Climate change is a common concern of humankind. For many people, it is just a recent problem to address, but in reality, post-cold war, due to issues relating to sustainability, member states at the United Nations Conference on Environment and Development (UNCED) in 1992, also known as the Rio de Janeiro Earth Summit, or just the Earth Summit, decided to collaborate in addressing some common issues: production of toxic components, replacing fossil fuels and support a proper usage of water.
Today, when we speak about climate change, the first thought goes to the well-known Paris agreement, sometimes referred to as the Paris climate accord. It is the legally binding international treaty, adopted in 2015 by 196 parties at the United Nations Climate Change Conference near Paris, to limit global warming by keeping the rise in mean global temperature to well below 2 °C (preferably 1.5 degrees) compared to pre-industrial levels. It is a landmark in the climate change process, where nations committed to achieving this long-term temperature goal and agreed to put in place international cooperation and coordinated solutions, to have net-zero emissions by 2050.
Climate change is a global problem that goes beyond any border. Every 5-year cycle each country submits its increasingly ambitious plan for climate action known as nationally determined contributions (NDCs), where they communicate actions to reduce their Greenhouse Gas emissions. At the same time, each nation formulates non-mandatory long-term low greenhouse gas emission development strategies (LT-LEDS) to provide a vision for future development.
Under the enhanced transparency framework (ETF), designed to build trust and confidence, all countries by 2024 start reporting their contribution, action and progress of their share to this global effort. Through the biennial transparency report (BTR) all the information will feed into the Global stocktake which will assess the global path toward the long-term goals (article 14). By 2030 we should have the first important results if the world continues this path and constantly increases its effort to achieve carbon neutrality targets. Something easier to write than to apply and reach. Annual emissions hoover around current record highs of about 40 gigatons of CO2 equivalent. Trying to reduce them more and to remain in the carbon budget will be costly: economic and social.
Taking into consideration the global oil demand, today's consumption holds just above 100 million barrels a day. A scenario that keeps oil around much longer and us away from the convergence to the net-zero emissions. In reality, after the pandemic, carbon emissions have recovered faster than expected and are heading now even higher making the climate goals harder to be reached. This “re-carbonisation” is even more pronounced during the current geopolitical tensions. Russia's invasion of Ukraine took attention back to “old” energy sources. The energy supply crunch has created a difficult situation for member states that could delay climate goals by bringing coal power plants back online and business lobbies have pointed to the Ukraine crisis to push for changing environmental rules. The same trend could be spotted even in the EU ETS carbon prices. EU allowances (EUAs) prices collapsed with a clear message. Investors are betting that the EU will relax its rules and favour more coal-burning power stations.
It is a very challenging situation with a difficult trade-off on the table. Becoming independent from Russian hydrocarbons but with environmentally unsustainable sources. We can’t forget the importance of reaching net-zero greenhouse gas emissions. Governments will have a tough mandate to secure the energy strategy with renewables power as much as they can. There is no time to waste in the passage from fossil fuels. A cleaner future is the best solution for everybody.
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