Key Takeaways
The U.N.’s 28th climate meeting is attracting a record 70,000 this year, as governments, non-profits, businesses, media, and hangers-on gather in Dubai to argue over how much the United States and other wealthy nations should redistribute around the world.
After 27 previous conferences, global carbon dioxide emissions will hit a new record this year, led by China, despite the United States reducing its emissions by 3 percent as it switches from coal to natural gas in the generating sector.
Biden has an agreement with China to stimulate more renewable energy deployment, which is good for China since it dominates world production of these products and their inputs.
Despite Biden’s enormous subsidies for “green technologies,” they are failing in the market and are increasingly expensive due to inflation, higher interest rates and supply chain problems.
The upcoming UN Climate Conference (COP 28) will have a larger ‘carbon footprint’ than any of the 27 previous U.N. climate conferences. COP28 is being held in the United Arab Emirates (UAE), where more than 70,000 people are attending–about 25,000 more than were at COP 27 in 2022. Biden’s special envoy for climate change, John Kerry, recently said that the United States will pay ‘millions’ into the U.N.’s ‘loss and damages’ fund that is attracting record numbers of attendees, who are looking for handouts despite the cost of attending the Dubai conference where luxury hotels are sold out at high rates. President Biden and Vice President Harris, however, are not planning to be part of the 70,000 attendees, skipping a meeting expected to be attended by King Charles III and leaders from nearly 200 countries.
President Biden earlier this month called climate change “the ultimate threat to humanity” and is pushing his climate agenda in the United States, using taxpayer funds to subsidize his favorite technologies. Last year, he promoted the passage of the Inflation Reduction Act—the country’s most significant climate law. That legislation is providing at least $370 billion into “clean” energy over the next 10 years. Biden believes it would help the rest of the world move away from fossil fuels. But, current national climate plans are expected to achieve only a 7 percent reduction in greenhouse gas emissions by 2030. This year global carbon dioxide emissions are expected to increase by 1 percent, despite the United States reducing its carbon dioxide emissions by a projected 3 percent. No major nation is on track to meet the emissions reduction goals outlined in the United Nations’ Paris accord.
China’s President Xi is also not expected to attend the meeting despite China being the world’s largest emitter of carbon dioxide. The United States, the world’s second largest emitter, and China recently established a joint agreement to boost renewables with the goal of displacing coal, gas and oil. Both nations will back global efforts to triple renewable energy capacity by 2030, accelerate the domestic buildout of green power to replace coal, oil and gas, and advance cooperation to limit emissions of nitrous oxide and methane, the US State Department and China’s Ministry of Ecology and Environment said in identical statements.
China’s Renewable Growth Undermined by its Coal Expansion
China’s energy bureau recently noted that total installed solar power capacity hit 536 gigawatts in October, up 47 percent from last year and wind capacity increased 15.6 percent to 404 gigawatts. Despite those numbers, China is continuing to increase its coal capacity faced with rising energy consumption, as the world turns to it for solar panels, EV batteries and minerals needed to produce “green” technologies.
China has granted permits for 152 gigawatts of new coal power since the start of 2022, starting construction on 92 gigawatts, with total capacity on track to increase 23 percent by 2030. Low cost and reliable coal power has made China the polysilicon leader of the world. For the same amount of capacity, coal can generate 2 to 3 times the energy that wind and solar generate due to their intermittency and dependence on the sun shining and the wind blowing. Further, coal generators can easily operate for 40 to 60 years, while wind and solar generators produce power for 20 or 30 years and then must be replaced and capitalized.
China’s carbon dioxide emissions are by far the highest in the world. They rebounded in 2023 as a result of low hydropower output and the revival of the country’s economy after its COVID lockdowns. Global demand for energy and materials from the rapid expansion of clean energy and electric vehicle manufacturing also offset the decline in emissions brought about by a slump in real estate, which restrained cement and steel production.
Biden’s Domestic Energy Transition is Facing Challenges
Despite the generous subsidies for green energy from Biden’s Inflation Reduction Act (IRA), the President’s climate agenda is suffering, faced with canceled offshore wind projects, imperiled solar factories, and fading demand for electric vehicles. Even President Biden’s and Energy Secretary Granholm’s favorite electric bus company, Proterra, is in bankruptcy. A year after passage of the largest climate change legislation in U.S. history, meant to set off a boom in American clean energy development, economic realities are becoming apparent due to inflation, high interest rates, soaring costs, unreliable supply chains, and sluggish permitting. Offshore wind developer Orsted cancelled projects in the Northeast; Tesla, Ford and GM scaled back EV manufacturing plans, and the breakneck speed of developing solar manufacturing plants has created the prospect of a glutted market that could drive down the price of solar panels due to supply outpacing demand. Biden’s Inflation Reduction Act’s billions in tax credits cannot resolve these issues, nor the fundamental issue that these technologies make energy more expensive.
More than 56 gigawatts of “clean” power projects have been delayed in the United States since late 2021 with solar energy facilities accounting for two thirds of those delays due in part to U.S. import restrictions. The United States has been trying to combat the use of forced labor and tariff-dodging in a global solar panel supply chain that is dominated by China.
Permitting gridlock, local fights over where to site solar and wind projects and a grid connection process that can take an average of five years are cited by developers as among the industry’s biggest challenges. While these are traditional problems faced by conventional energy projects over many decades, it appears to be surprising to “green energy” business people, many of whom were supportive of regulatory roadblocks to other energy projects. Tight supplies and strong demand for renewables from utilities and corporations because of mandates and subsidies have also driven up contract prices, which could mean higher costs for consumers. Solar contract prices increased 4 percent to $50 per megawatt hour for the first time this decade in the third quarter. The IRA has incentivized domestic production of solar panels and wind turbines, but manufacturers have recently warned that a wave of new Asian capacity is threatening the viability of dozens of planned American factories.
Turmoil in the U.S. offshore wind industry is a major issue. Developers like Orsted, BP and Equinor have sought to renegotiate or cancel contracts due to soaring costs, and have taken multi-billion dollar write downs on projects. Only one bid resulted at a federal wind lease sale in the Gulf of Mexico in August. The Biden administration’s target of deploying 30 gigawatts of offshore wind by 2030 is now widely regarded as unattainable with 16 gigawatts being a more likely target.
Some corporations are delaying investment decisions, awaiting the Treasury Department to write rules regarding the IRA’s tax credits. For instance, one company is waiting on the design of tax credits for sustainable aviation fuel under the IRA, to determine whether corn-based fuel can qualify as a feedstock.
Conclusion
The U.N. COP 28 is expected to garner a huge crowd that will be waiting for handouts from wealthy nations, starting with the United States. The United States is spending billions on Biden’s climate agenda pushing his favorite technologies here, but progress has slowed due to inflation, high interest rates, and problems with supply chains. Despite that, Biden is charging ahead with agreements with China to triple renewable energy to phase out fossil fuels, but that will not stop China from continuing to build coal plants and remain the world’s top emitter of greenhouse gases. Meanwhile, global carbon dioxide emissions continue to rise, led by China.
