The green transition after COP28: Should we laugh or cry?
Is the final agreement after COP28 an occasion to get out the kleenex or the champagne? I believe there is more reason to laugh than to cry, but there is a big pitfall to watch out for. Let me offer three reasons to be optimistic and one reason not to be jumping with joy.
Let’s jump right in and look at three reasons to be optimistic after COP 28 in Dubai:
1: Politicians are trying to catch up with industry and the financial sector
My first reason for optimism starts with a look back: after COP27 in 2022, it was clear to me that the industrial and financial sectors were moving faster in the direction of sustainable solutions than the politicians. Today, after COP28 in Dubai, we see a shift where politicians are trying to catch up with this development. Since the COP agreement itself is always an expression of the lowest common denominator of what all countries can agree on, I think we should celebrate it as a victory that the intentions are on the right track. The global political consensus points in the right direction, and this creates potential for the green transition. It is now explicitly stated in the agreement, for example, that we must move away from fossil fuels and towards more renewable energy and higher energy efficiency. The fact that the agreement also indicates an effort to implement new financing models and a fair treatment of those most affected by climate change is another reason to raise your glass.
2: The pace is increasing – and it has to
Two factors in particular mean that the pace of green transition is currently increasing: Firstly, the energy crisis and the increased focus on security of supply in Europe make it increasingly necessary to find new sources of energy. Secondly, Europe is under constant pressure from the USA's Inflation Reduction Act, which promotes and supports American production of renewable energy, green hydrogen and green production. The competition from here has, among other things, helped to speed up a new European green deal, which will promote the pace of the green transition in Europe. Technology catalysts like GreenLab need the transition to be accelerated, so that we have the opportunity to test even more green solutions at a large scale.
3: Interest in circular and integrated energy systems is increasing
Participants at COP28 showed an increasing interest in circular energy systems and an integrated approach to green energy. This signals an increased understanding of the complexity of the energy transition and the importance of thinking of energy as a whole rather than something that is divided into silos. We must not only think about renewable energy production – we must also think about how green energy is used, converted and used in new ways in industry. This means that the industry must not only use green energy in their production, but also think about what will happen to their surplus heat and residual products, for example, and how these can travel on as energy that can be used in a new context. That understanding is taking root among the major players, and it could be a turning point.
The political systems are moving, but we need more speed to make it in time. In Denmark, we need to understand that we in a global competition for technology, upscaling and jobs. In the USA, the headline is "bring manufacturing home", and in Germany, France and Great Britain, state programs have been started to accelerate green solutions. Right now, this is placing them ahead of Denmark in the green race.
Our recommendation is that politicians act pragmatically. Legislation and regulations are the most effective levers we can turn as the winds of change blow. We must adapt to a new reality, and this requires political craftsmanship at an unprecedented pace.
Change is needed at systemic level, and it is crucial that we collaborate across industries, financial sectors, and governments to create the framework for a green future. As part of an international community, Denmark has an important role to play in the global energy transition. Our experience with green energy, circular economy, and sustainable development places us in a unique position to be a pioneering country for the export of new technologies and industrial clusters – an export adventure that can surpass that of the wind industry. Let us grasp that opportunity and take that responsibility upon ourselves.
By Christopher Sorensen, CEO
COP28 Side Event hosted by GreenLab, The Ministry of Foreign Affairs in Denmark, Topsoe and Breakthrough Energy.