After the COP: The ups, the downs, and why there is hope
COP27 has left me with mixed emotions. On the one hand, it proved as hard as always to make the entire world agree on a climate agreement with enough ambition to make an actual difference in the greater scheme of things. On the other hand, I am left with high hopes for the ambitions and willingness to act that came from thousands of private sector officials and NGOs present in Sharm El-Sheikh. None of them played an official role in the negotiation rooms, but the green transition is not only up to the politicians. It is a movement that requires all hands on deck, and I remain carefully optimistic that the global “best effort” may finally be picking up speed.
For good and bad, the urgency is becoming tangible
Temperatures are rising faster than anticipated, and we are on the verge of having to give up the ambition of keeping global warming below 1.5 degrees – time is simply running out. Heads of States are under immense pressure to deliver on our collective promises in Paris, and their voters are experiencing the devastating effects right in front of their eyes. For the first time, we have been discussing compensation for climate disasters that are already happening around us. We are living the effects of climate change through severe humanitarian crises. Food shortage, poverty and climate refugees are real concerns that we need to deal with, and it has been a major wake-up call. Yes, it is depressing that we had to come this far to realize the urgency, but I do believe it has changed our perspective. I see signs that resources are beginning to mobilize to minimise further damage, that the private sector is leaning in, and that financial institutions are ready to invest. At the same time, a lot of us are taking huge leaps towards more climate-friendly lifestyles on an individual level. It is more important than ever to stay on the right path – and not wait for the politicians.
It is becoming more expensive to emit – take responsibility or take the punishment
The COP27 breakthrough establishment of a new “loss and damage” fund for vulnerable countries urging emitters to take responsibility and compensate for past activity was a major win for COP27 – and the world. It is a tribute to climate justice and a strong reminder that it can become expensive if we don’t commit to making real change. Even though it remains unclear who will pay and who will benefit, the agreement is a strong signal and a real psychological driver towards political commitment. Emitting CO2 now has a monetary price too.
The energy crisis in Europe can be an enabler for the green transition
As the urgency of CO2 reductions is becoming tangible, so is the realization for Europeans that energy is not an inexpensive and unlimited resource. It comes with a price – both financially and politically. Throughout the years, we have consumed energy without giving much consideration to its origin or abundance, and we’ve let huge amounts of energy go to waste.
Today, European consumers are conscious of energy prices, and public and private enterprises are suddenly acting on energy efficiency. Governments are shying away from dependency on Russian gas to ensure energy security, and in that sense, the current energy crisis is an opportunity to finally replace fossil fuels with renewable energy sources. The psychological fact that we are solving two problems (climate change and energy security) instead of one acts as a motivation and an enabler for the green transition
The U.S. has seen the light – let’s not fall behind!
After a long absence in the climate debate, the U.S. pivots to a very engaged effort with Joe Biden, John Kerry, and John Podesta in front (and present at the COP). With the Inflation Reduction Act (which has as one of its goals to promote clean energy), the U.S. will disperse 100s of billions of dollars into effective programs for clean energy solutions, including a first-of-its-kind green hydrogen deal. This deal provides market-based price support for green hydrogen, which is exactly what is needed to accelerate and scale its deployment – it is a model to follow! The big challenges for governments going forward (in the short term, too) will be to eliminate red tape and avoid becoming bottlenecks for innovation to happen. EU politicians assured me that this is a topic heavily discussed in Brussels, and countries with tradition for less bureaucracy will have an advantage here. The journey towards net zero is a perfect opportunity to develop competencies and foster tomorrow’s large companies and workplaces. Yet, because of the speed needed, it requires collective efforts – across sectors and industries too.
The world is ready for a systemic approach and a just transition
At GreenLab, we’ve been working for a “power shift” for a long time. A paradigm shift where fossil fuels are finally replaced by clean alternatives – something that evidently was not part of the COP27 agreement this time around. However, the leaders at COP27 demonstrated greater insight at this year’s meeting and a deeper knowledge of the markets that need to be established. According to the International Renewable Energy Agency (IRENA), the world needs 1,5 TW of renewable energy per year to complete the green transition.
No electricity grids are ready for such loads, which is why we need to rethink how we mediate the valuable electrons. We need a systemic approach where circularity is key – and the world seems to be ready for it. Ready to support green hydrogen and a new paradigm for renewable energy. If we could design society and the energy system from scratch, we would probably choose a model that looks like a GreenLab – with direct connections and bundling of energy streams to make the puzzle complete and with the best possible ecosystem to support local green growth. Together with UNIDO (United Nations Industrial Development Organization), we are going to try to do just that. With our new collaboration agreement, we have agreed to work on facilitating a step-by-step green transition in developing and transition economies. We are still going to lobby for enabling global politics, but we are not going to sit still while doing it. My take is, we are not the only ones. I left Egypt feeling energetic. Not naively optimistic, but hopeful and ready to keep working hard.
Earning some green drives making it green
My optimism today is based on the face-to-face discussions I have had with investors, developers, industry and governments. Their drive and sense of urgency may include a social impact, but it is clearly dictated by a competition for the new circular economy. The new frontrunners are the regions with the lowest cost of renewable energy or where active market structures (like the U.S.) are incentivizing new clean energy and industrial development based on ROI. If before we were hoping for a social consensus, we are now basing the transition on business drivers. That may be a less admirable motivator, but it has been known to be an efficient one.
By Christopher Sorensen, CEO at GreenLab.
