by Ignazio Musu^[1]

Relevant steps forward have been achieved in the recent years in the technological field to allow the energy transition required to reduce the excessive greenhouse gas emissions to face global warming and the related climate change problems without a lower economic growth.

Prices of solar and wind energies have been continually falling and so did the price of batteries to deal with their intermittency problems, relative to fossil fuels’ prices; however, being global climate change an environmental externality, technological progress to achieve it, although available, is not introduced automatically, but requires appropriate economic policy tools.

Economists focused on economic instruments of environmental policy acting on relative prices , such as carbon taxes, tradable pollution permits, aimed at introducing a carbon price, and subsidies to GHS emission abatement; but they seems to have ignored that this provides an incentive to adopt environmentally friendly technologies that already exist, whilst the required energy transition to fight climate change requires radical new emission reduction technologies, characterized by new infrastructures and institutions.

The introduction of “radical” innovations and the investments to implement them cannot be based only on price incentives; these can help, but a more direct public intervention is required integrated with those of private companies in research and investments in deployment of the new required carbon-saving technologies.

It must also be taken into account that global warming and the related climate change are negative externalities of a global nature; hence national governments’ actions are pushes towards «free-riding» behaviours, waiting to benefit from greenhouse gas emission reductions undertaken by other countries.

To avoid this, the United Nations Framework Convention on Climate Change (UNFCCC) approved in 1992 introduced annual Conferences Of Parties (COPs); but the COP’s experience has not been encouraging.

The choice made in the Kyoto’s COP of 1997 of a protocol requiring binding «targets» for the reduction of greenhouse gas emissions only for developed countries was a failure.

After years of uncertainties and hesitations in the subsequent COPs, the conviction began to make its way that a new approach was needed, which abandoned the «top-down» approach of the Kyoto Protocol in favour of a «bottom-up» approach to coordinate intervention strategies developed by individual countries, not only the developed ones.

Hopes came from this «bottom-top» approach adopted by the Paris Agreement from COP 21 held at the end of 2015, approved by almost all countries in the world, to coordinate Intended Nationally Determined Contributions (INDCs) to achieve a global warming of 2°C, and possibly 1.5°C, compared to pre-industrial levels, with net zero GHG emission reached by 2050.

The success of COP 21 was determined by the joint commitment of Barack Obama’s United States, of Xi Jinping’s China and of the European Union who dragged the other countries.

But things moved towards pessimism after the US President Donald Trump’s decision to withdraw from the Paris Agreement and was not cancelled after President Joe Biden’s adherence to the Paris Agreement.

New events rose on the geoeconomic scene after the Ukraine’s invasion, such as the EU forced to find a fossil fuels alternative to the end of imported Russian gas and EU’s clear signs to reduce engagement on green deal to devote economic resources to the improvement of military defence.

More recently, the situation worsened after the decision of Donald Trump, as new president of the United States, not only to withdraw from the Paris agreement again, but to orient US energy policy towards fossil fuels (see the military action against Maduro in Venezuela) and against renewable energy sources.

COPs after 2015 did not contribute to change tendencies towards global warming and climate change as demonstrated by the fact that greenhouse gas emissions, with the exception of the Covid-induced downturn in 2020, have always been growing and continue to grow, with the increase in global temperature broking through the barrier of the increase of 2° C compared to pre-industrial levels.

COPs may be useful for keeping sensitivity alive globally, but it has been proven that they are not enough unless they are led by a set of important countries clearly willing to proceed on the energy transition towards renewable source required to appropriately reduce GHG emissions.

This was also the case for COP 30, where no commitment has been taken to phase out fossil fuels and focus moved from mitigation to adaptation to climate change; some results only emerged on the field of stopping deforestation on the insistence of Brazil as the hosting country; other decisions, such that of mobilize $1.3 trillion annually for climate action were mere announcements.

The lack of leading action from important countries was shown by the United States not even sending an official representation to COP 30, and by the EU representatives clearly shown unable (or unwilling?) to push for more positive outcomes.

At the moment, among big countries, only China seems to play a stimulating role against global warming and climate change although its economy is still based for 86% per cent on the use fossil fuels and since 2019 China’s greenhouse emissions overcame those of all the developed countries jointly considered.

At COP 30, China’s representatives declared that China will act within the framework of “Common But Differentiated Responsibilities»(CBDR) and confirmed what President Xi Jinping has since 2020 declared, that China aims to achieve maximum CO2 emissions by 2030, only then starting to reduce them in order to reach net zero emissions not in 2050 but in 2060.

This will be a huge effort, if, according to the new China’s Five Years Plan, by 2060 the contribution to energy of the fossil fuels should be reduced to 25 per cent from the current 80%.

China’s reduction of greenhouse gas emissions will be crucial in the fight against climate change, if its huge required effort in terms of investments will be coordinated with those required by digital technological advancement and artificial intelligence with its big requirements in terms of energy.

China can play a crucial role in the next COPs if it will be able to lead emerging and developing countries, starting with the recently widened BRICS; but pessimism cannot be abandoned unless US and EU join China in the required common effort; the only hope is that public opinions in US and EU will play a role in moving the political leaderships in this direction.

^[1] Department of Economics, Ca’ Foscari University of Venice, and OEET.