11 December 2023 10:19 pm

What might COP28 mean for the construction sector?

Dec 6, 2023

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What might COP28 mean for the construction sector? wonders a Contributor to Construction News of 5 December 2023.  Here are his thoughts.

The image above is only for illustration and is credit to ArabianBusiness.com

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Contributor

 

Clive Docwra is managing director of property and construction consultancy McBains

 

On 6 December, the construction and built environment sector will be at the forefront of COP28 when the theme for the day will be ‘Multilevel Action, Urbanisation and Built Environment and Transport’. With the COP28 presidency calling on countries to commit to both national adaptation plans (NAPs) and nationally determined contributions (NDCs) – in short, climate-action plans to cut emissions and adapt to climate impacts – what might COP28 hold for the construction sector?

Out of 196 countries that have submitted NDCs, 158 mention buildings. This is an encouraging start, given that buildings are responsible for 37 per cent of energy-related carbon emissions and 34 per cent of final energy use, as well as a large share of extracted materials.

Transforming buildings will be essential in decarbonisation efforts – especially given the fact that the recent Global Stocktake, the first detailed assessment of global progress against the Paris Agreement, showed we are set to miss the 1.5C temperature goal set in 2015. The built environment sector’s potential for transformational change is underlined by the Intergovernmental Panel on Climate Change (IPCC), which says: “Building sector mitigation policies can reduce greenhouse gas emissions by 80 to 90 per cent, and lift up to 2.8 billion people out of energy poverty. The sector is also key for our economy: it is responsible for 7 per cent of global employment or more than 200 million jobs, accounting for 11-13 per cent of global GDP.”

“Resilience and adaptation will be key topics, with a focus on how to design, build, maintain and occupy buildings so they can work in a future of climate-change impacts”

As the IPCC also points out, green buildings represent an enormous low-carbon investment opportunity in emerging markets of $24.7tn (£19.6tn) by 2030. So far, 25 countries including the UK have also signed up for the Buildings Breakthrough Target. This target calls for net-zero emissions and resilient buildings to be the new normal by 2030. COP28 should see more countries commit and rise to the challenge. It is also expected that the area of embodied carbon will be explored.

Biodiversity is also likely to be an important topic as the built environment sector reevaluates how it can protect and restore nature. Understandably, resilience and adaptation will also be key topics, with a focus on how to design, build, maintain and occupy buildings so they can work in a future of climate-change impacts.

A long way to go

However, while this may all sound encouraging, there is still a long way to go. An analysis published this year by the World Benchmarking Alliance (WBA) assessed the climate-related targets and performance of a number of companies across building and construction-related sectors and described the results as “particularly alarming”, with 44 per cent of the companies assessed having no publicly disclosed targets to curb emissions at all. Of the companies deemed by the WBA to have significant property development or construction activities, not even one-fifth had a net-zero target.

Even the few leaders identified in the space did not have a roadmap covering how they would deliver zero-carbon-ready buildings by their target year. More than half (54 per cent) were revealed to not have a climate transition plan either.

We need every business within the sector to amplify their efforts to drive the transition to more efficient buildings and eco-friendly resources and materials. This includes stepping up the pace to address sustainability and achieve net zero. We need to increase the drive for energy-efficient designs like green urban spaces, solar-integrated rooftops, rain harvesting, biodiversity roofs, and more.

We also need to prioritise retrofitting – new buildings may be more energy efficient, but 80 per cent of the buildings that will be standing in 2050 have already been built, so we need to prioritise upgrading those we already have. Some government support would not go amiss here, given the scale of the challenge.

In addition, as the Chartered Institute of Building has suggested, a carbon budget could be allocated to development projects – just as they come with a financial budget – that is scrutinised at each stage of the project. Such a move would mean consideration of carbon impact in decision-making and prevent opportunities from being missed.

Just as much as we need these solutions, green building policies and regulations will also be vital in ensuring we are working towards a better future. Robust regulations would encourage the use of sustainable materials and address carbon emissions. This would not only help the environment but lead to better living conditions and reduced energy costs for residents.

COP28 comes at a crucial time. As the Global Stocktake made clear, time is running out to deliver a sustainable future. Change is starting to happen, but let’s hope COP28 sees the message get through to more of the construction sector.

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COP28 president is wrong – science clearly shows fossil fuels must go

Dec 5, 2023

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COP28 president is wrong – science clearly shows fossil fuels must go (and fast) as per Steve Pye, UCL. It is the designated president of the ongoing COP28 that is held in Dubai, the UAE.


The above image is credit to John Hanson Pye/Shutterstock

 

According to the president of COP28, the latest round of UN climate negotiations in the United Arab Emirates, there is “no science” indicating that phasing out fossil fuels is necessary to restrict global heating to 1.5°C.

President Sultan Al Jaber is wrong. There is a wealth of scientific evidence demonstrating that a fossil fuel phase-out will be essential for reining in the greenhouse gas emissions driving climate change. I know because I have published some of it.

Back in 2021, just before the COP26 climate summit in Glasgow, my colleagues and I published a paper in Nature entitled Unextractable fossil fuels in a 1.5°C world. It argued that 90% of the world’s coal and around 60% of its oil and gas needed to remain underground if humanity is to have any chance of meeting the Paris agreement’s temperature goals.

Crucially, our research also highlighted that the production of oil and gas needed to start declining immediately (from 2020), at around 3% each year until 2050.

This assessment was based on a clear understanding that the production and use of fossil fuels, as the primary cause of CO₂ emissions (90%), needs to be reduced in order to stop further heating. The Intergovernmental Panel on Climate Change (IPCC) says that net zero CO₂ emissions will only be reached globally in the early 2050s, and warming stabilised at 1.5°C, if a shift away from fossil fuels to low-carbon energy sources begins immediately.

COP28 president is wrong – science clearly shows fossil fuels must go Hands lowering solar panels into place on a roof.
Humanity has figured out how to cheaply capture and use the Sun’s energy.
Tsetso Photo/Shutterstock

If global emissions and fossil fuel burning continue at their current rates, this warming level will be breached by 2030.

Since the publication of our Nature paper, scientists have modelled hundreds of scenarios to explore the world’s options for limiting warming to 1.5°C. Many feature in the latest report by the IPCC. Here is what they tell us about the necessary scale of a fossil fuel phase-out.

Fossil fuel use must fall fast

A recent paper led by atmospheric scientist Ploy Achakulwisut took a detailed look at existing scenarios for limiting warming to 1.5°C. For pathways consistent with 1.5°C, coal, oil and gas supply must decline by 95%, 62% and 42% respectively, between 2020 and 2050.

However, many of these pathways assume rates of carbon capture and storage and carbon dioxide removal that are likely to be greater than what could be feasibly achieved. Filtering out these scenarios shows that gas actually needs to be eliminated twice as fast, declining by 84% in 2050 relative to 2020 levels. Coal and oil would also see larger declines: 99% and 70% respectively.

In fact, oil and gas may need to be eliminated even quicker than that. A study by energy economist Greg Muttitt showed that many of the pathways used in the most recent IPCC report assume coal can be phased out in developing countries faster than is realistic, considering the speed of history’s most rapid energy transitions. A more feasible scenario would oblige developed countries in particular to get off oil and gas faster.

A fair and orderly transition

The International Energy Agency (IEA) has added to evidence in favour of phasing out fossil fuels by concluding that there is no need to license and exploit new oil and gas fields, first in a 2021 report and again this year.

This latest IEA analysis also estimates that existing oil and gas fields would need to wind down their production by 2.5% a year on average to 2030, accelerating to 5% a year from 2030 (and 7.5% for gas between 2030-40).

A separate analysis of the IPCC’s scenarios for holding global warming at 1.5°C came to the same conclusion. Since no new fields need to be brought into development, global production of oil and gas should be falling.

This message was reinforced by the UN’s recent production gap report, which concluded that producer countries including the United Arab Emirates need to be moving towards a rapid phase-out of fossil fuels, not expanding production. Instead, the report estimated that in CO₂ terms, planned fossil fuel production in 2030 is projected to be 110% higher than the required phase-out trajectory to meet 1.5°C.

The evidence for a fossil fuel phase-out is clear. The debate should now turn to executing it.

A fair and orderly transition from fossil fuels must acknowledge the differing capacity of countries: developing countries are more economically dependent on fossil fuels and have less money to switch to cleaner technologies. Some investment in oil and gas will be needed for existing infrastructure. This would maintain the minimum level of production necessary for a carefully managed transition. Overall though, fossil fuels should now be in rapid decline.

Rich countries need to phase out fossil fuels now and raise the funding to help developing countries make the transition.

Don’t have time to read about climate change as much as you’d like?

Get a weekly roundup in your inbox instead. Every Wednesday, The Conversation’s environment editor writes Imagine, a short email that goes a little deeper into just one climate issue. Join the 20,000+ readers who’ve subscribed so far.

Steve Pye, Associate Professor in Energy Systems, UCL

This article is republished from The Conversation under a Creative Commons license. Read the original article.

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COP28 kicks off with climate disaster fund victory

Nov 30, 2023

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COP28 kicks off with climate disaster fund victory 

By ,  and 

 

Summary

  • COP28 adopts new fund to help poor nations with disasters
  • U.S., Japan, UAE among first to announce new contributions
  • Countries and oil companies urged to work together

DUBAI, Nov 30 (Reuters) – The U.N. climate summit clinched an early victory Thursday, with delegates adopting a new fund to help poor nations cope with costly climate disasters.

COP28 president Sultan al-Jaber said the decision sent a “positive signal of momentum to the world and to our work here in Dubai.”

In establishing the fund on the first day of the two-week COP28 conference, delegates opened the door for governments to announce contributions.

And several did, kicking off a series of small pledges that countries hoped would build to a substantial sum, including $100 million from the COP28 host United Arab Emirates, another $100 million from Germany, at least $51 million from Britain, $17.5 million from the United States, and $10 million from Japan.

The early breakthrough on the damage fund, which poorer nations had demanded for years, could help grease the wheels for other compromises to be made during the two-week summit.

But some groups were cautious, noting there were still unresolved issues including how the fund would be financed in the future.

“The absence of a defined replenishment cycle raises serious questions about the fund’s long-term sustainability,” said Harjeet Singh, head of global political strategy at Climate Action Network International. “The responsibility now lies with affluent nations to meet their financial obligations in a manner proportionate to their role in the climate crisis.”

Adnan Amin, CEO of the COP28 summit, told Reuters this month the aim was to secure several hundred million U.S. dollars for the climate disaster fund during the event.

Pope Francis, who was forced to cancel his trip to COP28 due to illness, sent a message on social media platform X: “May participants in #COP28 be strategists who focus on the common good and the future of their children, rather than the vested interests of certain countries or businesses. May they demonstrate the nobility of politics and not its shame.”

A ROLE FOR FOSSIL FUELS

Earlier on Thursday, Jaber opened the summit by urging countries and fossil fuel companies to work together to meet global climate goals.

Governments are preparing for marathon negotiations on whether to agree, for the first time, to phase out the world’s use of CO2-emitting coal, oil and gas, the main source of warming emissions.

Jaber, who is also the CEO of the United Arab Emirates’ national oil company ADNOC, aimed to strike a conciliatory tone following months of criticism over his appointment at the head of COP28.

He acknowledged that there were “strong views” about the idea of including language on fossil fuels and renewables in the negotiated text.

“It is essential that no issue is left off the table. And yes, as I have been saying, we must look for ways and ensure the inclusion of the role of fossil fuels,” he said.

He touted his country’s decision to “proactively engage” with fossil fuel companies, and noted that many national oil companies had adopted net-zero targets for 2050.

“I am grateful that they have stepped up to join this game-changing journey,” Jaber said. “But, I must say, it is not enough, and I know that they can do much more.”

Another major task at the summit will be for countries to assess their progress in meeting global climate goals – chiefly the Paris Agreement goal of limiting global warming to well below 2 degrees Celsius (3.6 degrees Fahrenheit).

This process, known as the global stocktake, should yield a high-level plan telling countries what they need to do.

Reporting by Kate Abnett, Valerie Volcovici and Maha El Dahan; Additional reporting by William James and Alvise Armellini; Writing by Katy Daigle; Editing by Matthew Lewis, Miral Fahmy and Christina Fincher

Our Standards: The Thomson Reuters Trust Principles.

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The EU’s Interest in Assisting MENA Countries

Nov 27, 2023

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In all Demographics and Resource Use: The EU’s Interest in Assisting MENA Countries to look at their respective population growth for better understanding and eventually a serious levy towards better numbers would be of paramount importance.

 

It is by Dr. Massaab Al-Aloosy
Displacement and Migration⠀/⠀Humanitarian Assistance 
A picture shows on February 11, 2020 a general view of al-Atba district of the Egyptian capital Cairo. – Egypt’s population has reached 100 million, the statistics agency said, highlighting the threat of overpopulation in a poverty-stricken country where many live in crowded megacities. (Photo by MOHAMED EL-SHAHED/AFP via Getty Images)
Download the Policy Report Here

The world population is currently estimated to be more than 8 billion and will be close to 10 billion by 2050. The extraordinary growth can be attributed to increased longevity as a result of widespread improvement in “public health, nutrition, personal hygiene and medicine, and on the other hand, the persistence of high levels of fertility in many countries.” Most of the population growth is occurring in developing countries, a trend that will continue well into the future. Close to 50% of the projected increase in the world’s population from today until 2050 is anticipated to take place in a few large countries within the developing world, and the share of the developing world population will increase from 66% in 1950 to 86% by 2050. Moreover, the population of the developing world is young and will continue to be for the foreseeable future.

Increases in population will strain the governments of developing countries, translating into more demand for food, water, health care, jobs, and energy, among many other needs. Simply put, it will be more difficult for “low-income and lower-middle-income countries to afford the increase in public expenditures on a per capita basis that is needed to eradicate poverty, end hunger and malnutrition, and ensure universal access to health care, education and other essential services.”

The failure of governments in MENA to address quality-of-life issues as the population grows could lead to a complete collapse of their political systems, as witnessed in countries such as Libya and Syria. Current trends are paving the way for massive migration to European countries, which could experience similar strains in providing satisfactory living conditions. Given its status as a destination for migrants from the MENA region and its proximity to the region, the EU would be an important partner for MENA countries in their efforts to improve quality of life for their residents. The EU could assist MENA countries in adopting effective voluntary family planning, moving toward more reliance on clean and renewable energy, and implementing efficient water management practices.

Dr. Massaab Al-Aloosy

Middle East  Special Initiatives  Europe  Humanitarian Assistance  Displacement and Migration
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Bridging the $18 Trillion Gap in Net Zero Capital

Nov 20, 2023

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A $18 Trillion Capital Gap Is Threatening the Energy Transition because Bridging this $18 Trillion Gap in Net Zero Capital would require as eleborated on below.

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Bridging the $18 Trillion Gap in Net Zero Capital

    

By Rebecca Fitz, Maurice Berns, Pattabi Seshadri, Asheesh Sastry, Jesper Nielsen, Ben Gottesdiener, and Betsy Winnike

Key Messages

The analysis by BCG’s Center for Energy Impact of global energy sector investment needed through 2030 to reach emissions reduction goals yielded the following key findings:

  • Capital Challenge. An $18 trillion capital gap exists between current commitments and the investments needed for alignment with net zero goals in 2030. Electricity and end-use sectors account for 90% of that shortfall.
  • Transition Barriers. Higher inflation and supply chain disruptions over the past 24 months have significantly hindered energy transition progress, stifling momentum and increasing costs.
  • Investor Behavior. Rising risks drive investors to seek higher returns, favoring businesses that prioritize capital discipline and cost efficiency even in high-growth renewables markets.
  • Sector Restructuring. Energy sector deals surpassed $320 billion in 2023, as companies optimize capital structures for energy transition investment. Oil and gas companies are leading with acquisitions, while utilities offload more assets to access capital and focus portfolios.
  • Strategic Adaptation. Companies should emphasize refining capital strategies, boosting efficiency, seeking innovative transactions and collaborations, bolstering financial foundations, and fortifying supply chains. These measures are essential to amplify investments, satisfy shareholders, and move toward net zero outcomes.
  • Government Role. Policy reforms, subsidies for low-carbon solutions, and expedited project approvals are essential for accelerating investment.

Navigating the path to a 2030 net-zero-aligned scenario reveals a staggering $18 trillion capital gap between current energy transition commitments and the required investment levels. Electricity and end-use sectors account for 90% of that shortfall. (See Exhibit 1.) With companies in the industry poised to drive 80% of planned energy transition investments through 2030, their strategies and execution plans are paramount.

However, their journey is riddled with hurdles. In the present climate, higher inflation, persistent supply chain pressures, and rising capital costs cause significant bottlenecks, slowing the pace of the energy transition. The setting is also reshaping investor behavior; companies face more demanding calls for higher returns, more disciplined capital management, and more efficient resource allocation, even within the high-growth renewables space.

The energy sector’s response has been proactive. A flurry of transaction activities signals a strategic push to fine-tune capital frameworks for the energy transition; so far in 2023, total energy sector deals exceed $320 billion. Oil and gas companies have emerged as dominant buyers, while utilities are using carve-outs to raise funds and recalibrate. As capital markets evolve, only projects that strike the right balance between risk and returns will receive sufficient funding. Regions where stakeholders effectively align policy directives and market mechanisms will be the prime recipients of future investments.

To flourish in the face of growing capital demands, energy companies must reassess portfolios, create innovative capital strategies and new partnerships, optimize their financial structures, and emphasize stringent cost and supply chain efficiencies. This report highlights the sector’s crucial capital allocation dynamics and the implications for competitive success in the energy transition.

Follow the Capital: Tracking the Investment Landscape of the Energy Transition

BCG’s Center for Energy Impact recently analyzed the investment plans of the world’s leading energy companies, governments, and private equity players, to compare real-world energy transition investments with net-zero scenario benchmarks.

The study reveals two major trends. One is that energy companies and governments aim to inject an impressive $19 trillion into the energy transition over the next seven years. This includes nearly $2 trillion in new government spending, spurred by US and European legislative initiatives. Company targets suggest a 15% increase in energy expenditures between 2023 and 2027, with an increasing share allocated to low-carbon investments. (See Exhibit 2.)

Yet the shadows of the war in Ukraine loom large. The repercussions of the conflict, marked by skyrocketing commodity prices in 2022 and 2023, have tightened capital availability, particularly for European utilities—the linchpins of European decarbonization efforts. These financial headwinds, coupled with higher inflation and capital costs, have curbed enthusiasm for new investments.

The Pivotal Role of Policymakers in Accelerating Transition Investment

There is an urgent need for global policymakers to address existing challenges and ensure a fair and efficient shift to low-carbon energy. Energy transition investments are most effective in regions where market structures and policy guidelines align to produce favorable risk-to-reward profiles for capital.

BCG’s Blueprint for the Energy Transition outlines six essential steps for public sector leaders to bridge the investment gap and support the flow of capital into transition projects. These steps include electricity market modifications to produce adequate pricing signals for new investments; faster approval processes for projects, particularly grid expansions; enlarged green investment subsidies through incentives and research grants; and revised liability guidelines to enhance investor confidence.

Strategic Imperatives: Shaping the Energy Transition Through Corporate Action

The energy sector stands out for its intense capital demands, marked by a capital intensity rate that is more than double that of other industries. Accounting for approximately one-third of the world’s yearly capex, it encompasses diverse peer groups, segments, and stakeholder interests. Yet organizations throughout the sector share a mission to amplify investments, satisfy shareholders, and navigate toward net zero outcomes.

To accelerate the energy transition, every company in this sector should treat six actions as mandatory:

  • Refine capital allocation. Evaluate and enhance current allocation processes to weigh trade-offs between traditional investments and low-carbon alternatives, ensuring a comprehensive approach to decision making. Look for processes that need revamping. In particular, low-carbon investments are much more sensitive to cost-of-capital increases than traditional energy sector investments. Improved cost-of-capital assessments across global portfolios would paint a more detailed picture of favorable assets.
  • Focus on efficiency. Emphasize cost and capital efficiency in energy transition investments. Such an approach may entail completely transforming the way a company runs major capital projects and operations. For example, companies are evaluating the factory model that has successfully reduced costs in the US shale sector for use in large-scale renewables and other low-carbon settings.
  • Explore strategic M&A and divestitures. Mergers and acquisitions may work for some companies, while others may benefit from divestments that enable them to concentrate their resources more effectively.
  • Forge new partnerships. Explore alternative deal structures such as minority shareholdings, joint ventures, strategic partnerships, and corporate venturing. These structures can be complex, but they offer strategic flexibility that is essential for navigating capital constraints in certain areas of the energy sector. They also promote specific collaborations to advance decarbonization efforts.
  • Strengthen the balance sheet. A volatile market forces companies to adopt robust financial strategies. The disparity in valuations between US oil and gas majors and their European counterparts highlights the importance of financial resilience, as does the surge in total shareholder returns by more debt-averse utilities in 2023.
  • Stress-test the supply chain. It is crucial to rigorously evaluate supply chains for cost efficiency, carbon intensity, and resilience. Reevaluating supplier relationships and identifying dependencies can cut costs and minimize risks.

 

The energy transition’s immense capital demands underscore the need for companies and policymakers to adopt robust and innovative approaches. As the world advances toward its net zero goal, harmonizing investment strategies with collaborative solutions is paramount. Although the energy sector is already making strides, consistent policy support and forward-thinking financial maneuvers are crucial to bridging the existing gaps and ensuring an ordered, equitable, and sustainable shift to a greener future.

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