Do you believe in life after oil?

It’s the multibillion-dollar question and the stakes for the world could not be higher: Will oil and gas interests at the COP28 climate talks silence calls for the phaseout or phasedown of increasingly profitable fossil fuels?

It’s a perennial Turkeys-voting-for-Christmas question when it comes to COP – but this time it has added relevance, and not just because the talks are happening in the oil-producing United Arab Emirates and led by Sultan al-Jaber, head of the Abu Dhabi National Oil Company (ADNOC).

Jaber is also the founding chief executive officer of the UAE’s renewable energy firm Masdar.

Yet despite growth in the use of renewables worldwide, including solar and wind power – accounting for 7.5% of global energy consumption, excluding hydropower, in 2022, according to the UK-based Energy Institute – oil profits are soaring since Russia’s 2022 invasion of Ukraine.

Analysts say this is discouraging oil and gas companies from investing in renewable energy – vital to cutting the greenhouse gas emissions fueling global warming – and pushing them to channel their money into developing more fossil fuel extraction capabilities.

“In relative terms, if you compare the profit you can generate from renewable assets to that [of profit from oil], they look worse than before, but they haven’t really changed,” said Nils Bartsch, head of oil and gas research at Urgewald, a Berlin-based environment and human rights organization.

Profits from the sale of fossil fuels are also making some companies “weaken” their climate strategies, Bartsch said in a phone interview with the Thomson Reuters Foundation.

In February, energy giant BP scaled back plans to reduce oil and gas output by 2030, reducing its target to 25% from 40% from 2019 levels.

ADNOC, meanwhile, plans to boost oil production capacity to 5 million barrels per day by 2027 from its current 4 million bpd as part of a $150-billion investment plan, said a report released by the UN Environment Programme and climate researchers this month.

With profits soaring, analysts say there is little incentive to cut oil production. Fossil fuel firms around the world are all “betting” on “producing the last barrel of oil,” said Bartsch.

This includes the Gulf too, and has serious implications for efforts to curb potentially catastrophic climate change, activists say.

Earlier this month, Urgewald released a report looking at whether a company’s activities are in line with the International Energy Agency’s roadmap to net zero emissions by 2050.

It found that ADNOC had missed its targets by the highest margin of any company in the world – and said its plans are out of kilter with the global goal to limit warming to 1.5°C (2.7°F) above preindustrial times.

“While ADNOC’s CEO Sultan al-Jaber is in the driver’s seat of this year’s climate summit, his company is on a clear collision course with the 1.5°C goal,” the report said.

On the opening day of COP28 on Thursday, November 30, Jaber said his team at the negotiations was “laser-focused on keeping 1.5 within reach” and delivering the “maximum” ambition in response to a UN assessment of global progress that found efforts lagging far behind what is needed to meet that target.

‘Conflict of interest’

The need for action is clear. This year is set to be the warmest year since records began in 1940, according to the European Union’s Copernicus Climate Change Service.

The UN Paris Agreement, adopted in 2015, set the goal of limiting temperature increases to “well below” 2°C (3.6°F) above preindustrial times while “pursuing efforts” for a tougher ceiling of 1.5°C.

To achieve that goal, greenhouse gas emissions need to be cut by 43% from 2019 levels by 2030, according to the Intergovernmental Panel on Climate Change. This would require countries to ramp up their plans to phase out the extraction and use of fossil fuels – coal, oil, and natural gas.

At the COP26 talks in Glasgow, world governments agreed to phase out “inefficient” fossil fuel subsidies to help fight global warming. Since then, however, global fossil fuel subsidies have risen by $2 trillion to $7 trillion, according to the International Monetary Fund.

Many environmentalists have expressed concern about whether any further progress can be achieved at COP28 and have raised doubts about Jaber’s suitability as president of the talks.

“There’s a conflict of interest if we have an oil and gas executive that is COP president,” said Bartsch.

“I fear that when it comes to upstream oil and gas specifically…not much will happen,” he added, referring to the expansion of fossil fuel production. “This is what’s really putting our climate efforts in danger.”

Jaber has previously said that a phasedown of fossil fuels is inevitable and essential, but as part of a comprehensive, thought-out energy transition plan that considers the circumstances of each country.

“One size fits all will not work so we need to be flexible and agile,” he told Reuters in October.

Phase down fossil fuels, ramp up renewables

In the lead-up to COP28, many activists and environmentalists unsuccessfully called on Jaber to resign his post at ADNOC.

His dual role “is emblematic of the problem,” said Rachel Kyte, former adviser to the UN secretary-general on climate and now co-chair of the Voluntary Carbon Markets Integrity Initiative, during a webinar on COP28 earlier this month.

The challenge, she explained, is the simultaneous need to gradually wind down fossil fuel use and ramp up investments in emerging economies and green infrastructure and energy.

Gulf countries argue they have a competitive advantage that puts them in the best position to continue meeting demand as it declines.

“They can do it cheaply, they can do it effectively, they believe,” she said.

She cited the example of Saudi Arabia’s giant state-owned oil company Aramco, which invests most of its profits back into green energy.

“The Saudi Arabian theory of change is we will be green at home and then we will export our last very efficiently-produced barrel of oil,” Kyte said.

She called on the UAE to bring together oil- and gas-producing governments and companies – both from the Gulf and the West – at COP28 to commit to be “at least part of the solution” and produce credible plans to cut their emissions to net zero.

“It is high time that they stop sitting on their hands and complaining and asking for the rules to be different for them…and start producing those plans,” she said. – Rappler.com