I am now seeing for the first time in a very, very long time.
Boris Schneider: So I would like to ask you some questions about the report which was published by the Climate Action Tracker in early June, and in that report, the authors are saying that since the Russian invasion of Ukraine we have been witnessing a proper global gold rush for new fossil gas production, new fossil fuel investments, new pipelines and, in particular, LNG – liquefied natural gas facilities. Of course, also Germany in particular is talking a lot about this infrastructure as a way to escape Russian gas imports. And could you please elaborate the main takeaways of the report, what all these investments, all those structures mean for our ability to stay within 1.5˚ Celsius in the Paris Agreement?
Bill: Yeah, I mean the Russian-induced energy crisis has meant that Europe is moving away from Russian gas, and that’s right, and I don’t think that anyone would argue that that gas needs, for a short period, needs to be replaced in order to enable the lights to stay on and the industry to keep moving in Europe. What’s really at stake is the longer-term commitments that are being made to long-term inbound gas through new liquefied natural gas import facilities in Europe – Germany, Italy, the Netherlands, for example. And these inbound gas commitments already far exceed replacement of the Russian gas. That’s one thing, the volume is greater, and secondly, we understand the commitments are over decades. So, add that up together, and it looks like a really big problem for de-carbonization in Europe. We know, for example, that two German utilities, RWE and Juniper, have entered into multi-megatons of gas contracts a year with an Australian producer, Woodside, which they now want to bring into Germany, and these contracts, ten-fifteen-twenty years or so, they are quite contradicting the idea of rapid de-carbonization of Germany and Europe. So that points to a really serious conflict between climate ambitions in Europe and the actual reality of what governments are stitching up on gas supply. So that creates a major risk for the future, because companies will want to make these investments and will want over ten or twenty years or more to get their returns, and so we are stuck with these facilities. They become, in effect, stranded assets or very strong carbon-locking to economies, including Germany and Europe. So that’s really one of the big risks I’m seeing, and of course the European energy liquefied natural gas problem is really only part of a much bigger global problem that we’re seeing. So, for example, in Africa, I think in the pipeline now are 60 to 74 million tons per annum of new liquefied natural gas capacity. To put into comparison the biggest producers now are something like 79 or 80, that’s Qatar and Australia. So, just the increase from Africa is enough to cause a serious problem in its own right. And somehow or other the gas companies and governments use the Ukraine and the Russian energy crisis to justify this. And it’s in a way like the whole climate ambition is being thrown away and replaced by a rush to gas. And in the political domain we’re also hearing that language for the G7 leaders in a few weeks and for the G20 leaders is increasingly referring to or replacing energy transition as an objective to energy security, which means boosting gas supplies.
Boris: Some politicians, in particular in Germany, I think it was the German Minister of Economy and Energy who is incidentally from the Green Party, when he announced that there would be an expansion of the LNG infrastructure, he claimed that part of it could eventually be used for hydrogen, so that in a way it would not be fully a stranded asset. Do you see this as a realistic option, or what is your comment on that?
Bill: I think technologically it’s possible to have liquefied natural gas terminals and social distribution systems that are hydrogen-compatible. So in the technological sense I think that’s possible. The skepticism that many would bring to that is that we have heard this before from the fossil fuel industry. For anyone with a decent memory, you know, some years ago, a decade or so ago, there was a big push on cleaning up coal, carbon-capture and storage for coal plants was talked about, and we had politicians, including the Chancellor in Germany (at the time Chancellor Merkel) going around also supporting carbon-capture and ready coal-fired power plant, but I doubt there was a single one in Germany or anywhere else on the planet actually. So one has to be very skeptical and the reason is that the companies building these terminals want a long-term return, and it’s not just the terminal itself, it’s also on the supply side. Companies are making multi-billion investments in generating liquefied natural gas to come to these terminals, and they will have a say in the political system, they always do, so I’m skeptical about this. I’m not questioning whether Germany needs to replace Russian gas for a few years, I think everyone agrees with that, but the issue is more of the longer-term lock-in and the rightly-held skepticism whether this would just be a short-term solution or part of a longer term carbon lock-in.
Boris: And what do you make of talk or I think already in some countries existing attempts to tax windfall profits of fossil fuel companies? Because obviously since energy prices have risen very, very strongly since the beginning of the invasion some of them are making way more money than they were before the war. Do you see this as a reasonable or possible policy?
Obviously, look, I’m not an economist, but, you know, as a citizen I think it looks perfectly reasonable to tax unusual windfall profits and to turn those to public advantage in different ways. People are hurting from the increased energy prices, industry are hurting, so it would make sense to tax windfall profits and thereby also provide a disincentive for companies to keep going in the fossil fuel direction. So I think that would be an important public policy initiative. I guess I struggle to understand why more governments haven’t moved in that direction, when it just seems a very obvious thing to do, you know. In a very colloquial sense you can say that many of the gas companies are profiteering off the war in Russia, they are the ones making the money, while many of the rest of us are suffering from the energy prices, and it’s not just people in rich countries suffering, we’re seeing countries that are presently importing fossil fuels to the developing world, who are quite poor, having to pay remarkable prices for energy, and that’s one of the factors that’s actually leading to a retreat from energy access in Africa. People can no longer afford to buy, for example, the liquefied natural gas which was sold a few years ago as a panacea for development, they just can’t afford to by it anymore, so they’re going back to traditional biomass, etc, and that’s one of the factors behind the retreat from energy access in Africa. So. I think, really, there’s almost a very moral case to tax the companies and probably a very good economic case as well.
Angelina: You now spoke a lot about how governments, and also particular companies are actually making money in current times of the war in Ukraine. Before the war, and also here, at the UNFCCC level, there was a lot of debate about how the world is moving more into renewable energy development, decentralization of energy supplies, and also people and consumers are having more to say, more power in the whole energy sector, rather than the governments and companies. Is there a possibility for us to come back to this debate and enforce it in any way?
Bill: That’s a very good question. I think there is every possibility of coming back to this, the question is how long-lasting would be the structural market developments in the gas area and fossil fuel area for the companies that are presently been involved in the fossil fuel industry. If they become long-lasting and backed by government, then it would be very difficult to go back. What we know is that despite the energy crisis, in a way, or even because of it, renewables are much cheaper than the alternative, the spike in liquefied natural gas and, to some extent, coal prices really tells us of the way to go for energy security is renewables. And that means that there has to be a very strong economic incentive to go back in that direction towards renewables. I think there’s another way to look at what’s going on. I’ve been engaged in this now for a very long time and I really think this is a very very strong and coordinated global push by the gas and oil industry to bust the Paris Agreement. Frankly, I think that’s really what’s going on. And you can see it in multiple different ways – you can see this in the way in which the companies have rounded up large industrial countries to support their push, despite all the advice from their scientists. You can see it in the way this is being pushed on to developing countries and supported by multilateral institutions. Knowing that the lobbying behind that is very formidable by the oil and gas industry. So it’s very hard to avoid the conclusion that the oil and gas industry is taking advantage of this Russian energy crisis to try and roll back the implementation of the Paris Agreement permanently. And you can see… this is my view; I can’t prove it, but it’s my observation – a feeling about what I’ve been seeing the last months, and this is also linked to this massive explosion of green-wash. If you go and look at the gas company websites, whether it’s Total or Woodside, you will see almost on the first page of their commitment to net zero, and so on and so forth. When you drill into that, there’s absolutely nothing there. It’s not happening. And it’s not going to happen. Or if it happens, it’s gonna happen through offset purchases. So I think there’s every justification for being deeply concerned that the fossil fuel industry is making an end-run in an attempt to derail and even strip off the Paris Agreement. And I think that creates a profound risk not just for the climate, but also for people in poverty. This is not going to help people in poverty in the developing world get access to energy. Further, it magnifies the very real chances of people in vulnerable places experiencing unacceptable, even catastrophic climate damages.