COP27 Summit begins as economy, Ukraine war overshadow climate concerns

This year, an energy crunch underscored the challenges of a transition to clean energy from fossil fuels. Climate concerns are being overshadowed by the war in Ukraine and related energy shortages; governments are worried about an economic downturn and some key alliances have broken down.

Taking place in the Egyptian seaside resort of Sharm El Sheikh, the conference known as COP27 is the 27th U.N. climate gathering and the successor to last year’s big event in Glasgow, Scotland. The meeting in Egypt will be smaller and less ambitious. Egypt, which is leading the event, says the focus should be on implementing earlier promises.

Weighing on every part of the conference is Russia’s invasion of Ukraine, which upended global energy markets and increased the use of fossil fuels, including coal. It also made the case for energy security, which for many countries means renewables. The U.S., Europe and China added policies and raised spending to address climate change.

“The bottom line is there has been really little progress since COP26," said Climate Analytics Chief Executive Bill Hare at a conference in September.

Here’s a by-the-numbers look at what’s happened since Glasgow:

Few believed the transition away from fossil fuels would be easy, smooth or cheap. Russia’s invasion of Ukraine made it clear how tough it would be. When Russia cut off gas to Europe, it reversed the long-term decline in coal use.

That has boosted carbon emissions. “European coal demand will grow and is already growing," said James Stevenson, head of research at McCloskey, an energy data provider owned by Dow Jones & Co., the parent company of The Wall Street Journal. “Europe will burn an additional 220 million tons of coal relative to what our pre-[Ukraine] war expectations were, equivalent to more than half a billion tons of CO2."

Coal is also rising in countries where demand for power is growing. In nine large Asian markets, including China and India, coal accounts for at least a third of the fuel used to generate electricity, according to McCloskey. In six of those markets, coal use has increased this year compared with the same period in 2021.

Global emissions have also jumped since the Glasgow conference, exceeding their prepandemic levels, driven by large increases in CO2 output from manufacturing and energy sectors, according to International Monetary Fund data.

The Glasgow climate conference was marked by promises from nearly 200 countries to reduce their carbon emissions. They also agreed to update their goals this year; more than 20 countries have done so.

Backsliding because of the war and failures by countries to produce more ambitious targets could set back efforts to rein in emissions to levels that would avoid the worst impacts of rising temperatures, according to a recent U.N. report. The Paris climate accord aimed to limit warming to 1.5 degrees Celsius, and the report said temperatures were now on track to rise 2.5 degrees Celsius.

The International Energy Agency said that just two of the 55 components needed for the globe to reach net-zero emissions by 2050 are on pace to be achieved, according to an analysis of national commitments, funding and infrastructure. Those two are electric-vehicle deployment and switching to LED lighting. Factors such as shutting down coal plants and capturing carbon dioxide from the atmosphere are lagging behind.

Money will remain a contentious issue at COP27. “We have to redo our international financial architecture to make sure the instruments are much, much better suited to, for instance, allow for private capital to be invested massively where that is possible," said EU climate chief Frans Timmermans during an October speech. “Ramping up climate finance will require a joint effort of both public and private finance."

Developing countries want wealthier nations to help finance their transitions from fossil fuels and to help pay for damage caused by extreme weather. Wealthy nations have fallen short of their promises on transition funding. They haven’t agreed to new funding for damages beyond what they already provide, in part because it is difficult to blame specific incidents on climate change.

“A third of Pakistan flooded. Europe’s hottest summer in 500 years. The Philippines hammered. The whole of Cuba in blackout," U.N. Secretary-General António Guterres said in October. “While climate chaos gallops ahead, climate action has stalled. COP27 is critical—but we have a long way to go."

Despite the diplomatic logjam, there has been significant action among individual countries. In the U.S., lawmakers passed a major legislative package aimed at developing green energy that would set the country on a trajectory to get closer to meeting its Paris pledges. The Inflation Reduction Act aims to direct nearly $400 billion toward energy projects and efforts to reduce carbon emissions.

The government cash joins a flood of private capital flowing into sustainable investments and provides incentives to bring in more investor funds. Green and sustainability-linked bonds and loans exceeded $1 trillion in 2021 and are on track to reach that level this year, according to Dealogic. Environmental, sustainable and governance funds held a record $350 billion in assets last year, according to Morningstar, and climate startups raised nearly $35 billion last year, PitchBook said.

Nearly 4,000 companies set climate goals in line with the Science Based Targets Initiative, or SBTi, to reduce their own emissions. Nearly two-thirds of those commitments came during and after the last U.N. climate conference. Still, more than half of firms have ambiguous targets that don’t yet address global warming, according to a Journal analysis of SBTi data.

Researchers at the NewClimate Institute, which studies climate and other policies, analyzed climate pledges of 25 large, multinational companies accounting for roughly 5% of the world’s CO2 emissions. They found that three of the companies—shipping company A.P. Moller-Maersk A/S and telecom providers Vodafone Group PLC and Deutsche Telekom AG—committed to reducing emissions from the use of their products by 90%, what the researchers called “deep decarbonization." Together, the 25 businesses committed to reducing their overall emissions by less than 20%.

Some advocates are calling for government regulation beyond pledges. “Corporate net-zero targets cannot be relied on and governments should not count on corporates solving this," said Hanna Fekete, a NewClimate Institute analyst.