The world is again hopping on the fossil fuel train – this is the impression you could get from today’s issue. Bulgaria wants to reverse its coal phase-out plans because exporting electricity proves to be quite lucrative. In Colombia, its Minister of Finance warns against a rushed energy transition – government revenues from oil and coal exports are at risk. And in Alaska, Joe Biden approved a major oil and gas project. The state government is happy about the revenues and jobs.
However, there are also glimmers of hope for the climate. If energy prices fall again, fossil projects could lose their profitability, as our analyses of Bulgaria and Colombia show. And there are many indications that demand for fossil fuels will continue to decline over the coming years: Fewer coal-fired power plants are being planned; and the EU intends to continue to push for an end to fossil fuels at COP28.
Today’s issue once again highlights the need for a just energy transition. If national revenues from the export of fossil energy sources break away, both the already deprived and ordinary workers – for example in the coal mining industry – are the first ones to suffer the consequences. The topics of climate funding and the just transition will at the latest come up again at the World Bank Spring Meeting in April.
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Colombia’s energy transition is no easy feat. Colombia’s Finance Minister José Antonio Ocampo said last July: “We have to look for more gas. (…) Self-sufficiency is a clear goal, we even have to keep exporting oil, otherwise, we’ll have an unmanageable problem with the balance of payments.”
For a little over six months, Colombia has been governed by Gustavo Petro, the first left-wing president of the Latin American country. During the election campaign, he already announced plans to end his country’s historic dependence on oil, gas and coal. Currently, 56 percent of export revenues are generated from fossil sources.
The government hopes that Colombia will also export green hydrogen in the future. It is supposed to replace the lost oil export revenue. Robert Habeck, German Minister for Economic Affairs and Climate Action, is also hoping for Colombian hydrogen. He wants to secure Germany’s energy supply in the long term. After spending a few days in Brazil, Habeck is currently in Colombia until Thursday. He announced intentions to establish “green value chains for greater prosperity and climate protection” between both countries. He called Colombia’s potential for green hydrogen “very, very large,” and Germany would want to help develop a hydrogen industry.
But Colombian experts are critical: “We should not replace one dependency with another,” said Nadia Catalina Combariza Diaz, founder of the think tank POLEN Transiciones Justas. She is particularly critical of huge wind and solar farms on Colombia’s Caribbean coast, especially in the La Guajira region, as analyses by Colombia’s Ministry of Energy and Mines recommend. “Many people in the region don’t even have access to power or drinking water themselves,” said Combariza Diaz.
Andrés Gómez of the NGO Censat Agua Viva said about the hydrogen export plans, “It sounds like energy colonialism to me.” He accused Europe of wanting to import clean energy at the expense of other countries. Moreover, he says, importing hydrogen from Latin America is inefficient and expensive for Europe. Instead, Gómez would prefer international aid for the energy transition and the phase-out of fossil fuels in Colombia – for example, through revised just energy partnerships or debt cancellation in exchange for climate action.
There are differing opinions in Petro’s cabinet on the pace of the energy transition. At the World Economic Forum in Davos, the minister of energy and mines, Irene Veléz-Torres, said, “We have decided not to award new oil and gas exploration contracts, and while that has been very controversial, it’s a clear sign of our commitment in the fight against climate change.” So her ministry is at odds with Finance Minister Ocampo. According to a study, current production capacities would already secure oil and gas until 2037. Later, a Finance Ministry representative rowed back, saying that this had not been decided by the government. What exactly Colombia’s energy transition will look like will be decided in May at the latest. That is when the government plans to present a “roadmap for a just energy transition“.
“The government’s ideas are ambitious and going in the right direction,” says Gómez from the NGO Censat about the plans for an energy revolution in Colombia. He emphasizes that it would be particularly important to make the country’s energy supply more participatory. “There is also a lot of resistance to these plans,” he adds. The argument is that the gradual phase-out of fossil fuels would harm Colombia’s economy at a time when the government is already trying to implement several expensive social programs.
“It will not be easy to replace the revenues from fossil fuels,” Combariza Diaz of POLEN also says. “Colombia produces fossil energy not only for the domestic market but also for export.” Nevertheless, she also believes an ambitious energy turnaround is necessary. However, it would be important to offer real alternatives for the people currently working in the energy sector.
Colombia’s electricity mix is relatively clean:
Wind, solar and bioenergy only play minor roles even though the country actually has large capacities in all three areas. Their expansion is fraught with conflict: In the Guajira, in northern Colombia, huge wind and solar farms have already been partly built but are not yet connected to the grid, Combariza told us. “The problem is that the operators of the projects there have entered into dialogue with the local, indigenous population too late and are hardly willing to address important demands raised by the local population, such as co-ownership.”
The overall energy balance is significantly worse: Around 80 percent of energy demand is covered by fossil fuels. One challenge is the transport sector – almost everything in Colombia runs on roads. “Due to long distances and geographical conditions, it will also not be possible to fully electrify the sector,” Combariza points out.
Another major problem: 36 percent of the country’s emissions come from deforestation and land-use change – especially in the Colombian Amazon. According to the Climate Action Tracker, 70 percent of the climate protection potential also lies in this sector.
Colombia produces more than 80 percent of the coal in Latin America. Some time ago, it looked as if coal mining in Colombia would end almost on its own due to the low coal price on the global market. The first mines had already been closed and the government was working on a ban on open pit mines. Then, with the war in Ukraine, demand and the price of coal suddenly rose again, and the country increased its coal exports once again.
There have been repeated human rights violations in connection with coal production in the past. Combariza is certain that the coal phase-out already makes economic sense now: “By 2030, Colombia is very likely to lose a large part of the markets for export coal.” Gómez takes a similar view, saying that a quick plan to phase out coal is also important so that Colombia is not left with bad investments (“stranded assets”) from coal mining.
Bulgaria and the EU are currently on a collision course in climate and energy policy. In January,
On Jan. 12, the Bulgarian parliament instructed the interim government to renegotiate the country’s recovery and resilience plan with Brussels. Under the plan, Bulgaria committed to cutting its greenhouse gas emissions by 40 percent by the end of 2025 compared to 2019 levels. So far, Bulgaria has reduced its carbon emissions by 47 percent between 1988 and 2017. Since 2019, however, emissions have actually risen slightly from 42.3 to 42.6 million metric tons in 2021.
This climate target entails the closure of coal-fired power plants. But following protests by more than 1,500 miners and energy providers in front of its building, the parliament declared that coal-fired power plants would remain in operation until 2038. Bulgaria covers about 40 percent of its electricity demand from coal and 36 percent from nuclear power.
Bulgaria’s reversal could now jeopardize the EU’s climate targets. With the lowest GDP per capita in the EU, Bulgaria has the most carbon-intensive economy and produces four times more emissions than the EU average.
There is another reason why Bulgaria is holding on to coal: It is currently making good money with it. After all, in the wake of Europe’s energy crisis, electricity prices have risen so much since 2021 that “Bulgaria’s coal-fired power plants, which were previously operating at a loss, have started making significant profits“, former Bulgarian environment minister Julian Popov told Table Media. “When the price of electricity rises above 150 euros per megawatt hour, which was the case several times last year, coal-fired power plants in Bulgaria are making profits – despite paying CO2 allowances and their operating costs.”
In 2022, Bulgaria earned around three billion euros from electricity exports to neighboring countries, including Serbia, Romania, Türkiye and Greece, which is three times as much as in the previous year. “So there is also a strong financial reason for keeping coal-fired power plants running,” says Popov. Since most coal-fired power plants are government-owned, they fill the government’s coffers. As a result, the Bulgarian government has largely spared companies and consumers the burden of high electricity prices.
Bulgaria’s EU-funded recovery and resilience plan guarantees the country 6.3 billion euros, including two billion for making the energy sector greener. But because the revenues from electricity exports are higher, the trade unions are pushing for keeping the coal-fired power plants in operation, Popov said.
The European Commission is aware of Bulgaria’s demand. So far, however, Sofia did not submit a formal request for a revision of the plan, a Commission spokesperson stated in response to a query. Such changes are only made in exceptional cases when countries cannot objectively fulfill the plans. Failure to comply with the plan could have “significant financial consequences for the country”, the spokesperson explained. These include the “partial suspension and reduction of the financial contribution”. In December 2022, Bulgaria received the first tranche of 1.37 billion euros. In total, the plan provides support amounting to just under 6.3 billion euros.
In mid-February, Deputy Energy Minister Eleno Bozhkov declared that Bulgaria wants to renegotiate the plan with Brussels after March 30. Sofia is playing for time: Parliamentary elections are on April 2. The outcome of the elections, however, will hardly change the parliament’s resolution: The motion to postpone the phase-out of coal received support from almost complete majority across all parties, with 187 votes in favor and two against. The phase-out would affect about 15,000 jobs in the mining and power generation sector and about twice as many indirectly. Consequently, the coal phase-out is not popular in the country.
The decision-makers in Sofia often play a double game with Brussels anyway, Toma Pavlov notes in his study on the political economy of coal. Although they officially support the EU climate policy, they hinder its implementation back home.
Renewables could help boost energy security in Bulgaria. Between 2010 and 2013, their share increased rapidly due to a feed-in tariff. After it was abolished in 2015, investments stagnated.
“By 2015, Bulgaria added about 1.9 GW of wind, solar and biomass energy. Since then, hardly any new capacity has been installed,” says Martin Vladimirov, Director of the Energy and Climate Programme at the Centre for the Study of Democracy. Loopholes in the legislation allow grid operators to deny connections to the grid.
On Jan. 26, the EU Commission filed a complaint against Bulgaria before the ECJ for failing to transpose the EU Renewable Energy Directive. Here, too, the country risks financial sanctions. The Directive calls for an EU target of at least 32 percent renewables by 2030 and provides support measures to reach this goal. In February, the Bulgarian government finally declared to have amended the renewable energy law. This amendment, however, still needs to be approved by the new parliament after the elections on April 2.
In the meantime, electricity prices in Europe are falling again, and Bulgaria’s coal power plants will start making losses again, according to Julian Popov. “The end of the coal industry will happen not because of the agreement with the European Commission but because of the growth of renewables and low electricity prices. In the next two to three years, the Bulgarian coal industry will collapse,” he concludes. By Komila Nabiyeva
The conclusion by EU states last Thursday sets out this year’s goals for European climate and energy diplomacy. Effectively, the document sets the priorities for the preparation of the next World Climate Conference (COP28) in Dubai this November. After the last COP27 in Sharm el-Sheikh, it was to be expected that it would focus on avoiding greenhouse gases (GHG). At the time, the EU failed to make significant progress in this regard.
Particularly important to the 27 EU members is the global end of fossil energy production. However, as is always the case on the international climate stage, the demand comes with a catch: Power plants where emitted greenhouse gases can be captured and prevented from escaping into the atmosphere are allowed to continue operating. However, there is considerable doubt among experts that a 100 percent capture is possible and, above all, profitable. The call for an end to so-called “unabated fossil fuels” is, therefore, almost synonymous with a complete end to fossil fuels.
Government subsidies for fossil infrastructure are also to be “phased out” unless they are “contributing to a just transition towards climate neutral energy systems.” This means that investment in gas infrastructure could continue, especially in developing countries that are heavily dependent on coal power, if they use gas as a transition technology. It only calls for “an immediate end to all financing of new coal infrastructure in third countries”. Thus, there is no inherent contradiction between the COP28 priorities and Germany’s plans to invest in LNG production in Senegal.
Other key demands of EU countries for climate and energy diplomacy:
The EU states are calling on the major emitters and G20 members, in particular, to set higher and 1.5-degree-compatible Nationally Determined Contributions (NDCs) well before COP28. What is noteworthy about this demand is that the EU also still needs to increase its NDC. In their 17-page document, the member states merely reiterate their willingness from the COP27 mandate to raise their climate target once the EU’s “Fit for 55” climate package is fully negotiated.
However, it is not certain that all the legislative proposals in the package on the implementation of the EU climate target will be fully negotiated by COP28. The recently highly controversial Buildings Directive is also part of the package and is likely to once again result in lengthy consultations between the member states and ultimately also EU institutions.
EU countries are also looking at the Global Stocktake of the Paris Agreement targets in Dubai. EU countries are calling for clear guidelines for the next generation of NDCs beyond 2030. These are to be submitted to the UN in 2025, before COP30.
While the EU states do net get into any specifics of how they envision the loss and damage fund agreed upon in Sharm el-Sheikh to address climate change in particularly vulnerable countries. However, they do call on “beyond the traditional base of providers of development finance, to expand their
support.” This likely means China in particular, which has resisted being classified as a donor country in the past. China insists on its status as a developing country under the 1992 United Nations Framework Convention on Climate Change.
The resolution of the EU countries should actually have been voted on two weeks earlier but failed due to a mention of nuclear energy. A direct reference is absent in the final version. However, it mentions the promotion of “the deployment of safe and sustainable low-carbon technologies”. In climate policy circles, sustainable low CO2 technology is usually nuclear energy, which would mean that the EU could also utilize this form of energy to achieve climate targets.
With new “nature certificates” and improved voluntary carbon credits, forest and climate activists want to protect the earth’s rainforests with all their biodiversity and simultaneously reform the controversial market for private climate funding. The new voluntary credits are supposed to secure funding both for forest and biodiversity conservation and carbon storage, but not as compensation for environmental damage caused by companies.
“The nations of the world must come together to propose an economic model to protect forests,” said Gabon’s President Ali Bongo at the One Forest Summit in Libreville in early March. Together with French President Emmanuel Macron, he hosted the meeting of ministers from the Congo Basin and other forest states and discussed funding options to protect tropical forests from deforestation and mineral exploitation.
At the summit, a high-level group of 20 experts called on forest states to support the development of biodiversity credits or “nature certificates” for forest conservation. The group was assembled by the Global Environment Facility (GEF), the only multilateral fund focusing on biodiversity conservation. It advocated the use of market-based mechanisms for private investment in nature.
Tropical forests are important carbon sinks that help cool the planet and are home to one of the largest varieties of species. So far, however, there have been no successful financial incentives to protect them.
In their report, the expert group calls for existing carbon credits (“offsets”) to be enhanced with additional and verifiable measures to restore and conserve biodiversity. In addition, they propose the concept of “nature certificates”, which companies and individuals could then purchase to invest in a project. These certificates would verifiably enhance or maintain biodiversity. Buyers could use them to publicize their green investment, but unlike “offsets”, they could not claim them as compensation for negative impacts on nature.
Proponents of the model argue that it is a response to the crisis in the market for voluntary offsets. These have come under increasing criticism since reports have shown that the vast majority of avoided deforestation projects have overstated their climate benefits.
To prevent this problem from repeating itself with the new “nature certificates”, the experts recommended applying the highest integrity principles to increase credibility and prices. To this end, indigenous peoples and local communities should be involved and receive the majority of the proceeds.
Carlos Manuel Rodríguez, CEO of GEF, said that nature certificates represented a new approach with great potential. He emphasized the need to change to a more official, regulated market that recognizes carbon and ecosystem services. He said the certificates were well suited to conserve areas with large forests and low deforestation, which are largely excluded from traditional carbon financing.
French Development Minister Chrysoula Zacharopoulou called for the certificates to be developed on a large scale in an international partnership. She said the discussion will start very concretely and called on bilateral and multilateral actors to consider using this model.
However, some questions are still unanswered. For example, there is no generally accepted method for measuring how a measure improves biodiversity. So far, there are only a handful of nature certificates available on the market, including one from the Colombian start-up Terrasos, which protects a cloud forest.
Gabon’s Minister of Forestry and Environment, Lee White, was cautiously optimistic. “The challenge is to find concrete examples [of projects] that we can start.” But if they can participate, they would be willing to join in, he said.
“I have mixed feelings,” added Franz Tattenbach, Costa Rica’s environment minister. “I don’t see a bold, new mechanism yet. You’re talking about supply and demand of credits, not the causes of deforestation.“
The Republic of Congo’s Environment Minister, Arlette Soudan-Nonault, added that her country would lack resources to measure carbon and biodiversity stocks and adequately engage with credit markets.
The experts acknowledged it would be difficult to increase demand for these credits. “We can create natural certificates, but where are the buyers? And what will they be used for?” asked Margaret Kim, CEO of Gold Standard, which certifies carbon credits for the voluntary market. “You can’t ask companies to fund something just out of goodwill. It has to be used for something.”
Oscar Soria of the campaign group Avaaz argued that “nature certificates” with carbon and biodiversity benefits were “new distractions” and would not bring about the necessary change. “The failed ideology of our times is to ask for markets to do voluntarily what states are failing to do. This is a lack of political courage masquerading as disruptive innovation,” he wrote. By Chloé Farand, Nairobi
The British think tank E3G has published new data showing that the global coal phase-out is already well underway. The number of planned coal-fired plants is at an all-time low, according to the E3G analysts. In the second half of 2022, the volume of new projects in all major regions has fallen or at least not increased. The only minor exceptions were India and Indonesia.
The biggest exception, however, is China. “A renewed coal power boom in China threatens this clear progress in the rest of the world,” E3G writes. In the second half of 2022, the country’s planned coal-fired power plant capacity increased more than ever. As a result, China now accounted for 72 percent of the world’s planned capacity, up 8 percent from July 2022. But how much China’s emissions will rise as a result of the new power plants, if at all, is yet to be determined: The government is also rapidly expanding renewables. And how long the new power plants will run is also not certain.
The global phase-out of coal is a tough battle over every plant. Still, the data from E3G gives hope. Coal is not only the most important energy source for global electricity generation but also the largest producer of carbon emissions worldwide. This is shown by data from the International Energy Agency (IEA). In order to limit global warming, a rapid phase-out of coal is therefore crucial. ae
“There’s no dumber saying than ‘The market takes care of everything on its own,’” thinks Holger Lösch. The 59-year-old is the deputy director general at the Federation of German Industries (BDI). “Politicians have to set the goals and the framework.” A good example, he says, is the US Inflation Reduction Act (IRA). With “pragmatic tax credits,” the Biden administration is making the US “one of the most competitive places in the world for green hydrogen production,” Lösch says. Germany and Europe need an “effective response” to the IRA, Lösch said, referring to the further development of Germany’s national hydrogen strategy, which the BDI considers disappointing.
So full steam ahead for industrial policy and state dirigisme? But Lösch does not want that either. For the exact path to implementation – such as achieving net zero – he believes that market mechanisms are clearly superior. The BDI study “Climate Paths 2.0”, which Lösch supervised two years ago, shows one way. The central results: The transformation to a carbon-neutral industrialized country is possible, and the German targets for 2030 and 2045 can be met “with swift action”.
Lösch has worked for the industry association, which represents 100,000 German companies, since 2008. As deputy director general, he works with five departments with a total of around 50 employees, one of which is the energy and climate policy department. In this respect, Lösch is both concerned about persistently high energy prices and the looming climate disaster: “A plus-four-degree world would certainly not be a paradise for entrepreneurs either.” In his opinion, however, Europe gets too caught up in detailed regulation, for example about which technologies are the best way to achieve the goal.
The consequence: “We are not at the point in the implementation where we want to be. One solution is to speed up the planning and approval process. “If we want three times as many renewables as we currently have, we can’t do it in the existing system.” The American IRA could serve as a blueprint for how to speed up the process simply – for example, through tax credits. A high-ranking US official once told him about the differences in mentality between US and EU climate policy: “You do things that are deep green, we do things that are cash green.
This expression has haunted him ever since – and is true given how wind turbines are sprouting up in Republican-ruled Texas, of all places. However, he criticizes the isolationist elements of the US subsidy program: “We have to tell them clearly where the hard limits of protectionism lie, which are not acceptable for us as partners.” There is another line in Lösch’s life that is not as strict, the one between his professional and private interests. Similar to his former job as a TV journalist at German broadcaster BR, he can hardly escape “his topics” when he watches the news on the couch in the evening.
Sometimes he gets annoyed about the way things are discussed. His profession is not just a means for making money. Trying to reconcile economic and climate issues is a challenge for society to which he wants to contribute. A few days ago, he visited the port of Rotterdam to take a look at the hydrogen network currently under construction there. A “great day” that made him more hopeful that Europe will soon make faster progress. Paul Meerkamp
The world is again hopping on the fossil fuel train – this is the impression you could get from today’s issue. Bulgaria wants to reverse its coal phase-out plans because exporting electricity proves to be quite lucrative. In Colombia, its Minister of Finance warns against a rushed energy transition – government revenues from oil and coal exports are at risk. And in Alaska, Joe Biden approved a major oil and gas project. The state government is happy about the revenues and jobs.
However, there are also glimmers of hope for the climate. If energy prices fall again, fossil projects could lose their profitability, as our analyses of Bulgaria and Colombia show. And there are many indications that demand for fossil fuels will continue to decline over the coming years: Fewer coal-fired power plants are being planned; and the EU intends to continue to push for an end to fossil fuels at COP28.
Today’s issue once again highlights the need for a just energy transition. If national revenues from the export of fossil energy sources break away, both the already deprived and ordinary workers – for example in the coal mining industry – are the first ones to suffer the consequences. The topics of climate funding and the just transition will at the latest come up again at the World Bank Spring Meeting in April.
We keep you in the loop!
Colombia’s energy transition is no easy feat. Colombia’s Finance Minister José Antonio Ocampo said last July: “We have to look for more gas. (…) Self-sufficiency is a clear goal, we even have to keep exporting oil, otherwise, we’ll have an unmanageable problem with the balance of payments.”
For a little over six months, Colombia has been governed by Gustavo Petro, the first left-wing president of the Latin American country. During the election campaign, he already announced plans to end his country’s historic dependence on oil, gas and coal. Currently, 56 percent of export revenues are generated from fossil sources.
The government hopes that Colombia will also export green hydrogen in the future. It is supposed to replace the lost oil export revenue. Robert Habeck, German Minister for Economic Affairs and Climate Action, is also hoping for Colombian hydrogen. He wants to secure Germany’s energy supply in the long term. After spending a few days in Brazil, Habeck is currently in Colombia until Thursday. He announced intentions to establish “green value chains for greater prosperity and climate protection” between both countries. He called Colombia’s potential for green hydrogen “very, very large,” and Germany would want to help develop a hydrogen industry.
But Colombian experts are critical: “We should not replace one dependency with another,” said Nadia Catalina Combariza Diaz, founder of the think tank POLEN Transiciones Justas. She is particularly critical of huge wind and solar farms on Colombia’s Caribbean coast, especially in the La Guajira region, as analyses by Colombia’s Ministry of Energy and Mines recommend. “Many people in the region don’t even have access to power or drinking water themselves,” said Combariza Diaz.
Andrés Gómez of the NGO Censat Agua Viva said about the hydrogen export plans, “It sounds like energy colonialism to me.” He accused Europe of wanting to import clean energy at the expense of other countries. Moreover, he says, importing hydrogen from Latin America is inefficient and expensive for Europe. Instead, Gómez would prefer international aid for the energy transition and the phase-out of fossil fuels in Colombia – for example, through revised just energy partnerships or debt cancellation in exchange for climate action.
There are differing opinions in Petro’s cabinet on the pace of the energy transition. At the World Economic Forum in Davos, the minister of energy and mines, Irene Veléz-Torres, said, “We have decided not to award new oil and gas exploration contracts, and while that has been very controversial, it’s a clear sign of our commitment in the fight against climate change.” So her ministry is at odds with Finance Minister Ocampo. According to a study, current production capacities would already secure oil and gas until 2037. Later, a Finance Ministry representative rowed back, saying that this had not been decided by the government. What exactly Colombia’s energy transition will look like will be decided in May at the latest. That is when the government plans to present a “roadmap for a just energy transition“.
“The government’s ideas are ambitious and going in the right direction,” says Gómez from the NGO Censat about the plans for an energy revolution in Colombia. He emphasizes that it would be particularly important to make the country’s energy supply more participatory. “There is also a lot of resistance to these plans,” he adds. The argument is that the gradual phase-out of fossil fuels would harm Colombia’s economy at a time when the government is already trying to implement several expensive social programs.
“It will not be easy to replace the revenues from fossil fuels,” Combariza Diaz of POLEN also says. “Colombia produces fossil energy not only for the domestic market but also for export.” Nevertheless, she also believes an ambitious energy turnaround is necessary. However, it would be important to offer real alternatives for the people currently working in the energy sector.
Colombia’s electricity mix is relatively clean:
Wind, solar and bioenergy only play minor roles even though the country actually has large capacities in all three areas. Their expansion is fraught with conflict: In the Guajira, in northern Colombia, huge wind and solar farms have already been partly built but are not yet connected to the grid, Combariza told us. “The problem is that the operators of the projects there have entered into dialogue with the local, indigenous population too late and are hardly willing to address important demands raised by the local population, such as co-ownership.”
The overall energy balance is significantly worse: Around 80 percent of energy demand is covered by fossil fuels. One challenge is the transport sector – almost everything in Colombia runs on roads. “Due to long distances and geographical conditions, it will also not be possible to fully electrify the sector,” Combariza points out.
Another major problem: 36 percent of the country’s emissions come from deforestation and land-use change – especially in the Colombian Amazon. According to the Climate Action Tracker, 70 percent of the climate protection potential also lies in this sector.
Colombia produces more than 80 percent of the coal in Latin America. Some time ago, it looked as if coal mining in Colombia would end almost on its own due to the low coal price on the global market. The first mines had already been closed and the government was working on a ban on open pit mines. Then, with the war in Ukraine, demand and the price of coal suddenly rose again, and the country increased its coal exports once again.
There have been repeated human rights violations in connection with coal production in the past. Combariza is certain that the coal phase-out already makes economic sense now: “By 2030, Colombia is very likely to lose a large part of the markets for export coal.” Gómez takes a similar view, saying that a quick plan to phase out coal is also important so that Colombia is not left with bad investments (“stranded assets”) from coal mining.
Bulgaria and the EU are currently on a collision course in climate and energy policy. In January,
On Jan. 12, the Bulgarian parliament instructed the interim government to renegotiate the country’s recovery and resilience plan with Brussels. Under the plan, Bulgaria committed to cutting its greenhouse gas emissions by 40 percent by the end of 2025 compared to 2019 levels. So far, Bulgaria has reduced its carbon emissions by 47 percent between 1988 and 2017. Since 2019, however, emissions have actually risen slightly from 42.3 to 42.6 million metric tons in 2021.
This climate target entails the closure of coal-fired power plants. But following protests by more than 1,500 miners and energy providers in front of its building, the parliament declared that coal-fired power plants would remain in operation until 2038. Bulgaria covers about 40 percent of its electricity demand from coal and 36 percent from nuclear power.
Bulgaria’s reversal could now jeopardize the EU’s climate targets. With the lowest GDP per capita in the EU, Bulgaria has the most carbon-intensive economy and produces four times more emissions than the EU average.
There is another reason why Bulgaria is holding on to coal: It is currently making good money with it. After all, in the wake of Europe’s energy crisis, electricity prices have risen so much since 2021 that “Bulgaria’s coal-fired power plants, which were previously operating at a loss, have started making significant profits“, former Bulgarian environment minister Julian Popov told Table Media. “When the price of electricity rises above 150 euros per megawatt hour, which was the case several times last year, coal-fired power plants in Bulgaria are making profits – despite paying CO2 allowances and their operating costs.”
In 2022, Bulgaria earned around three billion euros from electricity exports to neighboring countries, including Serbia, Romania, Türkiye and Greece, which is three times as much as in the previous year. “So there is also a strong financial reason for keeping coal-fired power plants running,” says Popov. Since most coal-fired power plants are government-owned, they fill the government’s coffers. As a result, the Bulgarian government has largely spared companies and consumers the burden of high electricity prices.
Bulgaria’s EU-funded recovery and resilience plan guarantees the country 6.3 billion euros, including two billion for making the energy sector greener. But because the revenues from electricity exports are higher, the trade unions are pushing for keeping the coal-fired power plants in operation, Popov said.
The European Commission is aware of Bulgaria’s demand. So far, however, Sofia did not submit a formal request for a revision of the plan, a Commission spokesperson stated in response to a query. Such changes are only made in exceptional cases when countries cannot objectively fulfill the plans. Failure to comply with the plan could have “significant financial consequences for the country”, the spokesperson explained. These include the “partial suspension and reduction of the financial contribution”. In December 2022, Bulgaria received the first tranche of 1.37 billion euros. In total, the plan provides support amounting to just under 6.3 billion euros.
In mid-February, Deputy Energy Minister Eleno Bozhkov declared that Bulgaria wants to renegotiate the plan with Brussels after March 30. Sofia is playing for time: Parliamentary elections are on April 2. The outcome of the elections, however, will hardly change the parliament’s resolution: The motion to postpone the phase-out of coal received support from almost complete majority across all parties, with 187 votes in favor and two against. The phase-out would affect about 15,000 jobs in the mining and power generation sector and about twice as many indirectly. Consequently, the coal phase-out is not popular in the country.
The decision-makers in Sofia often play a double game with Brussels anyway, Toma Pavlov notes in his study on the political economy of coal. Although they officially support the EU climate policy, they hinder its implementation back home.
Renewables could help boost energy security in Bulgaria. Between 2010 and 2013, their share increased rapidly due to a feed-in tariff. After it was abolished in 2015, investments stagnated.
“By 2015, Bulgaria added about 1.9 GW of wind, solar and biomass energy. Since then, hardly any new capacity has been installed,” says Martin Vladimirov, Director of the Energy and Climate Programme at the Centre for the Study of Democracy. Loopholes in the legislation allow grid operators to deny connections to the grid.
On Jan. 26, the EU Commission filed a complaint against Bulgaria before the ECJ for failing to transpose the EU Renewable Energy Directive. Here, too, the country risks financial sanctions. The Directive calls for an EU target of at least 32 percent renewables by 2030 and provides support measures to reach this goal. In February, the Bulgarian government finally declared to have amended the renewable energy law. This amendment, however, still needs to be approved by the new parliament after the elections on April 2.
In the meantime, electricity prices in Europe are falling again, and Bulgaria’s coal power plants will start making losses again, according to Julian Popov. “The end of the coal industry will happen not because of the agreement with the European Commission but because of the growth of renewables and low electricity prices. In the next two to three years, the Bulgarian coal industry will collapse,” he concludes. By Komila Nabiyeva
The conclusion by EU states last Thursday sets out this year’s goals for European climate and energy diplomacy. Effectively, the document sets the priorities for the preparation of the next World Climate Conference (COP28) in Dubai this November. After the last COP27 in Sharm el-Sheikh, it was to be expected that it would focus on avoiding greenhouse gases (GHG). At the time, the EU failed to make significant progress in this regard.
Particularly important to the 27 EU members is the global end of fossil energy production. However, as is always the case on the international climate stage, the demand comes with a catch: Power plants where emitted greenhouse gases can be captured and prevented from escaping into the atmosphere are allowed to continue operating. However, there is considerable doubt among experts that a 100 percent capture is possible and, above all, profitable. The call for an end to so-called “unabated fossil fuels” is, therefore, almost synonymous with a complete end to fossil fuels.
Government subsidies for fossil infrastructure are also to be “phased out” unless they are “contributing to a just transition towards climate neutral energy systems.” This means that investment in gas infrastructure could continue, especially in developing countries that are heavily dependent on coal power, if they use gas as a transition technology. It only calls for “an immediate end to all financing of new coal infrastructure in third countries”. Thus, there is no inherent contradiction between the COP28 priorities and Germany’s plans to invest in LNG production in Senegal.
Other key demands of EU countries for climate and energy diplomacy:
The EU states are calling on the major emitters and G20 members, in particular, to set higher and 1.5-degree-compatible Nationally Determined Contributions (NDCs) well before COP28. What is noteworthy about this demand is that the EU also still needs to increase its NDC. In their 17-page document, the member states merely reiterate their willingness from the COP27 mandate to raise their climate target once the EU’s “Fit for 55” climate package is fully negotiated.
However, it is not certain that all the legislative proposals in the package on the implementation of the EU climate target will be fully negotiated by COP28. The recently highly controversial Buildings Directive is also part of the package and is likely to once again result in lengthy consultations between the member states and ultimately also EU institutions.
EU countries are also looking at the Global Stocktake of the Paris Agreement targets in Dubai. EU countries are calling for clear guidelines for the next generation of NDCs beyond 2030. These are to be submitted to the UN in 2025, before COP30.
While the EU states do net get into any specifics of how they envision the loss and damage fund agreed upon in Sharm el-Sheikh to address climate change in particularly vulnerable countries. However, they do call on “beyond the traditional base of providers of development finance, to expand their
support.” This likely means China in particular, which has resisted being classified as a donor country in the past. China insists on its status as a developing country under the 1992 United Nations Framework Convention on Climate Change.
The resolution of the EU countries should actually have been voted on two weeks earlier but failed due to a mention of nuclear energy. A direct reference is absent in the final version. However, it mentions the promotion of “the deployment of safe and sustainable low-carbon technologies”. In climate policy circles, sustainable low CO2 technology is usually nuclear energy, which would mean that the EU could also utilize this form of energy to achieve climate targets.
With new “nature certificates” and improved voluntary carbon credits, forest and climate activists want to protect the earth’s rainforests with all their biodiversity and simultaneously reform the controversial market for private climate funding. The new voluntary credits are supposed to secure funding both for forest and biodiversity conservation and carbon storage, but not as compensation for environmental damage caused by companies.
“The nations of the world must come together to propose an economic model to protect forests,” said Gabon’s President Ali Bongo at the One Forest Summit in Libreville in early March. Together with French President Emmanuel Macron, he hosted the meeting of ministers from the Congo Basin and other forest states and discussed funding options to protect tropical forests from deforestation and mineral exploitation.
At the summit, a high-level group of 20 experts called on forest states to support the development of biodiversity credits or “nature certificates” for forest conservation. The group was assembled by the Global Environment Facility (GEF), the only multilateral fund focusing on biodiversity conservation. It advocated the use of market-based mechanisms for private investment in nature.
Tropical forests are important carbon sinks that help cool the planet and are home to one of the largest varieties of species. So far, however, there have been no successful financial incentives to protect them.
In their report, the expert group calls for existing carbon credits (“offsets”) to be enhanced with additional and verifiable measures to restore and conserve biodiversity. In addition, they propose the concept of “nature certificates”, which companies and individuals could then purchase to invest in a project. These certificates would verifiably enhance or maintain biodiversity. Buyers could use them to publicize their green investment, but unlike “offsets”, they could not claim them as compensation for negative impacts on nature.
Proponents of the model argue that it is a response to the crisis in the market for voluntary offsets. These have come under increasing criticism since reports have shown that the vast majority of avoided deforestation projects have overstated their climate benefits.
To prevent this problem from repeating itself with the new “nature certificates”, the experts recommended applying the highest integrity principles to increase credibility and prices. To this end, indigenous peoples and local communities should be involved and receive the majority of the proceeds.
Carlos Manuel Rodríguez, CEO of GEF, said that nature certificates represented a new approach with great potential. He emphasized the need to change to a more official, regulated market that recognizes carbon and ecosystem services. He said the certificates were well suited to conserve areas with large forests and low deforestation, which are largely excluded from traditional carbon financing.
French Development Minister Chrysoula Zacharopoulou called for the certificates to be developed on a large scale in an international partnership. She said the discussion will start very concretely and called on bilateral and multilateral actors to consider using this model.
However, some questions are still unanswered. For example, there is no generally accepted method for measuring how a measure improves biodiversity. So far, there are only a handful of nature certificates available on the market, including one from the Colombian start-up Terrasos, which protects a cloud forest.
Gabon’s Minister of Forestry and Environment, Lee White, was cautiously optimistic. “The challenge is to find concrete examples [of projects] that we can start.” But if they can participate, they would be willing to join in, he said.
“I have mixed feelings,” added Franz Tattenbach, Costa Rica’s environment minister. “I don’t see a bold, new mechanism yet. You’re talking about supply and demand of credits, not the causes of deforestation.“
The Republic of Congo’s Environment Minister, Arlette Soudan-Nonault, added that her country would lack resources to measure carbon and biodiversity stocks and adequately engage with credit markets.
The experts acknowledged it would be difficult to increase demand for these credits. “We can create natural certificates, but where are the buyers? And what will they be used for?” asked Margaret Kim, CEO of Gold Standard, which certifies carbon credits for the voluntary market. “You can’t ask companies to fund something just out of goodwill. It has to be used for something.”
Oscar Soria of the campaign group Avaaz argued that “nature certificates” with carbon and biodiversity benefits were “new distractions” and would not bring about the necessary change. “The failed ideology of our times is to ask for markets to do voluntarily what states are failing to do. This is a lack of political courage masquerading as disruptive innovation,” he wrote. By Chloé Farand, Nairobi
The British think tank E3G has published new data showing that the global coal phase-out is already well underway. The number of planned coal-fired plants is at an all-time low, according to the E3G analysts. In the second half of 2022, the volume of new projects in all major regions has fallen or at least not increased. The only minor exceptions were India and Indonesia.
The biggest exception, however, is China. “A renewed coal power boom in China threatens this clear progress in the rest of the world,” E3G writes. In the second half of 2022, the country’s planned coal-fired power plant capacity increased more than ever. As a result, China now accounted for 72 percent of the world’s planned capacity, up 8 percent from July 2022. But how much China’s emissions will rise as a result of the new power plants, if at all, is yet to be determined: The government is also rapidly expanding renewables. And how long the new power plants will run is also not certain.
The global phase-out of coal is a tough battle over every plant. Still, the data from E3G gives hope. Coal is not only the most important energy source for global electricity generation but also the largest producer of carbon emissions worldwide. This is shown by data from the International Energy Agency (IEA). In order to limit global warming, a rapid phase-out of coal is therefore crucial. ae
“There’s no dumber saying than ‘The market takes care of everything on its own,’” thinks Holger Lösch. The 59-year-old is the deputy director general at the Federation of German Industries (BDI). “Politicians have to set the goals and the framework.” A good example, he says, is the US Inflation Reduction Act (IRA). With “pragmatic tax credits,” the Biden administration is making the US “one of the most competitive places in the world for green hydrogen production,” Lösch says. Germany and Europe need an “effective response” to the IRA, Lösch said, referring to the further development of Germany’s national hydrogen strategy, which the BDI considers disappointing.
So full steam ahead for industrial policy and state dirigisme? But Lösch does not want that either. For the exact path to implementation – such as achieving net zero – he believes that market mechanisms are clearly superior. The BDI study “Climate Paths 2.0”, which Lösch supervised two years ago, shows one way. The central results: The transformation to a carbon-neutral industrialized country is possible, and the German targets for 2030 and 2045 can be met “with swift action”.
Lösch has worked for the industry association, which represents 100,000 German companies, since 2008. As deputy director general, he works with five departments with a total of around 50 employees, one of which is the energy and climate policy department. In this respect, Lösch is both concerned about persistently high energy prices and the looming climate disaster: “A plus-four-degree world would certainly not be a paradise for entrepreneurs either.” In his opinion, however, Europe gets too caught up in detailed regulation, for example about which technologies are the best way to achieve the goal.
The consequence: “We are not at the point in the implementation where we want to be. One solution is to speed up the planning and approval process. “If we want three times as many renewables as we currently have, we can’t do it in the existing system.” The American IRA could serve as a blueprint for how to speed up the process simply – for example, through tax credits. A high-ranking US official once told him about the differences in mentality between US and EU climate policy: “You do things that are deep green, we do things that are cash green.
This expression has haunted him ever since – and is true given how wind turbines are sprouting up in Republican-ruled Texas, of all places. However, he criticizes the isolationist elements of the US subsidy program: “We have to tell them clearly where the hard limits of protectionism lie, which are not acceptable for us as partners.” There is another line in Lösch’s life that is not as strict, the one between his professional and private interests. Similar to his former job as a TV journalist at German broadcaster BR, he can hardly escape “his topics” when he watches the news on the couch in the evening.
Sometimes he gets annoyed about the way things are discussed. His profession is not just a means for making money. Trying to reconcile economic and climate issues is a challenge for society to which he wants to contribute. A few days ago, he visited the port of Rotterdam to take a look at the hydrogen network currently under construction there. A “great day” that made him more hopeful that Europe will soon make faster progress. Paul Meerkamp
