World leaders, apart from Anthony Albanese, Xi Jinping and Vladimir Putin, are gathering in the Egyptian Red Sea resort of Sharm El-Sheikh for the 27th conference of parties (COP27) to deal with climate change.

COP1 was held in Berlin in 1995, three years after the United Nations Framework Convention on Climate Change was first established, and it was agreed then that “the parties should protect the climate system for the benefit of present and future generations of humankind”.

Since then, global carbon emissions have risen 61 per cent, increasing every year apart from during recessions and the pandemic, and after each of those inadvertent reductions, emissions from the burning of fossil fuels bounced back and continued marching upwards.

So COP that – 30 years of fine words have achieved nothing.
But, hey – this year will be the one for sure!

It’s not as if anyone can still plead ignorance or even scepticism about the impact of global warming: Just since COP26 in Glasgow a year ago, parts of China, Iran and the United States have endured their most intense ever heatwaves, temperatures in the UK went above 40 degrees for the first time, Pakistan was hit by floods that killed thousands and made 30 million homeless, millions are starving in the east African drought, record rainfall in South Africa killed thousands and, of course, eastern Australia has had virtually continuous floods for 12 months.

Leaders on COP’s naughty step

In the lead up to this week’s COP27, Egyptian President Abdel Fattah El-Sisi declared that he would “spare no effort to ensure that COP27 becomes the moment when the world moved from negotiation to implementation and where words were translated to actions”. Yeah right.

COP27 will be dominated by the growing need of virtually blameless poor nations for help to cope with the impacts of climate change. Photo: Getty

Australia will be represented by Chris Bowen, Minister for Climate Change and Energy. He goes to the Red Sea armed with his government’s election commitment of a 43 per cent reduction in emissions by 2030, which he and everybody else knows is not enough to prevent catastrophe, if even that is achieved.

But he won’t be alone on the Sharm el-Sheik naughty step.
The leaders of plenty of other countries haven’t promised enough, and those who have aren’t implementing their promises, as implied by President El-Sisi.

But his entreaty for the world to stop negotiating and start implementing is both pertinent and difficult, especially for Australia, whose economy, and Labor’s budget, rests on the mining and exporting of fossil fuels.

As Vaclav Smil explains in his seminal book, Energy and Civilisation, the much greater energy density of oil, coal and gas versus biomass fuels (peat, wood, whale oil) has been responsible for the explosion in GDP per capita after 1800, and still underpins growth in GDP.

He wrote: “… every economic activity is fundamentally nothing but a conversion of one kind of energy to another, and monies are just a convenient … proxy for valuing the energy flows.”

Smil points out that even though the energy intensity of economic growth has been declining – that is, each dollar of GDP requires less energy – “the size of the world economy, and the continuing population growth in Asia and Africa, (will mean that) … large quantities of fuels and large additions of electricity-generating capacities will be required to energise economic growth in modernising counties”.

The conundrum of renewables and growth

The truth is that while Chris Bowen talks about Australia becoming a “renewable energy superpower”, the energy available from wind and solar is not yet enough to energise economic growth, as Vaclav Smil puts it. It will be eventually, but not yet, simply because of the sunk cost of the world’s fossil fuel burning factories.

Chris Bowen faces an economic conundrum when it comes to renewable energy. Photo: AAP

That means accepting either less growth while we switch, or a long tail of fossil fuel burning, especially by modernising countries, well beyond the time needed to keep global warming to 1.5 degrees.

The urgently required alternative is a massive and expensive global acceleration of spending on renewable energy and decarbonisation technology at a time when government debt has been bloated by the panicked over-reaction to the pandemic.

With governments mired in debt, the call has gone out for business to step up and take the lead, but businesses and their lobbyists are much better at talking about net zero than doing it.

This tendency is on display in Australia at the moment with something else: The debate about multi-employer wage bargaining, which was another election pledge from the Labor Party.

Business groups have been solemnly saying they are in favour of higher wages, but as Katherine Murphy put it nicely in The Guardian, “business groups seem to think it’s OK to entertain a theoretical discussion about the desirability of lifting wages as long as nobody attempts to do anything structural to deliver that outcome”. Like allowing strikes, for example.

She went on to speculate that this might be a curtain raiser for the Albanese government’s next “thought crime” – requiring industrial polluters to reduce their emissions in line with the government’s pre-election commitment to overhaul the safeguard mechanism.

The safeguard mechanism, as designed by Chris Bowen’s predecessor, Greg Hunt, is a tourniquet that Tony Abbott kept loose.

Labor’s election commitment is to tighten it each year until, in 2030, the blood (carbon) flowing through business veins is 43 per cent less than it was in 2005 and then, in 28 years from now, is entirely cut off (or rather has the same amount of “blood” flowing backwards as forwards – so “net zero”).

Which means Labor’s first term, and probably its second as well, will be characterised by wrestling with business over wages and climate – that is, hammering the nation’s capitalists into putting their talk into costly action.

That will be repeated around the world, as global businesses that have net-zero commitments virtuously displayed on their websites are asked to actually do it at a cost to their profits, and they politely decline.

An exception might be the United States, because President Biden’s “Inflation Reduction Act” commits a colossal $US369 billion towards subsidising renewable energy out of a budget that’s already $US1400 billion in deficit.

Someone has to pay, or rather we have to pay – either through taxes or prices.

Alan Kohler writes twice a week for The New Daily. He is also founder of Eureka Report and finance presenter on ABC news