Last year was meant to be a game-changer for climate action, with the United States re-entering the Paris Agreement and pandemic stimulus funds from many countries aiming for “green stimulus.”
Much has been achieved, from the adoption of international carbon market accounting standards to a dramatic increase in net zero commitments by countries and companies. Current climate commitments now put the world on track for a warming of 1.8°C, a significant improvement from the 4 degrees of warming projected before the signing of the Paris Agreement.
But it still wasn’t the year many were hoping for, setting the stage for a tumultuous 2022.
As energy demand recovered from pandemic-induced 2020 lows, carbon emissions soared again and energy prices soared, becoming a major driver of inflation and underscoring the need meet the continued demand for hydrocarbons while significantly reducing emissions. Natural gas prices in Europe hit record highs in December; Brent crude was above $90 at press time; and demand for coal, which would have peaked globally in 2014, has increased dramatically, signaling a possible record year in 2022.
In 2022, geopolitics will also be increasingly unstable, with Russia gathering troops on the Ukrainian border, Iran ramping up uranium enrichment and rising tensions over Taiwan. The energetic implications of these flashpoints are potentially dramatic.
For the second consecutive year, the Atlantic Council Global Energy Center interrogates a group of top global energy leaders to better understand the key energy issues for 2022. Respondents this year were far more ambivalent about the future, perhaps even pessimistic, than they were going into 2021. Last year, we concluded that “2021 could be a turning point in the fight against climate change. Three questions from this year’s survey show how much things have changed:
While 36% of respondents in 2021 rated the achievement of global net zero emissions by 2050 as somewhat or very likely, that figure fell to 27% in 2022.
Last year, 39% of respondents thought Covid-19 was the biggest geopolitical risk to energy supply and production, with cyberattacks and intra-state conflicts totaling 28%. This year, cyberattacks and interstate conflicts totaled 43%, with Covid-19 just 11%.
When asked to rank the outcome of COP26 on a scale from ‘more blah, blah, blah’ to ‘creating a foundation for achieving global net zero by 2050’, 51% of people respondents chose the first and only 11% the second. .
The silver lining to this data is that our respondents seem to think the world can handle Covid-19, even as cases soar. But with their assessment of Cop26, net zero skepticism and serious geopolitical concerns, the results were far from the optimism that launched 2021.
But the real picture isn’t as clear as the austere mood might suggest. 2021 has been a banner year for the deployment of renewable capacity, as well as for investments in clean technology startups. While countries failed to agree on a ‘phase-out’ of coal at COP26, they did agree on a ‘phase-out’, the first time fossil fuels were specifically mentioned in a press release from the Cop. And, above all, Cop26 has kept the objective of limiting warming to 1.5 degrees within the realm of possibility.
Perhaps a better interpretation of 2021 was therefore a sobering year, but also a year that should give hope. The work needed to achieve climate goals while managing near-term energy needs is immense, but the current direction is correct.
If there is a single “energy agenda” for 2022, it is that policymakers and energy leaders must not lose sight of the urgent need for climate action in the context of current uncertainty, but must also remain agile and responsive to potential disruptions.
These are the key questions the Atlantic Council’s World Energy Center will explore with world leaders when it returns to the United Arab Emirates for the World Energy Forum on March 28-29. We hope to see you there.
This essay was adapted from the Atlantic Council’s World Energy Center publication, “The 2022 Global Energy Agenda”. The Atlantic Council’s World Energy Forum will be held March 28-29, alongside the World Government Summit at Expo 2020.
Posted: February 10, 2022, 4:30 a.m.