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For the global oil and gas market, COP28 means “higher volatility and prices are here to stay.”͏‌  ͏‌  ͏‌  ͏‌  ͏‌  ͏‌ 
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December 13, 2023

Net Zero

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Tim McDonnell
Tim McDonnell

Hi everyone, welcome to the final special COP28 edition of Net Zero.

If a hallmark of successful diplomacy is that everyone leaves the negotiating room a little unhappy, COP28 was a smashing success. The draft agreement released on Monday, which cut references to phasing out fossil fuels, was met with outrage in many quarters. The summit presidency claimed the move was strategic, a ploy to ruffle feathers and get everyone to more clearly point to their red lines. On Tuesday afternoon, everyone not directly sitting in closed-door negotiations, myself included, was dozing off as conference staff started dismantling the facilities. The ashtray outside the press hall overflowed, rumors about timing and compromises flew thick and fast, and mostly wrong. By 9 p.m., Sultan al-Jaber’s comms team recommended we pack it in.

I expected that the next morning’s draft wouldn’t be the last. But it was — gaveled in so quickly that the small-island states team didn’t even have time to make it into the plenary hall. Al-Jaber almost had to give his big closing speech off the cuff, because a U.N. staffer who was supposed to send him notes hadn’t updated their WhatsApp.

There’s plenty to quibble with in the agreement, as I write about below. But just two years ago, at COP26 in Glasgow, negotiators could barely agree on the need to wind down coal power. Now, all fossil fuels are unambiguously on the chopping block. Previous COP agreements only targeted net zero by “midcentury,” whereas today’s deal specifically points to 2050. But in some ways, COP is the easy part. Now it’s up to governments to put their promises into practice.

On the ground:

It was really an enormous pleasure meeting so many readers and colleagues in person in Dubai. Travel home safely, get some rest, and come back fired up for the work ahead. If you like what you’re reading, spread the word.

  1. Oil exec kills oil
  2. AI strategy
  3. Flying corn
  4. Taxing big oil?
  5. Carbon rules punted (again)

How to make COP work better, and Microsoft’s intriguing plan for nuclear power.


Oil exec kills oil

Tim McDonnell
Tim McDonnell
REUTERS/Amr Alfiky

After nearly three decades of global climate negotiations that avoided specifically targeting the main cause of climate change — the burning of coal, oil, and natural gas — diplomats on Wednesday concluded the COP28 summit in Dubai with an agreement to “transition away from fossil fuels in energy systems, in a just, orderly and equitable manner, accelerating action in this critical decade, so as to achieve net zero by 2050.”

The deal falls short of the language that most activists and negotiators had called for, namely a complete “phase out” of fossil fuels. It also lacks specific targets for climate impact adaptation, leaves unresolved questions over controversial carbon-capture technology, and eschews a mandate for wealthy countries to ramp up financial assistance for clean-energy in developing countries.

Still, the agreement leaves no ambiguity that the official policy of global governments is that the era of fossil-fuel consumption and production is ending, an unprecedented statement. Now comes the hard part: Actually “transitioning away” from fossil fuels, especially in the face of growing demand for oil and gas.

The outcome of this summit was in some ways inevitable. 2023 was the warmest year on record; next year will likely beat it. As the human and economic toll of climate disasters mount, many companies and governments are realizing that the costs of curbing emissions are far lower than the costs of adapting to impacts or paying climate reparations. That’s especially true as the costs of renewable energy, batteries, and related technologies continue to plummet.

And at the helm was al-Jaber, an oil executive who weathered scandals and criticism in the runup to the summit but proved an adept diplomat in forcing countries to compromise. If anything, his fossil-fuel background was a powerful asset. The UAE is relatively advanced in diversifying its economy compared to other Gulf producers, a process that al-Jaber has personally steered.

“For al-Jaber to acknowledge, as a petrostate, that some kind of phase-out language needs to be included provided so much credibility to this,” said María Mendiluce, CEO of the We Mean Business Coalition, a nonprofit representing climate-focused corporations.

Read on for how the disconnect between COP28’s mandates and the reality of global fossil-fuel demand means energy-security drama will only intensify. →


AI strategy


The U.S. Department of Energy opened a new office tasked with coordinating the government’s support for and use of artificial intelligence and other cutting-edge technologies to fight climate change, stave off pandemics, and protect the country’s security. The Office of Critical and Emerging Technology will oversee AI, biotech, quantum computing, and semiconductors, and will be led by newly-appointed DOE Chief Artificial Intelligence Officer Helena Fu, a former top technology and security official on the National Security Council and at DOE.

AI is quickly emerging as one of the most powerful tools for fighting climate change. It can help develop and test new materials for batteries and solar cells, manage the electric grid, study climate patterns, and monitor emissions, among other applications. But it also has risks, such as the possibility of data leaks and invasions of privacy, and costs, including the vast quantities of energy needed to power the computing that drives it. The DOE has a lot of resources to bring to bear on boosting the opportunities and curbing the risks, including grant funding for AI startups, access to some of the world’s fastest and most energy-efficient supercomputers, and the brains of scientists at the national labs.

Fu’s job will be to marshal all those resources, which today are scattered across the agency, in the same direction, and rope in a wider base of agencies, scientists, and entrepreneurs, she told Semafor in an exclusive interview.

“We have so many smart people at DOE who are focused on their specific piece of the mission,” she said. “One of the things we need to do better, on technologies like AI, is making ourselves known and thinking proactively about this set of issues, because it’s just so important.”


Flying corn

REUTERS/Jason Reed/File Photo

U.S. tax officials are expected to decide this week whether aviation fuels made from corn qualify for a lucrative Inflation Reduction Act tax credit. Environmental groups have urged the Treasury Department to disqualify the fuels, arguing that because of land and fertilizer use, corn-based fuel provides only a modest climate benefit over crude oil. But agricultural lobbyists have pushed back hard. For the U.S. corn industry, the decision could be nearly existential, Coco Zhang, vice president of research at the Dutch bank ING, told Semafor. In the early 2000s, the U.S. greatly expanded incentives for corn-based fuels to replace vehicle gasoline, leading to a large expansion of the area under cultivation with corn. Now, biofuels are on their way out, and electrification is in. Ethanol demand is expected to fall nearly 8% by 2030, Zhang projects, “but this could be more than offset by growing demand in the aviation sector.” If corn doesn’t end up qualifying for aviation fuel tax credits, she said, expect many U.S. farmers to begin switching to different crops.


Taxing big oil?

Estimated combined net income of top global oil and gas companies during COP28, according to data from the advocacy group Energy Profits. Those earnings may come under the microscope more in the year ahead; the COP28 decision says countries should “accelerate the ongoing establishment of new and innovative sources of finance, including taxation, for implementing climate action.” Heavier taxes on fossil fuel profits has been a core recommendation of climate finance hawks like Barbados Prime Minister Mia Mottley. As the advocacy group Global Citizen observed, a 1% tax on earnings just during the two weeks that COP28 took place would have raised more money than countries collectively pledged to the climate reparations fund during the summit.


Carbon rules punted yet again

REUTERS/Elizabeth Frantz/File Photo

COP28 concluded with no resolution on carbon markets. Article 6 of the Paris Agreement calls for countries to establish a U.N.-sanctioned system for trading carbon offsets between themselves, or between a country and a company. Yet eight years after the agreement was adopted, negotiators have failed to agree on the rules for that system, and came no closer in Dubai.

The rulebook is highly technical and nuanced, but the disagreements essentially boil down to a few key elements. Countries couldn’t agree on a process by which people living near carbon projects, mostly in developing countries, could file complaints to the U.N. if they felt their rights were being violated. And the rules themselves don’t provide enough baseline protection for those rights, analysts say. There is also little agreement on which types of carbon offsetting activities — renewable energy projects, avoided deforestation, and the like — can be included in the markets. The draft rules also allow bilateral deals to be conducted largely in secret, with little public transparency on their terms.

Some countries, including small island states, were willing to accept weak carbon market rules at COP28 in the interest of creating any new avenue for climate finance to reach them. That financie has so far failed to materialize at scale through other channels, said Erika Lennon, a senior attorney at the Center for International Environmental Law. Still, it’s probably better to punt on Article 6 yet again, she said, than for countries to validate low-quality rules.

“Do we really want to sanction carbon markets under the Paris Agreement with totally weak rules that won’t ensure environmental integrity, won’t ensure human rights and lead to a repeat of all the failures we’ve seen this year in the voluntary carbon markets?” she said. “There doesn’t seem to be a good reason to join the race to the bottom and lock in this totally dangerous distraction that could undermine everything.”

Power Plays


  • At least a quarter of billionaire delegates to COP28 made their fortunes from highly-polluting industries, new analysis by Oxfam found. The concentration of ultra-high-net-worth-individuals suggests COP may now be the “second only to Davos” as a forum where billionaires — many of who arrived on private jets — can “meet and potentially influence government leaders and senior politicians,” The Guardian reported.

New Energy

  • Next year will be the first time ever that solar and wind generate more electricity in the U.S. than coal. The milestone is a combination of soaring solar panel installations and a rapid drop in coal use. Coal is expected to produce 599 billion kilowatt-hours of electricity in 2024, down from 669 this year.

Fossil Fuels

  • Europe’s biggest economies have slashed the carbon intensity of their electricity production systems, new data shows. Steep cuts in fossil fuel use has cut the average CO2 emissions from electricity generation by almost a quarter in Germany, France, United Kingdom, Italy, Spain, and The Netherlands. Progress remains unequal, however: Germany’s electricity generation system is almost 10 times more polluting than France’s.


  • Microsoft is using artificial intelligence to streamline the approval of nuclear power, which it plans to use to power artificial intelligence. A team in the software giant has been training ChatGPT with U.S. nuclear regulatory and licensing documents, hoping that the large language model will help expedite the application process. “If we’re going to do that carbon-free, we’re going to need all the tools in the tool kit,” the head of Microsoft’s sustainability policy said.
  • Despite a commitment at COP28 to ramp up nuclear power production, the nuclear energy industry is facing a number of headwinds as funding dries up and regulations stiffen. Last month NuScale, one of the leading startups in the field, canceled plans to build its first small modular reactor in the U.S. The company’s share price is down more than 70% this year.


  • Ford will scale back production of its flagship electric pick-up as demand cools faster than expected. The company expects to produce just 1,600 F-150 Lightning next year, a drop of almost 50% from a previous forecast. Automakers across the industry are bracing for lower demand as would-be buyers shun EVs over high prices and a lack of charging infrastructure, The New York Times reported.

Climate impacts

  • A quarter of the world’s fresh-water fish are at risk of extinction, a new report by the International Union for Conservation of Nature found. The assessment found that the biggest culprit affecting imperiled species is water pollution, a large of which comes from fertilizers and pesticides as well as industrial run-off. However other factors such as dams and water extraction as well as over-fishing had a significant impact. “Climate change really compounds all of the other threats,” one of the report’s authors said.
One Good Text

Rachel Kyte, co-chair of the Voluntary Carbon Markets Initiative, former dean of the international affairs graduate school at Tufts University, and a former senior World Bank official.

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