The COP that couldn't kill coal
But Dutch MPs forced a U-turn from the Netherlands
THE NEW RHETORIC of net-zero promises already sounds tired, but teenage climate activist Greta Thunberg cut through the bluster. The COP26 summit in Glasgow was more “blah, blah, blah,” she told demonstrators at a protest. World leaders had gathered for “a celebration of business as usual”.
Yes, and no.
In the run-up to Glasgow, many analysts anticipated a “tidal wave” of new opportunities to scale green financing for the energy transition. As it turned out, even if all the pledges were actually delivered, then COP26 will have charted a course for global heating of 2.4 degrees above pre-industrial levels.
That forecast, from analysts at Climate Action Tracker, found emissions of greenhouse gases would remain at almost double the level required by the Paris goal of 1.5 degrees.
Climate envoys campaign in poetry but govern in prose. Like everyone else.
While the high hopes were overstated, COP26 did score some notable wins. Some important issues were settled by consensus. At the last minute, even the Dutch parliament rose to the occasion too.
A commitment to end de-forestration by 2030 was substantial, even as sceptics pointed out that the practical details were thin. Other declarations vested their faith in more public-private collaboration as the best means to move money and innovation to the people and places who need them most.
More than before, attention focused on polluting heavy industries and those parts of the world most at risk from global heating. An important shift in emphasis, as Microsoft founder-turned-philanthropist Bill Gates noted, was the new appetite to scale innovation - how to find, fund and share it. Nothing like this happened at any of 25 previous Conferences of the Parties.
Politicians are soft, slow-moving targets. So it’s worth remembering why we need them: Dutch Greens showed that western democracy can power the energy transition
More boldly, a coalition of 21 industrialised nations took a step beyond past efforts to phase out coal.
Even the Netherlands signed up to a new pledge to freeze government guarantees for the financing of new fossil fuel projects, though only after leftist parties forced the caretaker cabinet into a U-turn. More on this below.
In terms of tough decisions, though, COP26 failed. The climate imperative again lost out to the short-term expediency of national politicians defending old economies: Glasgow wasn’t the COP that killed coal.
That would have been a real breakthrough, a goal coveted by its organisers (including the British hosts). Already, capital markets are growing wary of financing the most polluting of fossil fuels. But agreement to end coal-fired power never seemed plausible in Glasgow. Indian prime minister Narendra Modi announced a plan to make India carbon-neutral by 2070, deferring the United Nations’ target by 20 years largely because of his country’s dependence on coal.
Meanwhile, the leaders of China and Russia stayed away.
Lobbyists linked to the oil and gas industry made up the largest single pressure group.
Suspicions of hypocrisy ran deep, not least towards the financial institutions which announced new net zero ambitions for their lending and investment businesses. (Most opted, simultaneously, to keep quiet about their stakes in unrepentant oil and gas producers intent - surely it's fair to say: hell-bent - on increasing so-called Scope 3 carbon dioxide emissions from products until at least 2030.)
Waiting for everyone
In his opening speech to COP26, Dutch prime minister Mark Rutte posed as a climate-conscious politician - presenteerde premier Rutte zich als een klimaatbewuste politicus, reported the Volkskrant.
With none of Greta Thunberg’s flair for repetition, Rutte urged delegates in Glasgow to “action, action, action and implementation, implementation, implementation”. The summit should lead to more concrete action, said Rutte - stelde hij dat de besprekingen moeten leiden tot meer concrete actie.
Those big words rang hollow, almost immediately.
On November 4, five countries (Canada, Denmark, Italy, Finland, Sweden, UK, US) and five multilateral financing institutions released a statement pledging to end new funding for fossil fuel projects abroad from 2023. Their statement signalled a first step by governments of large industrial countries to move beyond the debate over phasing out coal, towards a financial boycott of oil and gas projects - het eerst committeert aan een financiële boycot van olie- en gasprojecten.
Not including the Netherlands.
After discussing the issue on November 5, the Dutch cabinet declined to join.
If the world can count on us, blogged Volkskrant reporter Yvonne Hofs, why won't the Netherlands stop financing fossil energy projects abroad? It was a glaring illustration of Greta Thunberg’s account of leaders “fighting to preserve the status quo”.
The scene encapsulated an old problem with multilateral summits. When tough decisions are called for, everyone waits for everyone. Or for China. Or for Russia.
That’s the cup-is-half-empty scenario.
At the same time, Glasgow gave a stage for first-movers. Among them, in a further twist, non-state signatories to the freeze on new guarantees for fossil energy projects included the Financing Company for Developing Countries (FMO), a Dutch development bank that is 51%-owned by the government but whose board has autonomy to take independent decisions.
The unworldly weary
Among Dutch commentators, signs of a cynical dissent were easy to find. In a podcast by the Telegraaf, editor-in-chief Paul Jansen referred to fears - vrees - that the climate summit contributes to parallel reality - bijdraagt aan parallelle werkelijkheid. A guest column in the same paper by Casper Burgering, an economist who works on sustainability for ABN Amro, argued that promises from COP26 were too ambitious.
These arguments are old, but their persistence in 2021 is alarming.
The cut-throat competition in global markets - een mondiale markt met bijna moordende concurrentie - stymied change, argued Burgering. Big machines in capital-intensive sectors such as concrete, power, shipping and steel were expensive, and had a very long life - een hele lange levensduur. ABN Amro’s sustainability specialist found the momentum sought by world leaders in Glasgow was “ too ambitious” - de vaart die de wereldleiders voor ogen hebben lijkt mij iets te ambitieus.
Given this perspective, it would be reasonable to ask why Burgering chooses to work on the economics of sustainability in the first place. Margins in heaviest industries were thin - en dus relatief dunne marges, which left very little room, “ultimately”, for investment - geeft uiteindelijk maar weinig investeringsruimte. Besides, he wrote, nothing would change without tougher regulation from China and Russia.
And…action
Politicians make soft and slow-moving targets, for activists and cynics and sceptics alike. So it’s worth remembering why we need them. Only democracy can counter the inertia that is stalling the energy transition.
No sooner had the Dutch cabinet decided not to join other signatories of the ban on new state guarantees for fossil fuel projects than GroenLinks tabled a motion in parliament to demand that the Netherlands join the declaration.
Questioned in parliament, the state secretary for climate and energy, Dilan Yesilgöz (VVD) appeared hesitant. As coalition talks drag on, the outgoing caretaker cabinet could not commit to such promises, she suggested. That excuse seemed flimsy: as recently as September, the same cabinet had budgeted €6.8 billion euros in new subsidies for sustainable projects.
The old argument that a caretaker administration is obstructed by a lack of mandate was re-framed as an incentive to take action
The real problem was no secret. Financing fossil energy projects is a strategic interest for the Netherlands. Dutch lenders play a significant role in funding international oil and gas infrastructure, underwritten by about €4.8 billion in government-backed export credit insurance for companies including Shell, Van Oord, Boskalis and Heerema.
In a “scenario exploration” published in parliament in July, state secretary for fiscal affairs, Hans Vijlbrief (D66) cautioned that Dutch jobs would be lost if the Netherlands committed to a funding freeze: a so-called 'level playing field' would be at stake, he argued.
Rather than helping the climate, this business would migrate across the border - what’s called ‘carbon leakage’ - to other jurisdictions with weaker climate policies. Dutch lenders have a far bigger stake in financing fossil energy infrastructure than, say, Sweden. And while the United States government signed up to the freezer, the text of COP26 statement included “a few loopholes”.
“Everyone is waiting for everyone,” noted the Volkskrant blog. Nor was hypocrisy unique to the Netherlands: other heads of government in France and Germany were prone to preach the green gospel at climate conferences, although neither signed up to the financing freeze.
In the Hague, the prospect of a parliamentary rebellion was decisive. A vote was tabled for Tuesday, but by Monday morning, Dutch ministers has performed a deft U-turn.
Tom de Bruijn, minister for foreign trade and development cooperation, who like Vijlbrief is a D66 politician, told a press conference in Glasgow that the Netherlands would commit to the freeze: “This was not an easy decision, because it has real consequences for companies. That's why we took some time for it. On Friday we discussed it first in the Council of Ministers and at the weekend between individual ministers. But it is precisely in the interest of the climate that we have decided to sign the declaration anyway”.
And the argument that a caretaker administration lacked a mandate for such decisions? “What helped is that the outgoing government parties are the same as the forming ones,” said De Bruijn, neatly re-framing an obstacle as an incentive.
Which, of course, is how better climate policy is likely to be achieved. Not on the basis of facts - or even the microeconomic features of heavy industry, accurately described by Burgering - but in the combined effects of occasional, uncoordinated democratic resistance by assertive parliamentarians in western Europe. Two cheers.
The roadmap from South Africa
COP26 was preoccupied by exactly these issues of realpolitik, to borrow the Russian term. On the awkward question of how to decarbonise heavy industry, the summit served up some clear and candid answers. A “tidal wave” in green financing remains distant, but Glasgow brought necessary clarity about what needs to be done.
An eye-catcher for me was an agreement to provide $8.5 billion in concessionary multilateral loans for the greening of South Africa’s coal-powered Eskom power utility.