What are the aims of COP29?

The heads of states and governments, or their representatives, are meeting to flesh out an agreement under the title “New collective quantified goal” or NCQG. This is the mechanism by which large sums are to be transferred from developed countries to emerging ones.

There is general recognition that the costs of converting all electricity generation to renewables, and much of industry and transport to electrical power away from fossil fuel use will be large. The developed countries are expected to pay for their own conversion and to offer generous assistance to the developing world at the same time. So far under the Paris Treaty and the UN framework the developed countries have agreed to transfer $100bn a year in a mixture of grants, loans and private investment.

President Trump took the USA out of the Paris Treaty during his previous term. President Biden took it back in. The new president may remove the USA again and has made clear his disagreement with the idea of moving to net zero. China and other more prosperous emerging economies have declined to pledge large transfers as part of the policy, though China has been providing some climate change finance.

It will be difficult to reach a good agreement on the transfers, given the gap between what the emerging world thinks it needs and what the developed world think it can afford. The emerging countries think the transfers need to be at a minimum of $1tn a year compared to around the $100bn being achieved.

The leaders and the conference

This is no rerun of the Paris or even Glasgow COP. Only four of the G 20 countries are sending their top person: Italy, the UK, Turkey and Saudi Arabia. President Biden will not be present, nor will President XI, President Putin or Prime Minister Modi from India. The main creators of CO₂ will be represented by others who may lack the authority to make substantial new commitments. They assemble, along with more than 50,000 other people, to enter negotiating sessions and bilateral meetings as the chair seeks to narrow the differences. The conference concludes on 22 November when the hosts and the secretariat have to present the best conclusions they can shape out of all the talking.

The hope is the conference will nonetheless provide some progress on hitting targets and stimulate more private sector interest, against a backdrop of major countries feeling unable to make big new spending commitments.

The disagreements over the money

So far little has been agreed on how much money to commit. Some think the sums involved should include the recently agreed proposals to make payments for loss and damage caused to lower income countries by climate change. Others think this should be additional money outside an agreement on money for conversion and development. There are differing views on whether the target should be for state money, or whether the sums can also include private investment flows and payments by international institutions to cover transition and investment costs. There are issues over whether loans as well as grants should be included, and whether there are different rules for soft loans, guarantees, and other financing assistance.

The biggest difference is over the scale of the sums. Those who want $1tn or more a year of transfers understand the magnitude of the task of electrifying so much industry, transport and heating in emerging countries. Those who want something closer to the current $100bn recognise the big pressures on developed country budgets and the concerns in the government debt markets about present levels of spending. The UK is not announcing additional financial contributions but is committing to a tough CO₂ reduction target for 2035.

The attitude of the US Republicans to net zero policies

President Trump is announcing a big change in the approach of the USA which is most unwelcome to those attending the conference and seeking to keep the world on a path to decarbonising. Not all Republicans agree with Mr Trump on this issue, but he probably has the power needed to take the US down a pro fossil fuel road.

There is in the Republican party a core of Make America Great Again supporters who do not accept the climate change theory. They claim there was plenty of climate change in the world before mankind started burning fossil fuels. They think there may well be future climate change, but its causes will be varied and not susceptible to human control.

There are Republicans who query the settled science. They listen to scientists who say that water vapour, volcanic activity, solar intensity and other natural phenomena affect the climate but have not been properly modelled by the net zero climate scientists. They suspect their models are giving wrong forecasts.

• There are Republicans who accept the theory but do not think the US should shoulder the burden when China is the main emitter of CO₂ and has so far exempted itself from the need to rein in its output.
• There are Republicans who accept the general world view of climate threats but vote for Donald Trump because they agree with other things he is doing and they like winning elections.
• There are some Republicans who disagree with the Trump line on net zero and oppose him in public.

It is likely President Trump will be able to keep his coalition together to pursue some roll back of the net zero policies inherited from his predecessor. He is particularly keen to expand US oil and gas production further, as he did in his first term. He is also unlikely to cancel renewable investment programmes that are being implemented in the USA.

The attitude of consumers to net zero

In the developed countries making most progress to net zero it has been easiest to decarbonise the electricity sector, and to put pressure on parts of industry to change their fuel and their product ranges. It is proving more difficult to persuade consumers to change their own lifestyles even though many consumers tell pollsters they accept the science and agree with the general direction of travel. The policy advocates have centred their ambitions around a move to heat pumps for domestic heating systems and to battery cars for personal transport.

Recent statistics from the car industry shows increasing reluctance for car buyers to go all electric, after an initial rapid growth from a low base. The high costs of the new vehicles from developed country manufacturers, the issues of range anxiety, the shortage of rechargers, the costs of the electricity, the fall in second hand values and worries about battery life have put many people off or lead some early adopters not to want to replace with another battery car. People have been even more concerned about heat pumps, disliking the high cost and disruption of installation and the expensive evergy bills in cold periods. Many worry about the level of heating generated.

In order to get to net zero there has to be a change in consumer behaviour. There are plenty of business opportunities to develop popular green products and services. This then needs to be backed up by a large increase in electricity generation to meet the needs of all-electric heating, transport, and industrial activity.

The opportunities of net zero

Industry and most governments will the end, and need to double down on the means. Car manufacturers are working away to extend range, lower costs, and improve the consumer appeal of battery cars. Heating specialists are working at the challenge of finding good ways of electrifying home heating, as that is a potential very large market. Considerably more progress can be made with insulating older properties to much higher standards, with most people seeing this as good commonsense and a way of cutting the energy bill. There will be substantial commitments to more renewable power, and to the technologies that will allow storage of power from times of plenty to use at times of low or no wind and sun. Looking at the current state of world governments much of this investment will come from private sector companies and individuals as we find the new Tesla style companies that seize the opportunity and find favour with consumers.

Conclusion

COP 29 will draft a communiqué which pledges more funding by the developed world to help the emerging countries. It is unlikely to be able to produce a number for the transfers anything like as large as the task requires or the emerging economies want. The global transition will depend on the pace of consumer uptake, with consumers paying themselves for the new heating and transport systems it needs. There are big opportunities for companies to find the next iconic products of the green transition. There will need to be a big acceleration of the pace of installing renewable power, extra grids and storage capacity to meet these growing demands. This is an area which governments can influence and direct. It seems unlikely the world can hit the original targets for decarbonisation and temperature control. Bond markets act as a constraint on greater state outlays to speed transition.