We could hardly believe it ourselves: But just in time for Advent Climate.Table has some positive news: The EU has finally agreed in the trilogue to include shipping in emissions trading, as Lukas Scheid writes; IEA chief Fatih Birol, in an interview with Alexandra Endres, not only praises how the Germans are coping with the energy crisis so far. He is also confident that renewables will get a much-needed boost from climate policy, industrial policy decisions and the Ukraine war.
In addition, the island nation of Vanuatu is going to the International Court of Justice to clarify what responsibility states have in the climate crisis. The technology for clean flying is making progress. Those who want to earn money should invest in heat pumps. And more examples can be found in an Advent calendar with 24 pieces of good news about the climate.
We did not plan today as a “positive news issue”. It just happened. And of course, the major problems and the trends in the wrong direction will stay with us through Christmas. We do not want to sugarcoat anything and will continue to keep a very close eye on things. And of course, we also report a few things that are going in the wrong direction. But getting a bit of encouragement for a change cannot be wrong.
In any case, we hope you enjoy today’s issue. It will also help you keep your breath as long as possible. Remember: In exactly one year, we will see you at the next COP28 in Dubai. Until then, there is still a lot to do.
120 million tons of CO2 are supposed to be saved by including maritime shipping in the European Emissions Trading System (ETS) by 2030, predicts Peter Liese, EU Parliament rapporteur and environmental policy spokesman for the EPP. In the trilogue on Wednesday night, negotiators from the EU Parliament, Commission and Council agreed that emissions from ocean and inland waterway vessels of 5,000 gross registered tons or more will be included in the ETS.
Shipping companies and ship operators will thus have to buy emission rights for their greenhouse gas emissions in the future. Jacob Armstrong, an expert on sustainable shipping at the environmental organization Transport & Environment, called it a historic turning point for maritime shipping. The EU has now thrown down the gauntlet to other countries such as the USA, China and Japan. The EU hopes that this will put pressure on these countries to address this issue as well.
Moreover, the inclusion is to happen gradually:
Not only carbon emissions will be priced, but also, for example, methane or ammonia emissions (from 2026). The idea is to prevent ships from switching to more eco-friendly methane or ammonia engines. However, these would not reduce the emission of these greenhouse gases into the atmosphere, says Liese.
Journeys within the EU are fully covered, while journeys outside the EU are only subject to half of the ETS. This means that CO2 allowances must be acquired for 50 percent of the emissions of a journey from an EU port to a non-EU port or vice versa. The Parliament called for full inclusion here as well, but failed due to opposition from the member states.
The revenue from 20 million emission allowances is also to be earmarked for the EU Innovation Fund and used to decarbonize the shipping industry. At an average carbon price of 100 euros per metric ton, that would be two billion euros. This would also free up funds for climate financing, emphasizes Liese.
A completely different legislative proposal, officially presented by the Commission on Wednesday, had already been circulating in Brussels for several days. The European minimum standards for the certification of CO2 removals from the atmosphere are intended to pave the way for the EU to be carbon-neutral. While voluntary certification systems that allow companies to receive credit for carbon removals already exist, a uniform standard is still missing.
The goal is to generate trust for the concept of carbon extraction and to counter greenwashing, a senior EU official stressed. He said the idea is to find out which methods of carbon extraction have the best impact on the carbon footprint. Options include industrial technologies such as BECCS (Bioenergy with Carbon Capture and Storage) or DACCS (Direct Air Capture with Capture and Storage). Both capture carbon from the air directly or indirectly through biomass processing.
The Commission wants to use the new regulation to measure the effect of the different methods. Only additional carbon removals that go beyond existing measures and are permanently removed from the atmosphere are to be included.
The proposal considers three methods for subsequent CO2 storage:
Wijnand Stoefs of Carbon Market Watch criticizes the proposal for leaving many questions unanswered – including how to integrate removals into government climate targets. He also does not think much of including CO2 sequestered in soils and products in the certification system, saying there is a high probability that carbon will escape back into the atmosphere.
Juliette de Grandpré of WWF says the proposed legislation “undermines” climate protection. The Commission, she says, “opens the door for companies to use carbon removal certificates to clean their continued emissions on the balance sheet.” Furthermore, de Grandpré criticizes that the quality criteria for certification are yet to be drafted by expert groups and defined by delegated acts. This means interest groups would have a “massive influence on the concrete implementation content in the law.”
The European Environmental Bureau (EEB) criticizes that the definition of carbon farming also qualifies emission reductions as removals. This would be misleading, as only “actual physical removals” should be certified as such.
Oliver Geden, SWP Senior Fellow and IPCC author, on the other hand, sees the Commission proposal as a “prelude to the decision-making process” and praises it for addressing a “missing element on the road to carbon neutrality.” It would push EU member governments to develop policy positions on carbon removal for the first time. That would also apply to the German government, whose work on the “technological negative emissions” strategy agreed upon in the governing coalition agreement has not yet begun, Geden said. With Claire Stam
Mr. Birol, you expect the energy crisis caused by the Ukraine war to accelerate the transition to a climate-friendly global economy. At COP27, however, we have just witnessed a renaissance of fossil interests. Do you nevertheless stand by your assessment?
Yes, definitely. Many countries are investing huge sums in clean energy right now: The US, which invests almost 400 billion US dollars in climate-friendly supply, Europe with the RepowerEU program, Japan, China, and also India. They are all doing so not only because of their climate commitments but also in pursuit of greater energy security. In Germany and other European countries, for example, our data for next year shows a significant increase in renewables. This reduces dependence on Russian gas imports and safeguards against Russian aggression.
So it is all about energy security and climate protection?
There are also industrial policy considerations. Everyone wants to be a leader in the production of batteries, electric cars, solar panels, electrolyzers for hydrogen: China, the US, and other countries as well. These three factors – climate policy, energy security, and industrial policy – together make a very powerful combination. So I continue to hope for an accelerated energy transformation. However, whether it will be enough to stay below the 1.5-degree mark is an open question.
Countries like Saudi Arabia prevented the decision to phase out all fossil fuels at COP27. Instead, gas is to be expanded alongside renewables. Does this not contradict the IEA’s scenarios, which state that there can be no more new fossil infrastructure if 1.5 degrees is to remain achievable?
COP27 produced a good result: Wealthy countries agreed to support vulnerable developing countries on loss and damage. But it is true: The COP did not send the urgently needed signal to markets to accelerate the global energy transition. Nevertheless, there is already strong momentum in this direction. The reason for this is the political decisions of individual governments, quite independent of COP27.
But the governments of major oil-exporting countries do not seem to be part of this dynamic so far.
I expect that some countries will try to slow down the transition because they have their own short-sighted interests in mind. In the end, clean energies will be stronger.
But according to your research, the oil-exporting countries in particular urgently need to phase out fossil fuels. What does it mean if they put the brakes on change?
Based on our data, we expect that global oil demand could peak in the next five years if the climate targets put forward by governments are implemented fully and on time. Electric cars, for example, continue to become steadily cheaper, and in many countries, governments subsidize their purchase. At the same rate as demand for electric cars is growing, demand for fossil fuels is falling. Oil-exporting countries must recognize this. They need to prepare for the future by diversifying their economies as quickly as possible. Otherwise, they will face greater difficulties.
Are they diversifying fast enough?
Some are making significant efforts, but progress is far too slow everywhere. Certainly, they read our reports carefully. Whether they take the necessary action remains to be seen.
Saudi Arabia says it is not about fuels, but about emissions – a reference to technologies such as CCS. How far along is development in this area?
CCS can contribute to climate protection, for example in heavy industry where we cannot use renewable energies. But it cannot be the only answer to climate change. Moreover, the technology is still too expensive for large-scale global deployment. It will take a few more years before the costs have decreased to the point where it can be widely applied.
Let us talk about energy security: The war in Ukraine is accelerating the expansion not only of renewables but also of fossil energy infrastructure. Is that not going in the wrong direction?
The war has also caused global consumption of coal to rise: By about one percent this year, according to our figures. I think the increase is only a temporary phenomenon. Demand for coal will also peak very soon.
But it would have to fall quickly to meet the climate policy goals of the Paris Agreement. Will that be quick enough?
That depends on politics. The emissions from existing coal-fired power plants alone would be enough to bring the world above the 1.5-degree limit. At the same time, regions such as Shanxi in China, East Kalimantan in Indonesia and Mpumalanga in South Africa are very dependent on coal, for example, because many people there work in coal mining. This is another reason why the global coal phase-out is so difficult. For it to succeed, massive investments in renewables and energy efficiency are needed.
What sums are we talking about?
In order for all countries to meet their promised climate targets on time, investments in sustainable technologies need to increase to around three trillion US dollars by 2030: For low-emission power generation, primarily from renewable energy sources but also from nuclear energy, for storage and the expansion and modernization of power grids, for hydrogen, batteries and much more. To get the world on track to 1.5 degrees, that is, to reduce all global emissions to net zero by 2050, investments would have to rise to more than four trillion US dollars in 2030.
Will demand for gas also peak soon?
The golden age of natural gas and oil is ending. Demand for natural gas has increased in recent years mainly because industrialized countries have used it to generate electricity, and this can no longer be observed in this way. Renewable energies are playing an increasingly important role in power generation, as is nuclear energy in some countries. And in developing countries, given the high gas prices, I do not see much desire at the moment to build their own gas infrastructure and import gas.
What do you think of German efforts to cooperate with Senegal in order to secure its own natural gas supplies?
Germany, like every country, must decide for itself whether to sign long-term gas supply contracts now and at what price. In my opinion, three things are important here: The contract periods must be chosen wisely. It must be possible to use the gas infrastructure later for ammonia or hydrogen. And the energy needed to liquefy the gas should come from renewable sources. By the way, I think it would be wrong to try to tell African countries not to use their gas reserves.
Why?
The entire continent is responsible for only three percent of global greenhouse gas emissions. If all currently known natural gas resources in Africa were exploited in the next ten years, which is virtually impossible, its share would rise to 3.4 percent. This is nothing that would prevent us from maintaining the 1.5-degree target. Besides, Africa does not need natural gas to generate electricity, but rather for seawater desalination, fertilizer production, and its own industrialization. Renewables are not suited for that.
In Germany, Finance Minister Christian Lindner, among others, wants to get involved in domestic gas production through fracking. Does Germany really need fracking?
If Germany starts fracking today, it will take forever for the first gas from it to reach the market. I would be very careful about that. The risk that this investment cannot be utilized is great.
You said that Germany’s current task is to look for ways out of the energy crisis in solidarity with the EU. What do you mean by that?
Germany is doing a very good job right now. In my opinion, the next step now would be for the EU member states to jointly purchase natural gas. In the coming winter, they will find it even more difficult than this winter to supply themselves. Acting together on the market instead of competing with each other would be very helpful. Germany’s behavior in this situation will be decisive.
In the debate about the West’s dependence on China and forced labor in the production of solar technology, the People’s Republic is now adopting a dual strategy: The country is apparently building a second supply chain free of polysilicon from Xinjiang. With this strategy, Beijing, which dominates the global market for solar technology, wants to circumvent pressing questions about human rights when selling its products in Europe and the USA.
Some Chinese solar companies are adapting to the needs of the West and manufacturing “Xinjiang-free” products, says Johannes Bernreuter, a polysilicon expert with the consulting firm Bernreuter Research. The production chain can be “tracked and documented from the delivered polysilicon to the finished solar module,” the supply chain expert said. Jenny Chase, an expert at the think tank BloombergNEF, also confirms: The origin of polysilicon that does not come from the problematic Xinjiang province can be traced by certification companies.
This allows for easily dividing material flows: Xinjiang-free products are manufactured for export. Solar modules, whose feedstock might have been produced with forced labor, continue to be installed in China due to high domestic demand. Western sanctions and boycotts of polysilicon from Xinjiang would thus have little effect on Uyghur forced labor.
The development shows the close mutual dependence of China and, above all, the Western industrialized countries: On the one hand, three-quarters of all solar products come from the People’s Republic. They are needed for the global energy transition and compliance with climate targets. On the other hand, pressure is rising in the West for more independence from China and supply chains free of human rights violations – to which China in turn is responding.
However, it is unclear whether these dual supply chains are realistic down to the last detail. For example, the supply chains for metallurgical silicon, the starting material for polysilicon, are not transparent. Importers can hardly guarantee that no forced labor is used for it. “Of the seven Chinese polysilicon producers among the world’s top ten, six obtain significant quantities of metallurgical silicon from Xinjiang,” says Bernreuter.
Chinese manufacturers already circumvent US import tariffs and human rights regulations by relocating: They increase their investments in countries such as Vietnam and Malaysia. The first companies no longer buy raw materials in China, Bernreuter says. So Xinjiang-free supply chains are possible. What remains is the dependence on China: In case of a conflict, Chinese companies in Vietnam or Malaysia could also threaten to stop their exports to the West.
Like other industrialized countries, the German government is in a predicament. It wants to massively expand renewables to achieve its climate targets, while simultaneously wanting to reduce its dependency on China.
But China dominates the global market in all important production steps. The People’s Republic holds a market share (2021) of:
The share could grow to 95 percent for polysilicon, solar ingots (blocks of semiconductor material from which wafers are cut) and wafers, according to the latest World Energy Outlook. Overall, China accounts for three-quarters of the global solar trade.
The picture for European imports is correspondingly clear. 90 percent of EU imports of solar modules are from China. Since the Russian attack on Ukraine, imports have doubled.
In a recently leaked draft of the German Foreign Office’s China strategy, China is referred to as a “competitor in the green transformation.” Because of China’s “strong to dominant position” in the solar sector, for example, “one-sided dependencies could arise“. The goal is to reduce these “dependencies (…) under the aspect of risk minimization”.
Because of the forced labor issue, the Foreign Office is “also prepared within the EU framework to support import stops from regions with particularly massive human rights violations if supply chains free of human rights violations cannot be ensured by other means,” the draft states.
The USA is already one step ahead. It has already imposed an import ban and passed the Uyghur Forced Labor Prevention Act. The law reverses the burden of proof:
By the end of the year, US solar imports with a capacity of up to twelve gigawatts could be affected. But according to Jenny Chase of the think tank BloombergNEF, this “won’t slow down solar expansion much” in the US.
German Economy and Climate Minister Robert Habeck apparently recognized the sensitivity of the development. He plans to promote the mass production of solar modules and wind turbines in the EU with a “European platform for transformation technologies” (Europe.Table reported).
“Australia is back,” declared Chris Bowen, Minister for Climate and Energy, at COP27 in Sharm el-Sheikh. The conference breathed a sigh of relief that, unlike its predecessors, Premier Anthony Albanese’s Labor government is not treating international climate policy with contempt. Australia’s new role was also reflected in Bowen’s appointment by the COP leadership, with his Indian counterpart Yadav, to mediate climate finance negotiations. That was no accident, Bowen said, “People are listening to Australia.” And he used the attention to launch a prestigious bid: in 2026, Australia wants to host COP31.
However, Bowen has a difficult task: portraying climate policy under a Labor government as serious – while appeasing Australia’s resource and energy sectors.
As a career politician who has held half a dozen ministerial posts between 2009 and 2022, Bowen should be up to the task. He has spent his entire career in politics. He was elected to the Fairfield City Council in Sydney in 2005, just a year after earning a bachelor’s degree in economics from the University of Sydney – where he also studied under Yanis Varoufakis, who later became Greece’s finance minister – an association he has sometimes tried to distance himself from. Bowen is married and the father of two teenagers.
In 2006, Bowen was appointed deputy treasurer and shadow minister for taxation and competition policy and held senior ministerial and cabinet posts under three Labor Prime Ministers. He is considered a leading figure of the right faction of the Australian Labor Party (ALP). In 2013, Bowen resigned from his ministerial posts after supporting Kevin Rudd’s unsuccessful attempt to become prime minister again during one of the most tumultuous periods in Australian political history. But his involvement in that sorry saga did not appear to hurt Bowen’s reputation or political ambitions. He was reinstated just months after the leadership spill, appointed cabinet minister and treasurer
Bowen represents a government that has promised progress on climate change. But the gap between rhetoric and reality may be wider now than under the previous Liberal government.
Australia is the world’s third-largest exporter of fossil fuels, which together with domestic emissions account for about five percent of global emissions. It has neither an overarching framework to disclose emissions nor a general CO2 reduction scheme such as emissions trading. And although the government has increased its emissions reduction target to 43 percent by 2030 from 26-28 percent under the previous government and committed to reducing emissions to zero by 2050, it has also advocated for the expansion of gas and coal in Australia.
More than 100 new fossil fuel projects are under development across Australia, and the government has so far refused to end the 10 billion dollars a year in subsidies that fossil fuel companies receive. Bowen refused to rule out fossil fuel subsidies during parliamentary Question Time last month.
On renewables, the Albanese and Bowen government is showing much more ambition than its predecessor. By 2030, 82 percent of electricity is to come from renewables. It also has a strategy for electric vehicles and plans to introduce fuel efficiency standards. Bowen urged at COP to maintain the 1.5-degree target – but would not answer whether Australia’s climate goal was in line with science. And although Australia was in favor of the Loss and Damage Fund at COP, the country has not committed to rejoining the Green Climate Fund for climate finance.
Similarly, at COP, Australia also committed to protecting forests, mangroves and oceans. But this is not as ambitious as it sounds. Much of these outcomes have already been achieved in Australia, mainly through creative emissions accounting, or as a mechanism for the country’s highly questionable carbon credit program. Experts believe about 75 percent of offsets are “junk” that actually compensate for nothing.
In July, Bowen announced a review into the credibility of Australian Carbon Credit Units, an inquiry which has been criticized for its failure to address the use of carbon credits to justify ongoing fossil fuel production and consumption, and potential conflicts of interest. (Two of the four review panelists have links to companies that profit from current carbon offsetting arrangements).
As a result, Polly Hemming, senior scientist in the Australia Institute’s Climate and Energy Program, criticizes the new Labor government for “creating a policy framework in which climate misinformation can flourish. Creative accounting, offsets and their abuse are being nationalized in Australia, amounting to state-sponsored greenwashing.” Claire Conelly from Sydney
We could hardly believe it ourselves: But just in time for Advent Climate.Table has some positive news: The EU has finally agreed in the trilogue to include shipping in emissions trading, as Lukas Scheid writes; IEA chief Fatih Birol, in an interview with Alexandra Endres, not only praises how the Germans are coping with the energy crisis so far. He is also confident that renewables will get a much-needed boost from climate policy, industrial policy decisions and the Ukraine war.
In addition, the island nation of Vanuatu is going to the International Court of Justice to clarify what responsibility states have in the climate crisis. The technology for clean flying is making progress. Those who want to earn money should invest in heat pumps. And more examples can be found in an Advent calendar with 24 pieces of good news about the climate.
We did not plan today as a “positive news issue”. It just happened. And of course, the major problems and the trends in the wrong direction will stay with us through Christmas. We do not want to sugarcoat anything and will continue to keep a very close eye on things. And of course, we also report a few things that are going in the wrong direction. But getting a bit of encouragement for a change cannot be wrong.
In any case, we hope you enjoy today’s issue. It will also help you keep your breath as long as possible. Remember: In exactly one year, we will see you at the next COP28 in Dubai. Until then, there is still a lot to do.
120 million tons of CO2 are supposed to be saved by including maritime shipping in the European Emissions Trading System (ETS) by 2030, predicts Peter Liese, EU Parliament rapporteur and environmental policy spokesman for the EPP. In the trilogue on Wednesday night, negotiators from the EU Parliament, Commission and Council agreed that emissions from ocean and inland waterway vessels of 5,000 gross registered tons or more will be included in the ETS.
Shipping companies and ship operators will thus have to buy emission rights for their greenhouse gas emissions in the future. Jacob Armstrong, an expert on sustainable shipping at the environmental organization Transport & Environment, called it a historic turning point for maritime shipping. The EU has now thrown down the gauntlet to other countries such as the USA, China and Japan. The EU hopes that this will put pressure on these countries to address this issue as well.
Moreover, the inclusion is to happen gradually:
Not only carbon emissions will be priced, but also, for example, methane or ammonia emissions (from 2026). The idea is to prevent ships from switching to more eco-friendly methane or ammonia engines. However, these would not reduce the emission of these greenhouse gases into the atmosphere, says Liese.
Journeys within the EU are fully covered, while journeys outside the EU are only subject to half of the ETS. This means that CO2 allowances must be acquired for 50 percent of the emissions of a journey from an EU port to a non-EU port or vice versa. The Parliament called for full inclusion here as well, but failed due to opposition from the member states.
The revenue from 20 million emission allowances is also to be earmarked for the EU Innovation Fund and used to decarbonize the shipping industry. At an average carbon price of 100 euros per metric ton, that would be two billion euros. This would also free up funds for climate financing, emphasizes Liese.
A completely different legislative proposal, officially presented by the Commission on Wednesday, had already been circulating in Brussels for several days. The European minimum standards for the certification of CO2 removals from the atmosphere are intended to pave the way for the EU to be carbon-neutral. While voluntary certification systems that allow companies to receive credit for carbon removals already exist, a uniform standard is still missing.
The goal is to generate trust for the concept of carbon extraction and to counter greenwashing, a senior EU official stressed. He said the idea is to find out which methods of carbon extraction have the best impact on the carbon footprint. Options include industrial technologies such as BECCS (Bioenergy with Carbon Capture and Storage) or DACCS (Direct Air Capture with Capture and Storage). Both capture carbon from the air directly or indirectly through biomass processing.
The Commission wants to use the new regulation to measure the effect of the different methods. Only additional carbon removals that go beyond existing measures and are permanently removed from the atmosphere are to be included.
The proposal considers three methods for subsequent CO2 storage:
Wijnand Stoefs of Carbon Market Watch criticizes the proposal for leaving many questions unanswered – including how to integrate removals into government climate targets. He also does not think much of including CO2 sequestered in soils and products in the certification system, saying there is a high probability that carbon will escape back into the atmosphere.
Juliette de Grandpré of WWF says the proposed legislation “undermines” climate protection. The Commission, she says, “opens the door for companies to use carbon removal certificates to clean their continued emissions on the balance sheet.” Furthermore, de Grandpré criticizes that the quality criteria for certification are yet to be drafted by expert groups and defined by delegated acts. This means interest groups would have a “massive influence on the concrete implementation content in the law.”
The European Environmental Bureau (EEB) criticizes that the definition of carbon farming also qualifies emission reductions as removals. This would be misleading, as only “actual physical removals” should be certified as such.
Oliver Geden, SWP Senior Fellow and IPCC author, on the other hand, sees the Commission proposal as a “prelude to the decision-making process” and praises it for addressing a “missing element on the road to carbon neutrality.” It would push EU member governments to develop policy positions on carbon removal for the first time. That would also apply to the German government, whose work on the “technological negative emissions” strategy agreed upon in the governing coalition agreement has not yet begun, Geden said. With Claire Stam
Mr. Birol, you expect the energy crisis caused by the Ukraine war to accelerate the transition to a climate-friendly global economy. At COP27, however, we have just witnessed a renaissance of fossil interests. Do you nevertheless stand by your assessment?
Yes, definitely. Many countries are investing huge sums in clean energy right now: The US, which invests almost 400 billion US dollars in climate-friendly supply, Europe with the RepowerEU program, Japan, China, and also India. They are all doing so not only because of their climate commitments but also in pursuit of greater energy security. In Germany and other European countries, for example, our data for next year shows a significant increase in renewables. This reduces dependence on Russian gas imports and safeguards against Russian aggression.
So it is all about energy security and climate protection?
There are also industrial policy considerations. Everyone wants to be a leader in the production of batteries, electric cars, solar panels, electrolyzers for hydrogen: China, the US, and other countries as well. These three factors – climate policy, energy security, and industrial policy – together make a very powerful combination. So I continue to hope for an accelerated energy transformation. However, whether it will be enough to stay below the 1.5-degree mark is an open question.
Countries like Saudi Arabia prevented the decision to phase out all fossil fuels at COP27. Instead, gas is to be expanded alongside renewables. Does this not contradict the IEA’s scenarios, which state that there can be no more new fossil infrastructure if 1.5 degrees is to remain achievable?
COP27 produced a good result: Wealthy countries agreed to support vulnerable developing countries on loss and damage. But it is true: The COP did not send the urgently needed signal to markets to accelerate the global energy transition. Nevertheless, there is already strong momentum in this direction. The reason for this is the political decisions of individual governments, quite independent of COP27.
But the governments of major oil-exporting countries do not seem to be part of this dynamic so far.
I expect that some countries will try to slow down the transition because they have their own short-sighted interests in mind. In the end, clean energies will be stronger.
But according to your research, the oil-exporting countries in particular urgently need to phase out fossil fuels. What does it mean if they put the brakes on change?
Based on our data, we expect that global oil demand could peak in the next five years if the climate targets put forward by governments are implemented fully and on time. Electric cars, for example, continue to become steadily cheaper, and in many countries, governments subsidize their purchase. At the same rate as demand for electric cars is growing, demand for fossil fuels is falling. Oil-exporting countries must recognize this. They need to prepare for the future by diversifying their economies as quickly as possible. Otherwise, they will face greater difficulties.
Are they diversifying fast enough?
Some are making significant efforts, but progress is far too slow everywhere. Certainly, they read our reports carefully. Whether they take the necessary action remains to be seen.
Saudi Arabia says it is not about fuels, but about emissions – a reference to technologies such as CCS. How far along is development in this area?
CCS can contribute to climate protection, for example in heavy industry where we cannot use renewable energies. But it cannot be the only answer to climate change. Moreover, the technology is still too expensive for large-scale global deployment. It will take a few more years before the costs have decreased to the point where it can be widely applied.
Let us talk about energy security: The war in Ukraine is accelerating the expansion not only of renewables but also of fossil energy infrastructure. Is that not going in the wrong direction?
The war has also caused global consumption of coal to rise: By about one percent this year, according to our figures. I think the increase is only a temporary phenomenon. Demand for coal will also peak very soon.
But it would have to fall quickly to meet the climate policy goals of the Paris Agreement. Will that be quick enough?
That depends on politics. The emissions from existing coal-fired power plants alone would be enough to bring the world above the 1.5-degree limit. At the same time, regions such as Shanxi in China, East Kalimantan in Indonesia and Mpumalanga in South Africa are very dependent on coal, for example, because many people there work in coal mining. This is another reason why the global coal phase-out is so difficult. For it to succeed, massive investments in renewables and energy efficiency are needed.
What sums are we talking about?
In order for all countries to meet their promised climate targets on time, investments in sustainable technologies need to increase to around three trillion US dollars by 2030: For low-emission power generation, primarily from renewable energy sources but also from nuclear energy, for storage and the expansion and modernization of power grids, for hydrogen, batteries and much more. To get the world on track to 1.5 degrees, that is, to reduce all global emissions to net zero by 2050, investments would have to rise to more than four trillion US dollars in 2030.
Will demand for gas also peak soon?
The golden age of natural gas and oil is ending. Demand for natural gas has increased in recent years mainly because industrialized countries have used it to generate electricity, and this can no longer be observed in this way. Renewable energies are playing an increasingly important role in power generation, as is nuclear energy in some countries. And in developing countries, given the high gas prices, I do not see much desire at the moment to build their own gas infrastructure and import gas.
What do you think of German efforts to cooperate with Senegal in order to secure its own natural gas supplies?
Germany, like every country, must decide for itself whether to sign long-term gas supply contracts now and at what price. In my opinion, three things are important here: The contract periods must be chosen wisely. It must be possible to use the gas infrastructure later for ammonia or hydrogen. And the energy needed to liquefy the gas should come from renewable sources. By the way, I think it would be wrong to try to tell African countries not to use their gas reserves.
Why?
The entire continent is responsible for only three percent of global greenhouse gas emissions. If all currently known natural gas resources in Africa were exploited in the next ten years, which is virtually impossible, its share would rise to 3.4 percent. This is nothing that would prevent us from maintaining the 1.5-degree target. Besides, Africa does not need natural gas to generate electricity, but rather for seawater desalination, fertilizer production, and its own industrialization. Renewables are not suited for that.
In Germany, Finance Minister Christian Lindner, among others, wants to get involved in domestic gas production through fracking. Does Germany really need fracking?
If Germany starts fracking today, it will take forever for the first gas from it to reach the market. I would be very careful about that. The risk that this investment cannot be utilized is great.
You said that Germany’s current task is to look for ways out of the energy crisis in solidarity with the EU. What do you mean by that?
Germany is doing a very good job right now. In my opinion, the next step now would be for the EU member states to jointly purchase natural gas. In the coming winter, they will find it even more difficult than this winter to supply themselves. Acting together on the market instead of competing with each other would be very helpful. Germany’s behavior in this situation will be decisive.
In the debate about the West’s dependence on China and forced labor in the production of solar technology, the People’s Republic is now adopting a dual strategy: The country is apparently building a second supply chain free of polysilicon from Xinjiang. With this strategy, Beijing, which dominates the global market for solar technology, wants to circumvent pressing questions about human rights when selling its products in Europe and the USA.
Some Chinese solar companies are adapting to the needs of the West and manufacturing “Xinjiang-free” products, says Johannes Bernreuter, a polysilicon expert with the consulting firm Bernreuter Research. The production chain can be “tracked and documented from the delivered polysilicon to the finished solar module,” the supply chain expert said. Jenny Chase, an expert at the think tank BloombergNEF, also confirms: The origin of polysilicon that does not come from the problematic Xinjiang province can be traced by certification companies.
This allows for easily dividing material flows: Xinjiang-free products are manufactured for export. Solar modules, whose feedstock might have been produced with forced labor, continue to be installed in China due to high domestic demand. Western sanctions and boycotts of polysilicon from Xinjiang would thus have little effect on Uyghur forced labor.
The development shows the close mutual dependence of China and, above all, the Western industrialized countries: On the one hand, three-quarters of all solar products come from the People’s Republic. They are needed for the global energy transition and compliance with climate targets. On the other hand, pressure is rising in the West for more independence from China and supply chains free of human rights violations – to which China in turn is responding.
However, it is unclear whether these dual supply chains are realistic down to the last detail. For example, the supply chains for metallurgical silicon, the starting material for polysilicon, are not transparent. Importers can hardly guarantee that no forced labor is used for it. “Of the seven Chinese polysilicon producers among the world’s top ten, six obtain significant quantities of metallurgical silicon from Xinjiang,” says Bernreuter.
Chinese manufacturers already circumvent US import tariffs and human rights regulations by relocating: They increase their investments in countries such as Vietnam and Malaysia. The first companies no longer buy raw materials in China, Bernreuter says. So Xinjiang-free supply chains are possible. What remains is the dependence on China: In case of a conflict, Chinese companies in Vietnam or Malaysia could also threaten to stop their exports to the West.
Like other industrialized countries, the German government is in a predicament. It wants to massively expand renewables to achieve its climate targets, while simultaneously wanting to reduce its dependency on China.
But China dominates the global market in all important production steps. The People’s Republic holds a market share (2021) of:
The share could grow to 95 percent for polysilicon, solar ingots (blocks of semiconductor material from which wafers are cut) and wafers, according to the latest World Energy Outlook. Overall, China accounts for three-quarters of the global solar trade.
The picture for European imports is correspondingly clear. 90 percent of EU imports of solar modules are from China. Since the Russian attack on Ukraine, imports have doubled.
In a recently leaked draft of the German Foreign Office’s China strategy, China is referred to as a “competitor in the green transformation.” Because of China’s “strong to dominant position” in the solar sector, for example, “one-sided dependencies could arise“. The goal is to reduce these “dependencies (…) under the aspect of risk minimization”.
Because of the forced labor issue, the Foreign Office is “also prepared within the EU framework to support import stops from regions with particularly massive human rights violations if supply chains free of human rights violations cannot be ensured by other means,” the draft states.
The USA is already one step ahead. It has already imposed an import ban and passed the Uyghur Forced Labor Prevention Act. The law reverses the burden of proof:
By the end of the year, US solar imports with a capacity of up to twelve gigawatts could be affected. But according to Jenny Chase of the think tank BloombergNEF, this “won’t slow down solar expansion much” in the US.
German Economy and Climate Minister Robert Habeck apparently recognized the sensitivity of the development. He plans to promote the mass production of solar modules and wind turbines in the EU with a “European platform for transformation technologies” (Europe.Table reported).
“Australia is back,” declared Chris Bowen, Minister for Climate and Energy, at COP27 in Sharm el-Sheikh. The conference breathed a sigh of relief that, unlike its predecessors, Premier Anthony Albanese’s Labor government is not treating international climate policy with contempt. Australia’s new role was also reflected in Bowen’s appointment by the COP leadership, with his Indian counterpart Yadav, to mediate climate finance negotiations. That was no accident, Bowen said, “People are listening to Australia.” And he used the attention to launch a prestigious bid: in 2026, Australia wants to host COP31.
However, Bowen has a difficult task: portraying climate policy under a Labor government as serious – while appeasing Australia’s resource and energy sectors.
As a career politician who has held half a dozen ministerial posts between 2009 and 2022, Bowen should be up to the task. He has spent his entire career in politics. He was elected to the Fairfield City Council in Sydney in 2005, just a year after earning a bachelor’s degree in economics from the University of Sydney – where he also studied under Yanis Varoufakis, who later became Greece’s finance minister – an association he has sometimes tried to distance himself from. Bowen is married and the father of two teenagers.
In 2006, Bowen was appointed deputy treasurer and shadow minister for taxation and competition policy and held senior ministerial and cabinet posts under three Labor Prime Ministers. He is considered a leading figure of the right faction of the Australian Labor Party (ALP). In 2013, Bowen resigned from his ministerial posts after supporting Kevin Rudd’s unsuccessful attempt to become prime minister again during one of the most tumultuous periods in Australian political history. But his involvement in that sorry saga did not appear to hurt Bowen’s reputation or political ambitions. He was reinstated just months after the leadership spill, appointed cabinet minister and treasurer
Bowen represents a government that has promised progress on climate change. But the gap between rhetoric and reality may be wider now than under the previous Liberal government.
Australia is the world’s third-largest exporter of fossil fuels, which together with domestic emissions account for about five percent of global emissions. It has neither an overarching framework to disclose emissions nor a general CO2 reduction scheme such as emissions trading. And although the government has increased its emissions reduction target to 43 percent by 2030 from 26-28 percent under the previous government and committed to reducing emissions to zero by 2050, it has also advocated for the expansion of gas and coal in Australia.
More than 100 new fossil fuel projects are under development across Australia, and the government has so far refused to end the 10 billion dollars a year in subsidies that fossil fuel companies receive. Bowen refused to rule out fossil fuel subsidies during parliamentary Question Time last month.
On renewables, the Albanese and Bowen government is showing much more ambition than its predecessor. By 2030, 82 percent of electricity is to come from renewables. It also has a strategy for electric vehicles and plans to introduce fuel efficiency standards. Bowen urged at COP to maintain the 1.5-degree target – but would not answer whether Australia’s climate goal was in line with science. And although Australia was in favor of the Loss and Damage Fund at COP, the country has not committed to rejoining the Green Climate Fund for climate finance.
Similarly, at COP, Australia also committed to protecting forests, mangroves and oceans. But this is not as ambitious as it sounds. Much of these outcomes have already been achieved in Australia, mainly through creative emissions accounting, or as a mechanism for the country’s highly questionable carbon credit program. Experts believe about 75 percent of offsets are “junk” that actually compensate for nothing.
In July, Bowen announced a review into the credibility of Australian Carbon Credit Units, an inquiry which has been criticized for its failure to address the use of carbon credits to justify ongoing fossil fuel production and consumption, and potential conflicts of interest. (Two of the four review panelists have links to companies that profit from current carbon offsetting arrangements).
As a result, Polly Hemming, senior scientist in the Australia Institute’s Climate and Energy Program, criticizes the new Labor government for “creating a policy framework in which climate misinformation can flourish. Creative accounting, offsets and their abuse are being nationalized in Australia, amounting to state-sponsored greenwashing.” Claire Conelly from Sydney
