Davos 2023 – the good, the bad and the promising

As world leaders, chiefs of major companies and other elites were meeting in Davos to talk about 'Cooperation in a Fragmented World’, more doubt was being cast over plans to decarbonise and transition the energy sector, with serious questions raised over the offsetting, carbon markets and net-zero agendas, and the announcements of unprecedented profits by some of the largest in the oil and gas sector.

Energy supply is responsible for over half of greenhouse emissions globally. To mitigate climate change, the world must rapidly move away from fossil fuels, so it is a relief that, amid a sombre global context, climate conversations were still very much on the agenda this year at Davos.

The WEF’s own risk analysis for this year concluded that in the next two years the cost of living, while the biggest risk, is closely followed by extreme weather events made more likely and severe by the climate crisis. Looking out to the eight years beyond that, environmental risks top the list.

Many speakers reflected this ever-growing urgency with Antonio Guterres, Secretary-General of the UN warning, ‘The commitment to limit global temperature rise to 1.5C is nearly going up in smoke. Without further action, we are headed to 2.8C increase. The consequences, as we all know, would be devastating’.

Davos sets the tone of political focus and discussion for the year when it comes to the world’s biggest challenges. So, what were key emerging questions around energy transition and the environment, and what could they mean?

1. Could this be the year of landmark climate legislation? There was keen enthusiasm from businesses for US President Joe Biden’s ‘huge’ green package, The Inflation Reduction Act, The European Commission will also introduce the Net Zero Industry Act. The impact of legislation change could be profound for businesses.
2. Will technology be the answer to address the climate crisis? The International Energy Agency says most of the reductions in CO2 emissions through 2030 come from technologies already on the market today, and that the remainder by 2050 come from technologies that are currently at the demonstration or prototype phase. A report for the WEF by Nicholas Stern and Mattia Romani made the case that the next five years – a crucial period if net zero targets are to be achieved – more than half the tipping points for key green technologies will have been met.
3. How do we accelerate investment in green energy? According to Fatih Birol, Executive Director of IEA, energy security is the bigger driver of renewable energy growth today. The German Chancellor supported this view but added cost and environmental reasons – and because in the long run renewables promise the best returns. The IEA chief recognised there was no justification for investments in new oil fields because of the energy crunch, saying by the time these became operational the climate crisis would be worse. However, while investment in cleantech steadily increases (e.g. in 2022, renewable energy grew by 25% compared with a year earlier), it is still overshadowed by continuous support for fossil fuels, still very much part of the global energy mix. The past year has shown that reducing supply without reducing demand can be politically and economically challenging. At the same time, the role of oil and gas industry in the energy transition remains a topic of much debate, with many critics and activists asking what is the real incentive for these companies to leave the business as long as it is profitable.

In this age of polycrisis putting the right incentives in the right place could be the difference between a promising decade of fighting for our planet or a devastating path for our civilisation.

Maria Pontes, Director of Programmes & Partnerships

Banner Image Credit: The National