The eyes of the energy industry are on Egypt as COP27 kicks off on 6th November. The tide of the international community has been turning against fossil fuels in recent years; the Glasgow Climate Pact, agreed at last year’s conference, saw 197 countries agree to ”phase down” the use of coal for the first time in COP history. Since then, Russia’s invasion of Ukraine has revealed the fragility of natural gas and oil supply lines. Renewables are firmly in the spotlight as a solution for driving down costs and shoring up national security.
Emil Damgaard Grann is head of global policy engagement at Ørsted, one of the world’s leading green energy companies. He offers his perspective on the energy industry’s hopes and expectations for this year’s COP, how energy firms can make the most of it and the urgent need for government, business and society to collaborate in pursuit of green energy goals.
Could you give us some background on the COP conferences and their major achievements from a renewable energy perspective?
The Paris Agreement in 2015 is probably the biggest achievement of the COP conferences in recent years. That’s where the global ambition was set to try and keep global warming to within 1.5 °C. More concretely, it committed national governments to develop and present ‘nationally determined contributions’ (NDCs) – national plans for cutting or curbing greenhouse gas emissions in the following decade.
Why is this significant for a renewable energy company like Ørsted? From a high level, NDCs provide a solid basis for the expansion of renewable energy because it gives confidence to developers and investors that reducing emissions is a national priority – but only if these targets are turned into concrete plans for deployment of renewable energy. The production and use of energy accounts for 73% of global emissions, so any chance of meeting global and national climate targets will rely on how fast the energy transition happens.
How have things changed since last year’s conference?
Last year’s Glasgow Climate Pact, agreed at COP26, was a significant achievement in terms of renewable energy. It was the first COP agreement to include an explicit reference to phasing down fossil fuel subsidies and unabated coal power. The pact also requested countries to revisit climate plans every year – rather than every five years, as originally stated in the Paris Agreement.
Since last year’s COP in Glasgow, a raft of global crises has emerged – namely the energy crisis, high inflation, and the global security situation. These crises will inevitably dominate the narratives around this year’s meeting in Egypt. But they mustn’t get in the way of long-term commitments to accelerate the green transition. We hope governments and businesses will recognise the potential of the renewable energy to help address many of these crises.
What do you think will be the main topics covered at this conference that renewable energy companies should be looking out for?
The first is the build-out of renewable energy, especially against the backdrop of the ongoing energy crisis. The next few years will be critical for the energy transition. But globally, the build-out is happening too slowly. Meanwhile, business cases for renewable energy projects look very different today compared to 12 months ago, thanks to inflation, market uncertainty, higher interest rates, and a supply chain crunch. Governments need to address this. The renewable energy build-out is crucial to meeting global and national climate targets, so they need to provide frameworks that ensure a faster buildout.
The second interesting – and crucial – topic is the role of public and private sector collaboration and finance in facilitating more investments in renewable energy in emerging economies. I’m optimistic here. We’re seeing promising cross-border and cross-industry coalitions forming – such as the Global Offshore Wind Alliance and the First Movers Coalition – focusing on how to speed up the deployment of renewable energy and increase demand for decarbonisation solutions for the hard-to-abate sectors.
Finally, in relation to offshore wind specifically, key suppliers are currently operating at a loss and material prices are rising. Coupled with high inflation, this adds up to higher prices for wind energy. Nonetheless, wind and solar are still by far the cheapest sources of energy in terms of levelised cost – something that mustn’t be overlooked.
On the formal negotiations it will also be interesting to follow whether progress will be made on securing enough finance for emerging economies to both adapt to climate change and reduce their emissions, which will also have implications for their opportunities to decarbonise their energy systems.
Are there any subjects that you think have been underemphasised in recent years that you would like to see given more weight at COP27?
The importance of biodiversity in the green energy transition is crucial. And it goes beyond biodiversity. There’s a tendency to look at each of the challenges we face as a planet separately. But everything from climate change and biodiversity loss to inequality, poverty and health can be seen – at least in part – as related consequences of an unsustainable energy and production system. If we don’t look at these issues together, we risk exacerbating one problem while trying to solve another.
More weight should be given to finding holistic solutions to climate change. By that I mean solutions that help halt and reverse biodiversity loss, and that generate social and economic benefits for people most negatively affected by current fossil fuel activities – or who stand to lose the most from the necessary decline of the fossil fuel industry. The transition to green energy can and should be good news for everyone, and for nature as a whole.
How can companies and governments best approach conferences like COP to work together in pursuit of net-zero?
The good news is that there’s already a lot of interest in COP from companies and non-governmental organisations. There’s a recognition that this is where the important discussions are happening, and where global momentum for climate action can be built. But it mustn’t just be a talking shop – these conversations should be a prerequisite for action.
Companies, NGOs and governments need to share knowledge on what’s technologically possible, what’s politically realistic, and what’s socially sustainable. Only then, together, can we accelerate the green transition in a way that delivers renewable energy, helps solve crises like biodiversity loss, and generates opportunities that help solve the social and economic problems that exist today – including energy poverty.
What are the kind of ambitious but achievable commitments that you would regard as a positive outcome from COP27?
More and more direct consequences of climate change are with us every year. Some of these, like heatwaves and drought, are themselves contributors to the energy crisis. A good outcome from this year’s COP would therefore be stronger NDCs that will result in real action to reduce emissions more steeply towards 2030. But, alarmingly, most countries have failed to improve their climate plans by the agreed upon deadline set at COP26. It’s also important that significant progress be made on how to finance loss and damage and ensure that the $100 billion climate finance promise made by developed countries will be met.
Perhaps even more importantly, we need to see more of the commitments turn into action. COP26 resulted in a variety of strong pledges – spanning from reducing methane emissions to protecting forests – but these pledges need to clear roadmaps towards implementation. Accountability and implementation are two key themes that have to be present this COP.
With the backdrop of increased geopolitical tension, there is even more urgency for countries, organisations, and businesses to move in the same direction together.
As work ramps up to meet net zero commitments, how do you think COP conferences will change over the next ten or twenty years?
Conversations at future COPs will naturally reflect technological development. Technology is crucial for us to deliver on the green transition and the green ambitions of all those politicians, organisations and businesses. But to bring technologies like carbon capture, green fuels, floating wind, and long-term energy storage to fruition in the future means taking some important steps in the present. We need to develop standards, business models, and best practice guidelines that will shape future markets and lead to accelerated implementation.
But with everything from developing new technologies to solving broader social and environmental problems, we all – companies, businesses, civil society – need to join forces and find the solutions together. That’s what I hope the future of COP will look like.