There is a verse in prog-rock band Fink Floyd’s Dark Side of the Moon album track that goes as follows:.
Money, It’s a crime. Share it fairly, but don’t take a slice of my pie, Money! So they say Is the root of all evil today.
Its message was on point 50 years ago and maybe even more so today, especially in the light of what happened at COP28; you know, the annual environmental crisis jamboree where, this time, environmental protesters got chucked out; the organisers preferred to swamp the show with some 2,600 oil and gas suits.
Judging by some of the coverage of the Abu Dhabi-hosted enviroganza, the event was swamped by them. I thought COP 27 was a disgrace in this regard, but COP 28 was far worse.
Here in the UK, only Channel Four‘s excellent evening news programme paid consistent attention to a COP that just might go down in history as being a greater success than currently viewed.
There are three principal takeaways for me:
Drowning nations, Big Oil and MONEY!
Drowning nations like Vanuatu appear to have been noticed at last, with a lifeline of sorts thrown in their direction. I refer to the $12.8 billion of pledges made to the Geen Climate Fund, a sum so modest that it would barely cover the capital cost of your average North Sea oil and gas development.
At last Big Oil got onto the final declaration but should never have been allowed to swamp COP28 the way they did.
For me, among the most appalling omissions from the Dubai Declaration was, having apparently agreed to transition from oil and gas, there was zero definition as to pace and how.
I suppose we all have to be grateful that pariah Big Oil even got a declaration mention. That has never happened before and will act as a catalyst to change, perhaps in surprising ways.
But this was achieved not without massive pushback against the draft declaration when it was discovered that oil and gas, which had been mentioned in early drafting had been removed.
It emerged that, although over 100 of the nearly 200 countries attending COP28 had demanded that fossil fuels be phased out, oil producers such as Saudi Arabia and Iran had opposed such language.
Good job they got pushed aside by the crowd.
However, whether oil and gas or the Green Climate Fund, such pledges will only work is they are underpinned with credible climate policies and regulations, including a price on carbon and ending finance for fossil fuel, much of it sneakily done, not least by the UK.
Which brings me to … Money.
Money
A giant omission from the COP28 declaration surely was the failure to define how reversing climate change will be paid for.
But perhaps that doesn’t matter.
Declarations of intent are macro. The detail – micro – follows or is in sub-texts of such declarations. We perhaps forget that.
One person in the world of Big Money who appeared unfazed by the alleged COP28 omission was Dave Parker of Accenture, who moderated one of the Dubai sessions and wrote a viewpoint for the US business magazine Forbes.
He was laid back about how Big Money was treated at COP28 and stated that “they accept their role as key facilitators of the transition to net zero emissions, they see the opportunities that it presents and they are willing and able to help finance it.
“Think about that for a moment. Estimates of the cost of this mammoth undertaking run well into the trillions of dollars. More than $300 billion
was pledged during the conference alone, with the UAE Banking Federation committing itself to $270 billion.”
Parker warned of five critical obstacles standing in the way of this mountain of money being spent to good effect:
- The business case for many investments would look different if carbon already today had a price tag. But the carbon credit markets have not been standardised and are not yet working properly.
- Financial institutions need to build R&D muscle to better understand new sustainability technology deals in order to not overprice them.
- Many potential projects involve multiple funders with a blended finance approach. Each funder has its own objectives, priorities and preferred approach. A lot of financial innovation is needed to structure the funding tranches into a workable set of instruments.
- There is a crucial gap between the private and public sectors, especially in developed markets.
- And data. From the identification of assets and the measurement of baseline carbon emissions to transparent audit trails and reporting on investment outcomes, data is a vital enabler.
It all seems to boil down to risk. And perhaps as a result of the COP28 declaration including Big Oil in the barebones way that it did will notwithstanding have a powerful impact on a financial community that appears ready for change.
And money really is the ultimate tool for that change.
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