On the one side, we have the oil producers who received windfall profits this year, and led their main cheerleader to gloat. If there is a recession, on the other hand, prices of energy might stabilise, but in the short run, that could also trigger a carbon-intensive stagflationary growth.
Demand for coal, natural gas, and other forms of fossil fuel could increase with rising aggregate demand and inflation. The price of energy could determine what happens next. The high price of energy and the prospect of a recession has led to a paradigm shift in the energy forum, away from energy transition to energy security. The war in Ukraine, global inflationary pressure, and the uncertain economic future, including GDP growth, have thrown environmental priorities into the backburner. But, emissions are expected to fall around 7 percent only by 2030 under the plans submitted ahead of the Glasgow summit. Greenhouse gas emissions will need to fall 43 percent by 2030 compared with 2019 for us to stay within the "1.5 degrees" limit. "They say it shifts more of the burden to developing countries to cut emissions, even though emissions from rich countries are responsible for most of the earth's warming since the industrial era", writes Matthew Dalton in the Wall Street Journal (June 17, 2022).Īccording to climate scientists, the world is likely to go over the 1.5 degrees Celsius limit in the early 2030s. Moreover, large developing countries including South Africa and India have been speaking out voicing their reservations about the Paris and Glasgow agreements.
Right after Russia invaded Ukraine, a news report in Reuters announced, "Germany signalled a U-turn in key energy policies floating the possibility of extending the life-spans of coal and even nuclear plants to cut dependency on Russian gas, part of a broad political rethink following Moscow's invasion of Ukraine." China recently approved five new coal-powered power plants, and many other countries including Germany is now reconsidering their plans to phase out thermal plants. Even the agreements reached eight months ago at the Glasgow climate summit are in jeopardy.Ī quick look reveals that an increase in energy prices in the aftermath of the war in Ukraine has pushed the world's major economies to increase their investment in fossil fuels. The sudden jump in oil prices and the global policy realignments have pushed the climate agenda away from the wishful thinking that permeated climate activists before the 2020 pandemic.
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By all accounts, the climate negotiators failed once again to agree on how to cut emissions in line with the Paris accord of 2015 which called for governments to limit global warming to close to 1.5 degrees Celsius above temperatures of the pre-industrial era. The Intergovernmental Panel on Climate Change (IPCC) met in Bonn, Germany, in the shadows of the Climate Change Conference from June 6-16, 2022. Needless to point out, the current global situation presents a major setback for the environmental goals outlined in the Paris climate summit. The war in Ukraine and the galloping inflation would have been a major existential crisis for any leader, and makes us wish we were led by "a sophisticated thinker, intelligent and unashamed, willing to tackle issues of great complexity without reducing them to sound bites." So, what caused this turnaround for Joe Biden? Well, to be fair to him, one must concede that the US president, who will turn 80 this year, has been buffeted by a number of unexpected events both at home and abroad. However, the Saudi Arabians have been playing hardball and even appeared to have endorsed the Russian geopolitical goals in defiance of US efforts to get King Salman to align itself with Nato to choke Putin's war machine. For months, particularly since the war in Ukraine started, the USA has been trying to nudge the autocratic rulers of the oil-producing kingdom towards increasing oil production to bring down its price. It was reported that US President Joe Biden will be travelling to Saudi Arabia next month and finally kowtow to its rulers.
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