Phase Out or Mop Up

    Years ago, as I was entering the world of macrofinance, I remember being quite fascinated by the way my more experienced colleagues would dissect every word of the brief statements offered regularly by central banks. A former linguist, I was positively impressed by their attention to detail in the search for clues as to the next monetary policy move. The omission of a single word, a slightly altered punctuation, and an ever-so-subtle tweak in tone would trigger massive reactions pushing financial markets one way or the other.

    I was reminded of linguistic details’ importance while reading about a rather innocent-sounding comment uttered by COP28 President-Designate Sultan Al Jaber earlier this week. “In a pragmatic, just and well-managed energy transition, we must be laser focused on phasing out fossil fuel emissions while phasing and scaling up viable, affordable zero-carbon alternatives,” he said, addressing climate ministers from around the world at the Petersberg Climate Dialogue in Berlin on 3 May.

    Nothing out of the ordinary, at first glance. Just the kind of broad and vaguely positive statement you would expect from a COP president at a high-level gathering. Look closer, however, and you might notice that rather than talking about phasing out fossil fuels, the Emirati official and CEO of the Abu Dhabi National Oil Company is talking about phasing out fossil fuel emissions.

    It didn’t take long for attentive analysts to decipher the addition of the keyword, a covert opening for the continued use of fossil fuels, as long as you attempt to remove the resulting carbon dioxide emissions from the atmosphere afterwards. To allay any doubts about what he meant, Al Jaber explicitly mentioned carbon capture and storage in his speech, calling for smart government regulation to make the technology commercially viable.

    As anyone following the COP-opera closely would tell you, this is a game-changer.

    Attempts to agree on a deadline for weening the world out of its fossil fuel addiction have been going on for years. With little success so far, alas. You might still remember a previous linguistic twist at COP26 in Glasgow a couple of years ago, where countries eventually agreed to “phase down” the most polluting fossil fuel, coal, as “phase out” was deemed unacceptable by India and China. Squeezing in the phrase “phase out” proved impossible even last year, at COP27 in Egypt, despite the admirable efforts of a coalition dedicated to the cause.

    And so, we come to the innovative approach suggested by Al Jaber, setting the scene for an already controversial COP in the United Arab Emirates. Phase-out? Sure. Not the exploration and usage of fossil fuels themselves, however, just their emissions. Let’s continue business as usual and mop up afterwards to the best of our abilities (and wallets).

    All hail Carbon Capture Use and Storage! Well, as my colleague, Richard Tyszkiewicz, argues, there are still multiple concerns about the technology’s viability as an effective tool against climate change. “Aside from technological limitations and uncertain economics, there is also the danger of CCUS being used not as a last-resort climate change mitigation technique but as a distraction strategy by fossil fuel producers,” he writes.

    Did I mention, by the way, that the oil company Al Jaber is heading, the state-owned Abu Dhabi National Oil Company, is planning a significant expansion of fossil fuels this decade?

    Image courtesy of Andreas Iken from Pixabay
    Julia Axelsson, CAIA
    Julia Axelsson, CAIA
    Julia has accumulated experience in asset management for more than 20 years in Stockholm and Beijing, in portfolio management, asset allocation, fund selection and risk management. In December 2020, she completed a program in Sustainability Studies at the University of Linköping. Julia speaks Mandarin, Bulgarian, Hindi, Russian, Swedish, Urdu and English. She holds a Master in Indology from Sofia University and has completed studies in Economics at both Stockholm University and Stockholm School of Economics.

    Latest Posts

    Partner content


    NordSIP Insights Handbook

    What else is new?