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Fossil Fuel Phasedown, But Not Out, At COP28
At the 28th UN Climate Change Conference, representatives from almost 200 countries agreed on a final text that includes "transitioning away" from fossil fuels, working "toward the phasedown" of unabated coal, and tripling renewable energy capacity.
Key terminology took a top-tier role as the delegates debated declaration details.
Sultan Al Jaber, COP28 president and head of Abu Dhabi National Oil Co. (ADNOC), actively called on parties "to come forward with language on fossil fuels for the negotiated text.”
OPEC warned its member countries that a phaseout of fossil fuels as part of the negotiations would jeopardize their oil-dependent economies and exacerbate energy poverty in the global south. OPEC's Oct. 9 long-term energy forecast showed demand expanding by 3 million barrels per day of oil equivalent annually by 2045, driven by population growth, particularly in the Middle East, Africa and Asia. "We agree to phase out emissions, phase down emissions, not the fuel," said Abdulbaqi Alsalait, energy adviser to the Iraq Ministry of Oil.
Another key phrase the conference contested was "unabated fossils fuels." The final “phasedown” version refers only to fossil fuels created without interventions to substantially reduce greenhouse gases emitted during production. But many critics argue that abatement technology is too expensive, is largely unproven at scale, and is too capital and energy intensive.
EU climate chief Wopke Hoekstra called the final text a "historic decision" that sets in motion an "irreversible, accelerated transition away" from fossil fuels.
The global stocktake from COP28 itemized what countries and stakeholders will do to limit global warming to 1.5 degrees C above pre-industrial levels, including substantially reducing methane emissions by 2030, achieving net-zero emissions by 2050, investing in abatement and removal technologies, and seeking low-carbon hydrogen production.
As countries wrangled over wording, a new report funded by the Bezos Earth Fund warned that the world is at risk of experiencing several so-called climate tipping points in the 2030s, with global warming on track to breach 1.5 degrees C with consequences of up to $3.5 trillion in economic damage.
Global greenhouse gas emissions will need to fall 43% by 2030 to limit warming to 1.5 degrees C. According to the UN, current national climate plans will increase emissions 9% by 2030 compared with 2010 levels. Under S&P Global Commodity Insights' Inflections base case, global emissions from energy will peak at 51.46 billion metric tons of carbon dioxide equivalent (Gt CO2e) in 2024, declining gradually to 49.86 Gt CO2e in 2030 and 47.28 Gt CO2e in 2035.
Meanwhile, state-owned Saudi Aramco is on track to boost crude oil production capacity to 13 million b/d by 2027, up from 12 million b/d now, and Sultan Al Jaber’s ADNOC is lifting its own capacity to 5 million b/d by 2027 from about 4.65 million b/d now.
Today is Monday, December 18, 2023, and here is today’s essential intelligence.
Written by Ken Fredman.
Economy
Economic Research: 2023: Performance Beats Expectations And 2024: Resiliency Will Be Tested
The US economy has fared much better than we had anticipated at this time last year. What seemed like an economy tipping toward recession has instead grown by 2.9% in the last four quarters. The ongoing resiliency of the US economy will be tested in 2024, as real interest rates stay relatively high (relative to the last monetary cycle as well as the longer-run equilibrium rate) and the lags of monetary-policy tightening feed through the economy.
—Read the report from S&P Global Ratings
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Capital Markets
Commercial Real Estate Chart Book: Weathering the Storm – December 2023
S&P Global Market Intelligence's December 2023 Commercial Real Estate Chart Book: Weathering the Storm brings together a wide range of resources updated to include acquisition and asset quality data through the third quarter and market valuations through November. The chart book highlights bank regulatory data, loan-level and aggregate US life insurance company disclosures, information on individual commercial properties and key metrics of portfolio performance and valuation for real estate investment trusts, to provide additional context on the breadth and scope of commercial real estate exposure across financial institutions sectors.
—Read the report from S&P Global Market Intelligence
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Global Trade
Listen: 2023: The Changing Map Of Oil Trade
In the final episode of the Oil Markets podcast for 2023, S&P Global Commodity Insights crude and refined products directors Joel Hanley and Richard Swann round up the biggest events and trends of the year. They provide an across-the-barrel retrospective of the year in oil markets, including shifting trade flows, developing markets for Russian oil, the emergence of Guyana as a crude powerhouse and a landmark year for established benchmarks Dated Brent and Dubai.
—Listen and subscribe to Oil Markets, a podcast from S&P Global Commodity Insights
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Sustainability
CreditWeek: What Are The Climate-Related Trends To Watch In 2024?
A year marked by tighter financing conditions and geopolitical disruptions ended with a COP28 conference that delivered some major agreements but often seemed to lack practical measures. Uncertainty will continue into 2024, when investors and other market participants will have to cope with ongoing pressures, notably related to the climate finance gap.
—Read the report from S&P Global Ratings
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Energy & Commodities
Women In Commodities: Breaking Barriers. Building Balance.
It’s a pivotal era for the commodities industry. Driven by Energy Transition, change is happening at lightning pace, fostering emerging markets and new tech. This landscape holds dynamic opportunity for gender equality. But is the industry stepping up to the challenge of creating a balanced workforce? S&P Global Commodity Insights recognizes the importance of attracting and sustaining equal gender representation as it powers the markets of the future
—Read the article from S&P Global Commodity Insights
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Technology & Media
Top 50 US TV Station Groups 2023 Update
S&P Global Market Intelligence updated the ranking for the top 50 US commercial TV station groups for 2023. This includes MediaCensus' traditional video subscribers and over-the-air household estimates, as of third-quarter 2023, and Nielsen TV households (TVHH) with broadband-only homes for the 2023-24 season.
—Read the article from S&P Global Market Intelligence