On January 15, local time, the World Economic Forum (WEF) 2024 Annual Meeting opened in Davos-Klosters, Switzerland. “A Long-Term Strategy for Climate, Nature and Energy' is one of the key themes. In the context of global temperatures rising 1.48°C above pre-industrial levels in 2023 (already close to the 1.5°C limit in the Paris Agreement), this topic received much attention from the outside world.

The “Global Risk Report 2024” released by WEF last week showed that environmental and climate-related risks accounted for half of the top 10 risks in the next 10 years, with extreme weather events, major changes in the Earth system, biodiversity loss and ecosystem collapse, and natural resource scarcity ranking in the top four.

Talking about how to achieve energy transition and sustainable development, David Tong, chairman of the board of directors of Greenpeace, one of the world’s largest non-governmental environmental organizations, and global industry campaign manager of Oil Change International, pointed out in an interview with the NBD that continuing to provide public funds for fossil fuel projects is inconsistent with the goal of limiting global temperature rise to 1.5°C.

He emphasized in the interview that the real way to solve the cost of living and energy crisis is to provide public funds for clean energy.

Photo/Oil Change International website

Continued public finance for fossil fuel projects is not aligned with a 1.5°C future

Climate change is indeed an urgent challenge facing the world. The comprehensive report of the Sixth Assessment Report of the Intergovernmental Panel on Climate Change (IPCC) shows that climate adaptation development will face greater challenges as the temperature rises by one degree. Therefore, the choices made in the next few years are crucial. (Climate adaptation development refers to combining measures to adapt to climate change with actions to reduce or avoid greenhouse gas emissions, thereby expanding benefits.)

The International Energy Agency (IEA) pointed out at the WEF 2024 Annual Meeting that to put the world on the path to achieving climate goals, while promoting economic growth and energy, food and water resource security, it is necessary to quickly switch from fossil fuels to renewable energy, improve energy efficiency, and reduce all greenhouse gas emissions.

At the sub-forum “Transforming Energy Demand” held on January 16, local time, IEA Director-General Fatih Birol said that people are paying more and more attention to energy efficiency, and policy makers need to give more attention to this. Birol believes that energy efficiency is very important because it can protect consumers from high energy bills, protect energy security, improve industrial competitiveness, and cope with climate change.

At the 28th Conference of the Parties to the United Nations Framework Convention on Climate Change (COP28) held in Dubai, UAE, nearly 200 parties to the Convention finally reached the “UAE Consensus” on the first global stocktake, mitigation, adaptation, finance, loss and damage, and fair transition of the Paris Agreement, and for the first time agreed on a roadmap for “transitioning away from fossil fuels” in text form.

Almost at the same time as COP28, scientists confirmed that 2023 was the hottest year on record. On November 17, 2023, the global average surface temperature exceeded 2°C above the pre-industrial level for the first time.

Credit:EU Copernicus Climate Service

However, even though COP28 reached a historic agreement to phase out fossil fuels, some people said that the agreement still lacked binding force, making the global transition to renewable energy difficult.

Regarding the difficulties and challenges faced by the global “get rid of” fossil fuels and energy transition process, David Tong, chairman of the board of directors of Greenpeace and global industry campaign manager of Oil Change International, pointed out in an interview with NBD that continued public finance for fossil fuel projects is not aligned with a 1.5°C future. A 1.5°C scenario means there are no investments — private or public — in new fossil fuel production, including LNG, and there is a rapid phase-out of fossil fuels across the rest of the supply chain.

Tong further pointed out that Global North countries with low levels of economic dependency on fossil fuel revenues need to do their fair share to phase out fossil fuel production by adopting faster timelines for ending oil and gas production and working with oil and gas-producing countries in the Global South to explore how to jointly develop transition through technical assistance, experience sharing, and new funding instruments.

Public funds for clean energy, a real solution to the cost-of-living and energy crisis

2023 was not only the hottest year on record, but also experienced extreme weather in many parts of the world under the influence of the El Niño climate phenomenon. In the polar regions, the melting of sea ice also worsened, and the Antarctic sea ice area continued to hit historical lows.

The “Global Risk Report 2024” released by WEF last week showed that environmental and climate-related risks accounted for half of the top 10 risks in the next 10 years, with extreme weather events, major changes in the Earth system, biodiversity loss and ecosystem collapse, and natural resource scarcity ranking in the top four.

According to UN statistics, in the past 50 years, the climate crisis has caused more than 2 million deaths and 4.3 trillion US dollars in economic losses, and important natural ecosystems have also been destroyed. What’s worse, the climate crisis will become more intense and affect the food and water resources that humans depend on for survival.

WEF’s survey report believes that in order to maintain sustainable growth and competitiveness, enterprises need to assess the value of natural capital in their supply chains, and re-evaluate and better price the risks related to nature in their business models, otherwise the road to a “net zero emission” future is impossible to achieve.

The report shows that by 2030, natural climate solutions can contribute at least 30% of the global carbon emission reduction required. Due to the inseparable connection between climate and nature, it is essential to adopt a more comprehensive approach and a more systemic perspective in the sustainable development strategy of enterprises. In this case, in addition to the guidance of government-level regulations and policy makers, increasing investment in clean energy is also indispensable.

According to the current forecast of S&P Global, due to the demand for alternative sources of coal, oil and other carbon-intensive energy, the global clean energy investment is expected to reach 5.6 trillion US dollars from 2022 to 2030. By 2050, renewable energy investment will reach 700 billion US dollars per year. S&P Global said that although these investments are vital to mitigating climate change, climate finance will still fall short of the expectations of the Paris Agreement. It is predicted that to achieve zero emissions by 2050, annual investment needs to reach 1.4 trillion US dollars.

In an interview with NBD, David Tong also called for providing public funds for clean energy and expanding the scale of renewable energy solutions.

He pointed out that a real solution to the cost-of-living and energy crisis is public finance for clean energy, paired with windfall and wealth taxes to ensure everyone can meet their basic needs. Public finance institutions are uniquely placed to kickstart a just, transformative, and rapid transition to clean energy. Glasgow Statement countries must take further action to deliver on the clean energy finance part of their commitment. A renewable energy transition is possible and must begin now.