Net Zero

1. So long, coal
2. Bye, bye tax credits
3. Next steps for climate reparations
4. Revenue at risk
5. Climate’s “big why”

A climate strategy for Big Philanthropy, and banks balk at scrutiny of their climate targets.

So long, coal

Coal took a beating during the first days of COP28. In rapid succession, Japan announced it would stop building unabated coal-fired power plants; French President Emmanuel Macron urged developing countries to avoid using coal as they grow their economies, and Vietnam unveiled some details of a $15.5 billion plan to transition off of coal, including a target for renewables to reach nearly half of its electricity supply by 2030. While oil and gas are still on the table at COP, most countries are fairly well in agreement that coal is on its way out. How quickly that happens, however, will depend on whether programs like Vietnam’s can succeed without disrupting its economy in the near term.

Bye, bye tax credits

The White House outlined new proposals to try and move production of electric vehicles to the United States and erode China’s dominance of the industry. The rules limit federal tax credits depending on the amount of Chinese materials supplied, and discourage companies from seeking Chinese help in building battery factories. They’ll put an additional profit squeeze on U.S. automakers, which are already struggling with the economics of the EV transition and in many cases pushing off plans to expand production. But Treasury officials had little choice, since maintaining broad qualifications for the tax credits would open them to attack from Republicans in Congress.

COP28’s big win could turn into a bust

COP28 opened with a bang: Within hours of starting, summit President Sultan al-Jaber gaveled in a new fund to provide climate reparations payments — “loss and damage” — to low-income countries impacted by disasters. At the beginning of last year’s COP, the creation of such a fund wasn’t even on the agenda. Now it officially exists, with about $500 million dedicated from the U.S., the UAE, European countries, and Japan.

Now comes the hard part: Making it work.

The loss and damage fund will be a major test for the World Bank, which will need to prove that it can be handled more effectively than other climate funds under the bank’s supervision. And COP28 delegates have a lot more work to do on solving other problems in climate finance which are essential to take pressure off the loss and damage fund by limiting damage in the first place.

Revenue at risk

Reduction in oil and gas revenue for the top 40 oil and gas-producing nations by 2040 if governments fulfil their stated climate pledges, according to an analysis by the think tank Carbon Tracker. For 28 of those countries, more than half their oil and gas revenue is at risk, and for many — including COP28 host UAE — oil and gas provide 40% or more of total government revenue. These countries, most of which are in Africa, urgently need to diversify their economies, the report argues.

Finding climate’s ‘big why’

Some of the messages most favored by climate activists to draw support for climate policies are hitting the wrong notes to sway the general public, a large global marketing survey found.

The survey, conducted by the communications nonprofit Potential Energy and the Yale University Program on Climate Change Communication, tested support for a range of climate policies among nearly 60,000 respondents in 23 countries. The results, published Thursday, suggest that most people aren’t persuaded to support climate policies because of messaging focused on their potential to create green jobs. That benefit feels distant and vague. And messaging focused on “phasing out” fossil fuels — a key demand of activists at COP28 — and to “keep fossil fuels in the ground” also don’t resonate. The average person is less likely to instinctively link fossil fuel production to climate impacts than activists tend to believe, Potential Energy’s CEO John Marshall said.

Instead, Marshall said, by far the most effective way to change a person’s mind to support climate policies is to focus on the “urgent need to protect the next generation.”

“Climate needs a ‘why,’ and the data says the dominant ‘why’ is to protect our children,” Marshall said. “We’re under-messaging the big ‘why,’ and over-messaging the green jobs.”

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New Energy

• Octopus Energy announced it would help build Sierra Leone’s first wind farm in 2024. The move marks the Britain-based company’s first renewables project in Africa.
• BP agreed to take full ownership of its solar-power joint venture Lightsource BP. It will buy the 50% it does not already own for about $320 million.

Fossil Fuels

• Progress by oil and gas companies in cutting their emissions has stalled in recent years, the Financial Times reported, with investments in greener products overshadowed by resurgent fossil-fuel demand driven by Russia’s invasion of Ukraine.
• Oil prices fell despite promises by major OPEC+ producers to slash their production. Brent crude traded at about $81 a barrel after Saudi Arabia said it was prolonging 1 million bpd output cuts, but analysts voiced doubt that the cuts — which are voluntary — would be fully implemented.

Finance

• HSBC and Standard Chartered were among four banks that quit a U.N.-backed initiative aimed at scrutinizing corporate climate targets, Reuters reported. The lenders backed out because of concerns the effort could hinder their ability to finance fossil-fuel projects.
• New standards were unveiled to measure greenhouse gas emissions tied to financial institutions’ off-balance sheet emissions.

Climate Impacts

• Kenyan communities are protesting against evictions and disruption to their ways of life which they blame on government deals to ramp up the production and sale of carbon credits, Semafor Africa’s Martin K.N. Siele reported.

Personnel

• Iranian delegates walked out of COP28 to protest the presence of Israeli delegates.

Paul Bodnar is the Bezos Earth Fund’s director of finance and industry.

• U.S. President Joe Biden’s plans to counter China run through Angola.
• With an estimated 70,000 attendees, COP28 will be twice as large as any previous climate summit. A small handful will shape the outcome and the narrative.
• Republicans won a historic urban upset last week. Can they repeat it?