As the UK gets set to host the 26th UN Climate Change Conference of the Parties (COP26) in Glasgow on 31 October-12 November 2021, the challenge of implementing the recommendations of leading climate experts looms large.
When it comes to creating policy, navigating competing interests is always a challenge. But the parties face a unique set of tensions in the present moment. Pertaining to energy transition pathways, as an international community, we face three urgent and major challenges:
- How to effectively implement decarbonisation pathways and reduce greenhouse gas (GHG) emissions to mitigate climate change
- How to expand universal energy access, including to the 3 billion people still without clean and sustainable energy
- How to meet the decarbonisation targets established during the Paris Agreement.
Various attempts have been made to solve these challenges. Recent efforts include the Circular Carbon Economy (CCE) framework and recommendations (endorsed by the Saudi-presided G20 in 2020). The framework advocates for reducing, reusing, recycling, and removing emissions, offering a holistic, yet flexible, approach to managing emissions during the energy transition. The CCE framework also received particular attention when Saudi Arabia made a historic announcement on the 23rd of October 2021 to achieve net-zero emissions by 2060 largely using renewable energy and also the CCE approach.
Yet, unfortunately, a neat and tidy solution resulting in meeting benchmarks in all three areas may not be feasible at present. To complicate this picture further, the disparity in the ways different nations measure and report emissions threatens the effective use of decarbonisation pathways and CCE implementation.
The first step to finding a workable solution is to enhance international cooperation, which is effectively done by creating an international body to set standards for measuring and reporting emissions. Although achieving international cooperation is difficult, finding common ground is absolutely imperative in this case. We can start pushing this boulder up the hill at COP26.
Lack of International Agreement Leads to Misinformation, Free-Riding, and Carbon Leakage
Of course, creating an international body — at least, one that is effective — requires international cooperation. And getting nations with competing interests to sit down at the table and leave with a solid agreement is always massively challenging.
But when nations are not even on the same page about how they ought to measure and report emissions, we need to address this more fundamental challenge before we can even begin hashing out policy disagreements.
The difficulty results from and is manifested by the following:
- There is no single, universally agreed upon path to achieving specific metrics, given countries’ different and sometimes competing priorities. For example, hydrocarbon-producing economies might favor blue hydrogen production, which uses their hydrocarbon source with Carbon Capture, Utilization, and Storage (CCUS) technologies; while members of the European Union might have a distinct preference for green hydrogen that relies on green renewable energy for hydrogen production.
- There is no widely agreed upon methodology for measuring, reporting, and certifying emissions.
- There are no agreed upon rules governing carbon market mechanisms (Article 6 of the Paris Agreement), transparent reporting requirements, or “common timeframes” for climate pledges and market trading (especially trading surpluses under the clean development mechanism, emissions double counting, and overall mitigation measures).
- There is no shared climate governance framework, which permits some countries’ measures to have unintended negative impacts on others and on the climate.
In addition, lack of agreement on the above leads to the spread of misinformation on the role of technologies in reducing emissions. For example, consider electric cars. Teslas and other electric or “clean” vehicles have been gaining popularity, especially in countries like the United States. Their popularity is due in no small part to government incentives to purchase based on the belief that they produce fewer GHG emissions.
Yes, incentivising a population to switch from driving conventional vehicles that require fossil fuels to those that run on clean energy will reduce emissions in one area of the supply chain but only in one area. And many might be shocked to realise that when we measure emissions across the supply chain, we find that the production process for electric cars in fact produces higher levels of emissions than the production process for conventional cars.
Such misinformation gives certain technologies an unfair advantage over other decarbonisation technologies. Consequently, this disincentivises investments and the updating of technologies to reduce emissions from hard-to-abate sectors that are likely to continue relying on fossil fuel use, possibly for decades.
Another important consequence of the existing gap concerning how to measure, report, and certify emissions is that it increases opportunities and incentivises producers to free-ride or under-report. It also leads to increased emissions and carbon leakage. This problem occurs when corporations faced with harsh requirements for measuring and reporting emissions, react to environmental laws not by reducing emissions, but by moving their operations to other jurisdictions with fewer or laxer climate and environmental regulations. In so doing, they reduce emissions in their original country, but at the global level produce an outcome that the regulations intended to prevent.
If our goal is to reduce emissions, while providing a level playing field for low-carbon development, then shouldn’t we focus on reducing emissions across the supply chain as well as accurately measuring and reporting emissions on this more holistic level?
A Mixed-Membership (Public-Private) Body Could Be the Solution
Given the disparity in measuring and reporting emissions, as well as the potential for misinformation about the role of green technologies, we are in need of a quick solution here so that the international community can get on with the urgent work of solving the climate crisis.
To fill the gap, I was lead co-author of a proposal submitted to the T20 (Think20) of the G20 including the following three-point action plan as a framework for enhanced cooperation to be established and implemented by a mixed-membership (public-private) body:
- To measure carbon content in a way that considers products’ lifecycles from inception through energy intermediates to final processing
- To report and verify emissions according to standardised and transparent Generally Accepted Accounting Principles for Emissions (GAAP- E)
- To certify GHG-content based on an internationally recognised methodology for relevant internationally traded products.
What are the benefits of implementing such a plan? Because the mixed-membership international body will be created through a systematic consultation process (as detailed in the Policy brief), there will be ample opportunity for buy-in and commitment.
Also, the action plan is anchored in a standard established at the global level but implemented locally. As such, this framework calls on horizontal implementation across countries but also vertical implementation of internationally-agreed upon principles being incorporated into domestic regulations.
This three-point framework addresses the above disparities with clear and practical recommendations, supports policymaking, facilitates policy advocacy, stops carbon leakage, and adjusts incentives in a meaningful way so that we can move toward establishing a level playing field on which all green technologies can fairly compete.
Fully addressing all of the disparities listed above is the first step to taking on the urgent and major climate challenges we face. Without an internationally accepted unified process of measuring, reporting, and certifying greenhouse gas emissions, the deployment of the circular carbon economy (CCE) will be undermined, as well as the implementation of the mechanisms specified in Article 6 of the Paris Agreement (which set a new global market system). Without such an internationally accepted, unified process, any efforts within different countries and internationally (including carbon taxes and Carbon Border Adjustment Mechanism (CBAM) or COP26) will fail.
If the parties in attendance at COP26 are ready to lead the world into a brighter, greener, environmentally just future, then settling these tensions must be a primary focus. Will the unique tensions of the present moment be diffused, or will countries continue to work at cross purposes and be guided by misinformation?
I urge all parties in attendance at COP26 and companies engaged in CCE or decarbonization technologies to consider the proposal and to contact me for further information at email@example.com.
This article is drawing from the policy brief:
International Cooperation to Accelerate the Development and Deployment of the Circular Carbon Economy, Policy Brief to 2021 T20 Italy Task Force 2 on Climate Change, Sustainable Energy & Environment. https://www.t20italy.org/2021/09/22/international-cooperation-to-accelerate-the-development-and-deployment-of-the-circular-carbon-economy/
Which was co-authored by:
Manal Shehabi (Oxford Institute for Energy Studies); Giacomo Luciani (Paris School of International Affairs (Sciences Po)); Noura Mansouri (King Abdullah Petroleum Studies and Research Center (KAPSARC)); Kirsten Westphal (German Institute for International and Security Affairs (SWP)); Bassam Fattouh (Oxford Institute for Energy Studies); and Adnan Shihab-Eldin (Kearney Energy Transition Institute).
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Dr. Manal Shehabi is an applied economist with expertise in economic, energy, and resource sustainability & policy. She is a Senior Research Fellow at the Oxford Institute for Energy Studies and Founding Director at SHEER Research & Advisory Ltd. A polyglot, she advises policymakers and firms, including Fortune 500+ multinationals, mostly in energy and mining industries. She is a recognized expert on economic and energy transition in Gulf oil producers.