Part 2: How have Governments responded to the IEA & IPCC Reports
In the first blog of a three-part series, we looked at the ways in which the recent publication of two reports, from the IEA and the IPCC, has fundamentally changed the ground rules for fossil fuel investment.
In this second article in this series, we look at the initial response to these reports from governments.
The IEA Report ‘Net Zero by 2050’ published in May 2021 called for no further investment in new coal mines or coal mine extensions, and no new exploration and development of oil and gas fields.
The IPCC Physical Science Basis Report of August 2021 into the physical science basis for climate change, from IPCC Working Group 1 and part of its AR6 series, was described by UN Secretary General Antonio Guterres as “code red for humanity” and he said that it must mean the death knell for fossil fuels, calling for a cessation of investment in coal and a programme to end exploration and development of new oil and gas fields.
Comparing what the IEA and IPCC reports call for, with what is actually being done, presents a stark picture of countries, companies and funders being slow to adapt to the shifting tectonic plates of climate science and climate politics.
A non-scientific survey of new oil and gas developments can be made by reviewing the Exploration and Development pages of the Oil and Gas Journal website. For summer 2021, this reported major new developments in:
Mexico, Guyana, Australia, Norway, Surinam, Azerbaijan, Trinidad, Malaysia, Nigeria, Brazil, Uganda, South Africa, Kazakhstan, Turkey, Angola, Congo, Namibia, Russia – Barents Sea, United Kingdom, Abu Dhabi, Pakistan, East Timor, Papua New Guinea, Colombia, USA, Oman.
All of these countries are signatories of the Paris Agreement on Climate Change. All or nearly all of the companies undertaking these new developments are based in countries that are signatories of the Paris Agreement. Most if not all of the banks which are reported to have supplied $654 billion of financing to fossil fuel companies (in 2018 alone) are based in countries that have signed the Paris Agreement. The highlighted countries are also members of, or associated with, the IEA.
Governments’ initial responses exhibit lack of consistency and some disarray
In the face of all of this evidence, and despite no less than 195 countries clearing the text of the IPCC report on the physical science base for climate change, there is little evidence, yet, that many governments have adjusted to the new reality and aligned their policies accordingly.
The Norwegian Prime Minister described the IEA report as one of “many reports” and said that it would not change Norway’s petroleum policy, which in turn is an election issue in 2021.
The UK government has called for an end to coal power, but has not yet committed to an end to oil and gas exploration and production, despite being legally committed to net zero emissions by 2050, and a 78% reduction in emissions by 2035. It has said instead that new oil and gas licences would be subject to “climate compatibility checks”. But the IEA and IPCC reports are themselves “climate compatibility checks”: and this is a bit like asking your doctor for a health compatibility check on smoking. In the summer of 2021, the UK government was reported to be considering authorising a major new extension of an existing oilfield called Cambo, in the North Sea, by Siccar Point Energy and with a 30% stake by Shell (which had itself been ordered by a Dutch court on 27 May 2021 to make major cuts of 45% in its worldwide emissions). The Scottish Government, which had in the past cited oil and gas wealth as part of the economic case for Scotland’s independence, has called for a ‘review’ of the Cambo decision by the UK government.
US climate envoys promised close scrutiny of the IEA report but warned that the transformation was not going to be quick. In response to the IPCC report, President Biden declared that …”The signs are unmistakable. The science is undeniable. And the cost of inaction keeps mounting.” It is not yet clear that these concerns are fully shared by the U.S. Senate. President Biden announced a ban on new Oil & Gas drilling on federal land, but that was blocked by a Federal judge in June, and NPR reported the US Interior Department “approved about 2,500 permits to drill on public and tribal lands in the first six months of the year”.
The EU’s Frans Timmermans accepted that “we need to get out of oil, gas and coal. We need to have a fair taxation system that incentivises this.”
France’s President Macron declared that “the time for indignation is behind us”, calling for an agreement in Glasgow that befitted the urgency of the moment:
“Accord de Paris, neutralité carbone au niveau européen, loi climat… La France restera du côté de ceux qui agissent. En novembre, à Glasgow, scellons un accord à la hauteur de l’urgence!”
But the construction by France’s Total and China’s CNOOC of a new $3.5 billion EACOP oil pipeline across Uganda and Tanzania is not fully consistent with these aims.
Germany has called for more urgent action on climate change and the European and world levels, and experienced terrible loss of life from climate-related floods in 2021, yet is about to open the Nordstream gas pipeline from Russia. Again, climate change is an election issue in 2021.
Japan has said that it has no plans to stop oil, gas and coal investments.
China has indicated that it has no new policies in place in response to the IPCC report: coal consumption there is still set to increase up to 2026. China has 1,082 operational coal plants, and produces 53% of its power from coal. China is responsible for 28% of global greenhouse gas emissions, and what it does to reduce emissions, or not, is critically important. China has committed to carbon neutrality by 2060, and is being closely watched to see whether, and if so how, it will take steps to try to ensure peak emissions by 2030. Meanwhile it was reported that 300 people died in the 2021 flooding in Henan province attributed to climate change.
India’s Prime Minister Modi has so far made no statement about the IPCC report. Coal India Limited is the largest coal company in the world. On 21 January 2021 it was responsible for 78.6% of India’s total generation. Its 272,445 employees are a reminder of the breadth and depth of communities reliant on fossil fuels for their livelihoods.
Russia’s President Vladimir Putin signed a first steps emissions reduction law on 2 July 2021, and he has warned about the need to reduce methane emissions. Russia has also built a $25 billion pipeline to China, which buys 30% of Russia’s oil. China was reported to have paid the Russian oil company Rosneft $80 billion for a 25 year supply of oil. But the IPCC report anticipates that Russia will experience unprecedented heatwaves, fires and floods, and the melting of 32% of the Permafrost by 2100.
Australian Prime Minister Scott Morrison said that “I won’t be signing a blank cheque on behalf of Australians to targets without plans”, and he has refused to legislate for a net zero target. Meanwhile in the case of Sharma et al v Minister for the Environment, a group of Australian teenagers, on the basis of overwhelming, and unopposed, evidence of climate change scenarios, established a new legal principle that the Minister had to consider the health impacts on young people of a coal mine extension contributing to climate change: and the Minister is appealing against the judgement, thereby obliging her to argue that she has no such duty.
Saudi Arabia, with the US, Kuwait and Russia had taken steps to try to block the publication of the IPCC’s earlier 1.5oC Report in 2019. The Saudi national oil company, Saudi Aramco, is reported to have proven reserves of 261.5 billion barrels of oil, which gives it a bit of an interest in delaying the exit from oil and gas production and supply. Yet the IPCC report warns that Saudi Arabia is part of the MENA region expected to experience extreme heat from climate change.
It has been left to the governments of Denmark and Costa Rica to declare that:
“One thing is clear: to meet the Paris objectives, we will need to put an end to the expansion of fossil fuel production”, urging their friends and allies to do the same.
The Paris Agreement on Climate Change remains a landmark achievement as a diplomatic and political consensus on the diagnosis of climate change. The fact that 195 governments worldwide endorsed the scientific findings of the IPCC’s report of 9 August 2021 is still very significant.
However, so far, there is an overall incoherence in the responses of key governments to the IEA and IPCC reports: they have accepted the diagnosis but are still not ready to accept the logic of the cure.