We are in a period of climate stuckness

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Last week, the term “energy transition” was mentioned more than 3,000 times in news reports, media releases and research papers. Numbers like this, from the Factiva news database, are enough to make you think the world is finally shifting decisively away from the fossil fuels that have dominated for decades towards a cleaner, greener energy system. But it isn’t.

Oil, gas and coal made up 81.8 per cent of the global energy mix last year — almost the same as the 82.3 per cent in 2021 — Energy Institute data shows. That’s barely below the 85 per cent share fossil fuels had in 2015 when the Paris climate agreement was struck, and the 86 per cent in 1995 when the first UN climate COP conference was held.

We hear a lot, rightly, about the huge gains that solar power, wind farms and electric cars have made in that time. But as energy use has grown, the global green surge has so far amounted to an addition to fossil fuels, not an emphatic substitute for them. 

This might soon change. The influential International Energy Agency thinks current government policies will lead oil, gas and coal demand to finally peak this decade. But it doesn’t think the projected drop will be steep enough to limit global warming to the Paris Agreement goal of 1.5C. That will require tougher measures. 

All this underlines the strange period of climate stuckness we have entered. 

The need for faster climate action has never been more widely accepted. As a result, we understand better that much of the global financial, economic and climate institutional architecture needed to cut emissions is either unfit for purpose or has yet to be built.

The World Trade Organization, OECD, World Bank, Intergovernmental Panel on Climate Change and other bodies that should be leading the charge to accelerate the energy transition are struggling to do so.

This is not for want of trying. Experts within and outside these groups have pushed for reforms for years. Changes often need government agreement that is hard to secure at the best of geopolitical times, which we don’t have today. Yet the need for improvement is only going to grow. 

The WTO, for example, is logically the body to galvanise the global trade of green goods and stamp out trade-distorting fossil fuel subsidies that slow the energy transition. It isn’t, despite years of effort from some member countries. Global fossil fuel use subsidies rocketed to a record of more than $1tn last year, the IEA says.

The World Bank has probably done more to help governments tackle these subsidies than any other international institution, says development economist Neil McCulloch, author of the recently published book Ending Fossil Fuel Subsidies. But the budgets it has had for such work have been dwarfed by the size of the problem.

The same goes for similar programmes at the IEA, OECD, IMF and UN Environment Programme, he says.

The UN’s Intergovernmental Panel on Climate Change is also ripe for reform. Many of the climate scientists who contribute to the ever more enormous assessments of global warming it has been issuing since 1990 think it should focus on shorter, more consequential reports. Its relatively slender 2018 study on the effects of 1.5C of warming shows what is possible. Those findings revolutionised thinking about how quickly emissions must fall and made the concept of net zero mainstream. 

More than 70 countries have now set a net zero target, along with nearly half of the largest 2,000 companies. But the absence of official global standards for such targets, let alone an international body monitoring whether they are met, makes it hard to judge their impact.

Likewise, efforts to shift the trillions of dollars in capital needed to speed the energy transition would be helped if there were, say, an intergovernmental panel on ESG investing standards, or greenwashing.

Calls for reform of the UN’s unwieldy COP conferences hardly need repeating. These annual affairs should focus more on implementing policies to meet agreed goals, and it would help if decisions were made by majority votes, not consensus.

We know that institutional reform is possible. This week’s IMF and World Bank meetings in Marrakech are expected to build on moves the bank set out in June, such as pausing debt repayments, to help low-income countries deal with a rising barrage of natural disasters.

But it’s not enough. These steps must be matched by measures to hasten the shift away from what is fuelling those disasters in the first place.

pilita.clark@ft.com