Carbon Technology Captures Billions in Funds

Carbon removal technology is capturing more than just greenhouse gases. It’s also sucking up billions of investor dollars.

The following is an excerpt from GreenBiz Group’s 16th annual State of Green Business, which explores sustainable business trends to watch in 2023. Download the report here.

After debuting 50 years ago, carbon tech — technologies that capture, store and use emitted carbon; reduce emissions from other sectors; or monitor physical assets containing stored carbon — was long considered too expensive and inefficient to be a viable climate solution. But the skyrocketing number of venture capital (VC) deals in 2022 (plus the sobering reality that eight years remain to halve global emissions in line with the Paris Agreement) awakened carbon tech funding from its slumber. Now it’s the tech sector to watch.

Carbon tech raised $10.7 billion in VC investments across 517 deals in the first three quarters of the year, according to Pitchbook’s 2022 Carbon & Emissions Tech Report, including standout deals such as Climeworks $634.4 million Series F funding, Carbon Clean’s $150 million Series C funding and Twelve’s $130 million Series B funding. (Compare that to $3.2 billion for all of 2019.) This growth is due to a few factors, such as the passage of new federal laws, the promise of carbon-intensive industries to invest in mitigation tech such as point source carbon capture, and the expanding potential of the up-and- coming carbon market.

Experts from Breakthrough Energy Ventures, Pitchbook and the Carbon Business Council all informed GreenBiz that the passage of the Inflation Reduction Act in the United States will encourage investors to increase spending on carbon capture ventures and will undoubtedly catalyze future boosts in funding. But “the real impetus for the explosion in carbon tech is the 45Q increased amendments,” explained Jack Andreasen, manager of carbon management policy at Breakthrough Energy Ventures.

The U.S. federal 45Q tax credit originally allotted carbon tech companies $50 per ton of carbon captured and stored, but the initial incentive, according to Andreasen, was too low to create sustainable revenue streams. The 2022 amendment from the IRA boosts those returns to as much as $180 per ton while lowering the project eligibility threshold, unlocking a financially lucrative market for more companies.

Large oil and gas producers, including Occidental Petroleum and Talos Energy, are also financially committing to the long-term economic potential of carbon tech. ExxonMobil recently signed a $2.5 billion agreement with Indonesia’s state-owned energy company to develop a carbon capture sequestration hub in the country, supporting its national 2060 net-zero goals.

But fossil fuel investment in carbon tech is not without controversy. The practice provides the option to purchase carbon offsets in place of reducing actual emissions and extends the life of fossil fuels, creating a dilemma akin to a double-edged sword. Large fossil fuel producers use their wealth to invest in much-needed carbon tech R&D, thereby contributing to further technological innovation that can be used across industries.

And those same oil and gas companies then subsequently use the technology they funded to extend the long-term viability of fossil fuels, all while seemingly espousing commitments to climate mitigation. Additionally, captured carbon is pressurized and injected into the earth to flush out crude oil, another reason oil companies will likely continue investing in carbon tech for the foreseeable future.

This duplicitous trend from fossil fuel companies is likely to continue so long as the demand remains, aided by oil and gas companies’ use of greenwashing practices and industry lobbying. Emissions-heavy industries, including steel and cement production, will also continue to require external inputs to decarbonize their supply chains in lieu of less carbon-intensive practices.

Even so, carbon capture remains a key technology that can bridge the transition between fossil fuels and renewable energy. Thus, carbon tech in 2023 will remain a vital and lucrative sector in which to invest.

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My Epiphanies at a Climate Innovation Breakfast

As the internet industry implodes, a session helped me realize that a newly-forming climate industry will replace it. Climate tech and climate-conscious companies will become the leading force in business and markets, a new force for wealth-creation.

I had a series of epiphanies at a breakfast session on “The Climate Innovation Opportunity” I moderated the other day at our Techonomy 2022 conference in Sonoma. Around the table in front of plates of eggs and toast were more than a few of the country’s leading thinkers about climate tech, climate investing, and climate action. Listening to them was powerful.

At that very moment, the internet industry, which I have been obsessively covering since its infancy, was more or less imploding. Meta and Amazon were each laying off more than 10,000 employees; Meta’s stock was down 75% in a year; an activist investor was, for the first time ever, demanding Alphabet/Google cut costs; and Elon Musk appeared to be willfully dismantling Twitter. I brought to the breakfast a conviction that a financial era was ending. While the net giants would all remain major profitable companies, no longer would they lead the world’s financial markets upwards, as they had for over a decade, creating the world’s first trillion-dollar companies in the process.

So as I sat there waiting for the breakfast to begin, I was ready for more than a discussion. I was ready to learn what would constitute the next era for business. Of course I didn’t realize it. That’s not what I thought the session was going to be about. But it was.

A few conclusions I came to from the discussion that morning:

  • Global heating will become more pronounced and more obvious with every passing day from now on. And society’s primary task in coming years will be to adapt and respond to it.
  • The next giant value-creation opportunity for business, investors, and the general public will be climate tech and climate action. The companies that invent the tools to take us to a carbon-free era, and those that remake their current businesses to thrive in an era of sustainability–will be where the money will be made in coming decades.
  • It is irrational to deny this inevitability. This has to be true. Otherwise we are finished, as a thriving global human society.
  • Business, not government, will lead the way to a carbon-free future. Unlike government, business and financial markets can evolve quickly and absorb innovation as it occurs.
  • A climate industry is on the horizon. It will be just as clear-cut as today’s internet industry.
  • The only way to defeat climate denial is with profit and wealth creation. You can’t deny a dollar. And the dollars will come to those who invest in climate solutions. The denialists, whether companies or individuals, will lose, and it will, soon enough, hurt them.
  • Climate capital can build the next economic era. If we do have a recession in the next year or so, climate investment and action will bring us out of it.
  • Markets will be driven in coming years by the companies that invent and deploy technologies and systems to combat global heating. The investors who get on board with those companies will be the ones who get the richest, just as was the case with early investors in Amazon, Apple, Facebook, Google, and Microsoft.
  • Systems thinking will be essential to lead us to the most powerful climate solutions, and while nobody is very good at it, business will do better than government.

None of this means net companies won’t profit, or that tech will not be the central tool that gets us to the verdant valley of climate success. After all, we live in a digital society now, and it will be digital tools that take us into this potentially-glorious future of climate consciousness.

In fact, the companies that now lead in the cloud-computing era will likely thrive as a more monitored and managed world emerges. We can’t improve what we can’t measure, and data–stored, analyzed, and deployed–will be what drives us into the new era. Artificial intelligence will help climate action, climate business, and climate profit.

But it is a new era, just when we needed one. The old era, when investors thought Facebook would forever go to the moon is over.

Coda:

The day before the breakfast, two conference plenary sessions had helped me arrive at my epiphanies:

  • Mike Schroepfer, longtime CTO of Facebook and Meta and now marshaling his wealth as a determined climate investor through his firm Additional Ventures, spoke with me on stage about his conviction that now, for the first time, software and other advances make it possible to “hyperscale” physical infrastructure for climate. We will, he says, be able to create the systems for an energy-efficient economy much faster than most have realized.
  • And immediately after Schroepfer, we heard from Paul Hohenberger of TerraPraxis. Here was a proof point for Schroepfer’s thesis (and evidence of the radical potential for growth in a carbon-conscious age). TerraPraxis is a nonprofit that develops and deploys systems–based on sophisticated software and data–to enable coal plants to quickly transition away from coal to newer more efficient heat and energy-production sources. Next generation nuclear is expected to be the primary method, but geothermal and other options can also be incorporated. The point is to have processes in place that factor in all the various systems entailed in a coal plants and its connection to the existing grid, so that a templated approach can be applied quickly to thousands of plants over a very short period. Microsoft is a huge backer of TerraPraxis.

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Metaverse Hype Befuddles Everyone–Even Techonomists

Ask 10 people to define the metaverse and you’ll get 15 different answers. The recent conference served to highlight the metaversal concerns of digital sophisticates.

The word “metaverse” is one of three in the running to be crowned Oxford Word of the Year in a competition run by the Oxford University Press —publisher of the OED. But taking the temperature of the current metaverse landscape reveals a severe case of too much talk and not much traction.

Techonomy community members, smarter than your average bears, of course, and typically known for embracing new innovations, gave the metaverse and its pundits a solid thrashing at the recent Techonomy 2022. At a well attended breakfast roundtable that I moderated, the metaverse may not have been summarily rejected by the crowd, but there was a lot of curmudgeonly skepticism. And more than plenty confusion about exactly how the metaverse might work.

Fair enough: there is no shortage of good reasons for doubt. Techonomy’s conference-goers generally scoffed that anyone would willingly choose to look at the world through isolating, cumbersome and expensive VR headsets. There was even more skepticism about dressing up as an avatar to head off to a digital fantasyland, often as a leg-less body or torso-less head. E-commerce in the metaverse was relegated by some to a “gamer thing.”

There were also strong calls for governance and a general lack of buy-in surrounding how a decentralized metaverse might work. “Wandering around lost in empty spaces” was a recurring sentiment. Smart contracts, NFTs and the prospect of interoperability that could power the metaverse were widely regarded as just more tech-speak goobledygook. Metaverse pundits were criticized for adding to the confusion with wild predictions and unintelligible metaverse-speak.

Meta, the company that aimed to reconstruct its image as epicenter of the metaverse, hasn’t exactly created clearer definition. Its version revolves around donning virtual reality goggles, which makes it complicit in spreading misunderstanding.

The more likely real future, I believe, is that today’s popular Metaverse-ish destinations like Roblox, Fortnite, Decentraland and Sandbox will triumph. And none of them require special hardware. Later that morning, on the main stage, Activate co-founder and media consultant par excellence Michael Wolf showed data from all the major platforms, underscoring the point that the metaverse will likely be cross-platform. Media consumption across all platforms is up, but the ones most poised to move fluidly to the metaverse are the ones with the most checkboxes in the image from his slides below. Those companies are meeting gamers where they are.

Despite periodic efforts to create in-world high-brow destinations for fashion, art and consumer brands, most metaverses today are built mainly to groom young gamers for a metaverse still to come. The 10-to-13 year olds in my family seem mostly to play the same kind of basic mind-numbing games as have generations before. But they do so collaboratively, in the cloud, using avatars. That’s a step towards the metaverse but not all the way there.

They frequent places like Arsenal, a team shoot-‘em-up based on blocky Roblox characters, or Brookhaven, a role-playing Roblox game. I showed them corporate destinations like WalmartLand and Forever21 Shop City, shopping games created to attract a new generation. But they were underwhelmed. They did, however, like Busy Business on Roblox, where you build your own business in a simulated world.  Classic gaming patterns never seem to get old. They just find new media.

Conference speaker John Riccitiello, CEO of Unity, the software company that provides the platform and tools most content creators use to bring metaverse worlds to life, acknowledged at breakfast that he sees a disillusionment with VR. But he believes the next two years will see both price drops in hardware as well as increasingly mature software. The experience is the thing, he says:  “The metaverse isn’t different than any other platform we’ve experienced.  People want something to do when they get there.”

Virtual reality glasses will have an important place at least in the enterprise, no question. Metaverse ways are emerging to build prototypes of products and buildings, and for playing what-if with everything from city planning to medical treatments. Another real practical business trend is so-called “digital twins” that recreate reality in the metaverse for planning and monitoring systems. As for the coming consumer experience, Riccitiello is bullish on play in immersive environments – he expects a natural evolution of early games and experiences like Sims or Second Life will emerge.

Later at the Summit, Michael Wolf of Activate presented extensive data about entertainment and tech trends–who’s watching what, how much time they spend, and on what devices. Towards the end, almost as a non-sequitur, he displayed an instructive diagram–a kind of map of the metaverse (see below). Web3 technologies provide the structural underpinning; the metaverse is the experiential layer in his proposed construct. “The metaverse will be the user interface for Web3, similar to the role the browser played to the internet,” is the headline for Wolf’s slide.

The metaverse backlash is real.  Meta has lost almost three-quarters of its market valuation since announcing it was planting its flag in the the metaverse.  Stories of empty metaverse wastelands and the plummeting value of NFTs only add fuel to the fire.  Still, advertisers are flocking to this inchoate set of systems already, and worlds with concerts, sports, arts and many sorts of entertainment are being invented.

Dr. Louis Rosenberg, one my oft-quoted metaverse true believers, says the metaverse is “inevitable.”  In this VentureBeat article he nails what ailed us in our discussion at Techonomy. “The general public, he says, “is still confused about what ‘the metaverse’ is and how it will benefit society. You’d think this would be clear by now, but even simple definitions of the metaverse are hard to come by.”

Rosenberg blames Web3 influencers for describing the metaverse in terms of blockchains, cryptocurrencies and NFTs. While these are profoundly useful technologies, he says, they are no more relevant to the metaverse than things we’re already using like 5G, GPS or GPUs:   “We get mired in the infrastructure and the ignominy of where we’re at today, ignoring the big picture a 3D immersive experience promises.”

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Ask 10 people to define the metaverse and you’ll get 15 different answers. The recent conference served to highlight the metaversal concerns of digital sophisticates.

My Epiphanies at a Climate Innovation Breakfast

Ask 10 people to define the metaverse and you’ll get 15 different answers. The recent conference served to highlight the metaversal concerns of digital sophisticates.

Metaverse Hype Befuddles Everyone–Even Techonomists

Ask 10 people to define the metaverse and you’ll get 15 different answers. The recent conference served to highlight the metaversal concerns of digital sophisticates.

Climate Tech, Compassion, and the Innovation Crucible: Highlights of TE22

Ask 10 people to define the metaverse and you’ll get 15 different answers. The recent conference served to highlight the metaversal concerns of digital sophisticates.

Climate Tech, Compassion, and the Innovation Crucible: Highlights of TE22

Our recent three-day excursion into the future of innovation at TE22 brought together concerns about democracy, a semi-obsession with global warming, confusion about the metaverse, and predictions of an AI/robotic society. But we found general optimism that yes, there would be tools for all these challenges.

Maria Ressa told us freedom is at stake.

“Online harms turn into real world harms,” said 2021 Nobel Peace Prize laureate Maria Ressa. ”The weaponization of the legal system, or as my lawyers call it ‘lawfare’, is something…I hope doesn’t come to America. But the polarization of politics, the addiction to the technology, all of these things we share around the world.”

Ressa was scheduled to be our opening speaker at the recent Techonomy 2022 conference in Sonoma, California.  But she had to withdraw to attend to urgent filing of a final legal appeal to the Supreme Court of the Philippines in Manila. Ressa, journalist, activist, and thorn in the side of vindictive dictator Rodrigo Duterte, has been on trial on multiple spurious charges. She faces prison time of up to seven years in just this case, even as she also faces numerous other charges in separate cases.

Ressa sent a special video message to the conference, whose theme was “Innovation Must Save the World,”  expressing her grave concerns about the impacts of technology on our emotions, brains, and society. She also said this case will “basically determine whether I still have my freedom.”

Everything is interconnected.

The legendary Dr. Larry Brilliant (who gifted me a primo mask backstage, btw) is uniquely qualified to discuss how public health, the economy, geopolitics, the climate, and indeed everything, are profoundly interconnected. His overarching message: problems of all kinds must be addressed wholistically, cooperatively, and compassionately. Among his many accomplishments Brilliant, alongside a valiant corps of public health workers, decades ago helped lead the fight to eradicate smallpox, as an employee of the World Health Organization.

Brilliant joined David Kirkpatrick on stage at TE22 to discuss the connection between climate change and global health. He said the key thing to remember is that the fundamental causes of climate change are also antecedent causes of Covid–clear-cut rainforests, rising temperatures, changing seasons, famine, drought, and floods. “All of these things at the same time destroy animal habitat and put animals and human in each other’s habitats,” Brilliant said, “and that’s why we’ve gotten over the last ten years a cacophony of these viruses…SARS, MERS, Lyme disease, West Nile, Ebola, and now you have Covid…The major culprit is modernity. The most invasive species is us.”

(For a more detailed account of Brilliant’s inspiring appearance, read Meredith Salisbury’s report.)

Climate tech (like our precious planet) is hot, hot, hot.  

It’s not just wind farms and carbon capture anymore. Every company must become a climate company and every industry is ripe–overdue–for innovation. Among numerous speakers, Techonomy 2022 hosted leaders from biomanufacturing, solar power, sustainable aviation, next-generation nuclear power, electric vehicles, and climate investing. They all said climate tech is the future and is not a choice.

Mike Schroepfer is all in on climate. As the former longtime chief technology officer of Meta, he learned a thing or two about how to scale technology and organizations. (His direct reports at Facebook, now Meta, grew from 150 to 35,000 during his time there.) Now he is applying that knowledge to his new passion:  hyperscaling climate technology.  “If we’re going to solve these problems, we need to build lots of stuff. We’re going to need a lot more solar, wind, batteries…we’re going to need to decarbonize everything, electrify everything. And that’s going to require a lot of scale up…and we’re going to have to do it really quickly.” He believes that “hyperscaling,” heretofore applied by advocates like entrepreneur and investor Reid Hoffman to software businesses, can apply to hardware systems as well. We face the need for a build-out of sustainable infrastructure that is of unprecedented urgency.

The Environmental Defense Fund’s Kristin Tracz shared her optimism about the historic climate funding in the recently-passed U.S. Inflation Reduction Act. That and other recent “Biden bills” are expected to yield major innovations in the fight against climate change. Separately, IDA Ireland’s Maeve Cowley and Dr. Lorraine Byrne of Trinity College’s Advanced Materials and BioEngineering Research center said on stage that enlightened regulation, urgent R&D, and public/private collaborations have led to a thriving sustainable innovation ecosystem in Ireland and in Europe more broadly.

The metaverse is still up for debate. 

What is it? What does it look like? What should we call it? What are the use cases for individuals, businesses, and governments? If a “tree” falls in a “forest,” does it make a sound? Will we ever have legs?

Even more than for most nascent but promising technologies, there is excessive confusion and debate about the metaverse. But everyone agrees it will be–for better and/or worse–transformative and consequential.

The debate grew “spicy” at a Techonomy breakfast roundtable on the metaverse hosted by veteran tech journalist Robin Raskin. Unity CEO John Riccitiello said avatars are overhyped and often irrelevant. And Games for Change President Susanna Pollack pointed to the potential for learning and peace.

In response to a question in his main stage interview about the criticism Meta has faced for spending billions on cutesy avatars, Mike Schroepfer said: “All of that money is going towards long term R&D for the actual technological enablers for things I’ve seen in the lab, which is not a cartoon avatar, but someone that looks like a real, 3D person who’s talking to me in real time, who happens to be across the country…And you literally have this experience of ‘Oh my gosh. This is the closest thing I’ve ever had to being here in person without having to travel to see you.’”

(For a detailed account of the debates over the metaverse that prevailed at the conference, see Robin Raskin’s just-published report.)

To make progress in the world, we must also make progress within ourselves.

At the conference’s opening plenary, Esther Dyson, Vivienne Ming, and John Hagel tackled the ticklish topic of how to harness human nature to accelerate innovation. Silicon Valley icon Esther Dyson, who now focuses with her Wellville project on community-based health solutions, says the tech industry itself suffers from addiction. She argues that tech and venture capital’s addiction to big exits and big profits is fostering a culture of short term thinking and a dearth of socially-minded leadership. Author John Hagel says at the core, fear is what holds people back, but that we can learn to tame it and use fear as a tool. Neuroscientist Vivienne Ming’s research counterintuitively found that access to unlimited information, which we all have these days at the tips of our fingers, is sapping creativity and slowing innovation. Her antidote: we must go deeper and keep searching for novel answers. And even when we succumb to things like scrolling Instagram, our welfare and creativity depends on making sure we also ensure we periodically sit back and think deeply.

In a different session that took a similar theme, Autodesk CEO Andrew Anagnost made the case for what he called “innovation without ego.” Too often, posited Anagnost, tech industry CEOs focus more on notoriety and wealth creation than societal stewardship. This leaves leaders always searching, often in vain, for the elusive next big thing. Executives must put stakeholders and long-term vision first, he said.

Keep an eye on advancements in AI and robotics.

Ken Washington, former CTO of Ford and now Amazon’s VP of software engineering, spoke with Worth Magazine’s Dan Costa about how robots can evolve to improve the world. Amazon’s new home robot Astro, for example, is one adorable first step into the coming age of robotics. Amazon envisions home robots that improve safety and security, help people stay connected and eventually assist them with aging in place. And perhaps keep things tidy?

Tekedra Mawakana, CEO of Alphabet’s self-driving car division Waymo, explained the complex challenges her company faces of perfecting driverless vehicles. When lives are at stake, she says, progress must be well-researched and deliberate. But Waymo’s progress is coming along nicely. The company is currently expanding into some neighborhoods in Los Angeles.

Serial entrepreneur Dan Neely and  Nina Schick, author of Deep Fakes: The Coming Infocalypse, discussed the promises and dangers of generative AI, which creates surprisingly-compelling and convincing images, video, and audio in response to spoken or written prompts. With the public now able to whip up AI-generated images at will and whim, Neely launched a new company, Vermilio, at the conference. It aims to help solve challenges of IP ownership and image authenticity posed by the generative AI revolution.

These conversations shouldn’t stop here. Our world is at a critical juncture and all businesses across all industries must innovate to drive climate solutions, health, and equity for all. Join us this spring in Silicon Valley for the second annual Techonomy Climate conference, where we will dive even deeper into the tech we need to save our planet.

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EU Proposes Immediate Loss and Damage Fund, Emissions Peak Before 2025

A dramatic new offer from the plenary floor at COP 27, in which rich countries would immediately set up a loss and damage fund in exchange for a pledge to peak greenhouse gas emissions before 2025 and phase down oil and gas as well as coal, may have changed the tone and salvaged the outcome of climate negotiations that seemed hopelessly deadlocked just hours before.

A dramatic new offer from the plenary floor at COP 27, in which rich countries would immediately set up a loss and damage fund in exchange for a pledge to peak greenhouse gas emissions before 2025 and phase down oil and gas as well as coal, may have changed the tone and salvaged the outcome of climate negotiations that seemed hopelessly deadlocked just hours before.

The proposal from European Union Vice-President Frans Timmermans, literally an eleventh-hour pitch delivered Thursday at 11 PM local time, “came after days of sluggish talks in Sharm El-Sheikh, bogged down by fights over how to compensate developing countries bearing the brunt of climate change through flooding, droughts, and other disasters,” Bloomberg News reports.

“The European Union offer would include a commitment to immediately establish a new loss and damage response fund with details worked out over the next year as well as a commitment to examine debt and reform the mulitlateral development banks,” the news agency writes. “There also would be a pledge to ensure all financial flows are aligned with the Paris Agreement commitment to keep global warming to 1.5°C.”

In return, “countries would vow to peak global emissions before 2025 and phase down all fossil fuels—not just coal, which was spelled out in the Glasgow climate pact last year. That would come with some accountability, in the form of an annual report on progress toward implementing the phase down of unabated coal power.”

The idea “went down well with vulnerable countries and most other rich nations,” says Climate Home News. “China and Gulf states pushed back, while the U.S. kept quiet.”

But the deal isn’t nearly done, at least not yet. Early Friday local time, when the Egyptian Presidency finally brought forward a first attempt at an official conference declaration, or decision text, the draft “fell short of beefing up language on a phasedown of fossil fuels—a key condition for the EU and an indication that Timmermans’ offer may not yield the breakthrough he sought,” Bloomberg writes. The text did include a first reference to the “unprecedented” global energy crisis triggered by Russia’s invasion of Ukraine.

The drama was just one part of a complex, interwoven process that looks certain to go on through the weekend, well past the scheduled close of the conference later today. It wasn’t yet clear whether the EU’s intervention would fundamentally shift the direction of the negotiations or heal the deep frustration and disappointment percolating out of news reports from Sharm el-Sheikh.

As recently as Thursday, Egypt stood accused of letting crucial negotiations at COP 27 fall into dystopian disarray.

“Diplomats from rich and poor countries, observers from non-profits, and activists meeting in Egypt for the UN-sponsored climate talks are finding themselves in the unusual position of agreeing on something: This is chaos,” Bloomberg reported. “There is collective exasperation among attendees at the COP 27 summit over the status of talks.”

“With time running out for countries to agree on a road map for tackling climate change,” the Washington Post wrote, “rich and poor nations continued to disagree on an array of issues, including compensation for harms caused by a warming world.”

The blame is falling squarely on the Egyptian COP Presidency for “failing to anticipate and address some of the thorniest issues facing negotiators” and taking a “haphazard approach to organizing the high-stakes negotiations,” the Post added in a separate dispatch, citing a half-dozen interviews with veteran negotiators or observers at the annual conference.

No Text to Negotiate

For days, there has been talk and speculation about the COP 27 “cover decision”, the summary document that captures the major points of agreement among delegates representing 195 countries and multiple negotiating blocs. Against the urgency and front-line impacts of the climate crisis, negotiations at a UN summit come down to this—any progress takes the form of legalistic text to be negotiated, then finalized, with every bit of syntax and punctuation subject to scrutiny and debate in a process where all decisions must be made by consensus.

Those discussions take time, and usually begin earlier in the conference. This year, delegates woke Thursday morning to a 20-page draft, described by some as disorganized and disjointed, containing “the political statement outlining the goals and commitments that all climate negotiating parties are supposed to agree upon,” Bloomberg writes. “The presidency’s document confused delegations and was mistaken as a draft of the final declaration until Egyptian officials clarified it was just a collection of ideas.” It “came out late in the process, lacked key demands by some countries, and included statements that outraged others,” the news agency adds, citing interviews with several delegates and observers.

Bloomberg News says the draft “was slammed by developing nations seeking more ambition from the closing text, setting up a showdown at the two-week summit.” The news story has a rundown of the contents of the draft cover decision and the early critiques.

Carbon Brief Deputy Editor Simon Evans was out shortly after the document landed with a Twitter thread that summarized the contents, noting that key substantive issues like tougher emission reduction targets, climate adaptation, loss and damage, and many others remained unresolved.

With less than 48 hours remaining before the conference was due to end, “this is not a text that has been discussed by countries but elements reflecting what Egypt has gathered from consultations with countries. Formal negotiations on the text are yet to start,” Climate Home News writes. “If Egypt wants to secure a successful outcome, it urgently needs to bring the discussion into negotiating rooms.”

“It doesn’t feel like one single coherent vision pushed by the presidency but more a text that weaves together lots of ideas they’ve heard—many will get shot down from various groups,” said Tom Evans, a climate policy advisor at the E3G climate think tank. “There’s lots in there that all sides will dislike.”

The delayed release of such a preliminary text means that “this will be quite a long and difficult journey—I’m not sure where these talks will land,” European Commission First Vice President Frans Timmermans told media yesterday. Yet “if this COP fails we all lose, we have absolutely no time to lose.”

“These last two days are to take decisions,” said Manuel Pulgar-Vidal, the former Peruvian environment minister of Peru who led the COP 20 climate talks in Lima. “This COP has to deliver and we are not seeing that yet.”

“There should be a clear road map by those who are emitting a lot to start reducing their emissions,” said Zambian environment minister Collins Nzovu. “We are headed completely in the wrong direction—driving very, very fast into a ditch.”

COP President and Egyptian Foreign Affairs Minister Sameh Shoukry was quick to declare that the 20-page document was just a draft, not a final destination.

“Whatever circulation you might have seen is still a work in progress and I don’t think one should jump to any conclusions,” he said. “We are still in a phase of deliberations to see how best to provide a cover decision that responds to the interests of parties and doesn’t provide any form of backtracking or relinquishing of any previous commitments.”

No Language on Fossil Fuel Phasedown

One notable omission from the Thursday draft of the cover decision was India’s proposal that the COP endorse a phasedown of all fossil fuels. That followed language at last year’s COP 26 summit in Glasgow that called for a phasedown (but not a phaseout) of coal. Some discussions over the last week have cast a wider approach as a matter of international equity, since coal is the primary fossil fuel on which developing countries rely while richer nations are more dependent on oil and gas.

At first, there was concern that India’s intervention was meant to trigger objections from major oil and gas producers like Saudi Arabia and Russia, in response to which India could then try to water down the previous agreement to phase down coal. But that risk seemed to dissipate after Indian Prime Minister Narendra Modi endorsed the coal phasedown during the G20 leaders’ summit in Bali, Indonesia.

“My fear on that is a lot less” after the G20 reaffirmed its commitment to the coal phasedown and Modi agreed, said Alden Meyer, an E3G senior associate who’s attended all but one of the 27 COPs. That in itself wouldn’t stop Russia and Saudi Arabia from trying to block language on oil and gas. But “my view of that is, let’s build support for it, get it into the decision, and then let them explain why they think coal should be phased down but not oil and gas, in the view of the whole world in the closing plenary of the COP,” Meyer told a media briefing earlier this week.

In the end, India’s proposal received support from the European Union and the United Kingdom, and the United States said it would back the plan as long as it specified “unabated” oil and gas, leaving the door open for questionable carbon capture and storage technologies. But it wasn’t in the Thursday discussion document, nor did it show up in the draft cover decision. On Thursday, the Canadian government said it wouldn’t support including an oil and gas phaseout in the cover text, Environmental Defence Canada reported.

“Acknowledging only the need to phase down coal while ignoring oil and gas is hugely problematic. This predatory delay is out of line with the science and with 1.5°,” Collin Rees, campaign manager at Oil Change International, told Bloomberg. “At a COP shaped by more than 600 fossil fuel lobbyists roaming the halls, parties fighting for progress must push back against weak language that allows the fossil fuel industry to continue its deadly expansion.”

Multiple Moves on Loss and Damage

As expected, COP 27 has seen a great deal of discussion and considerable controversy over the decades-old demand that rich countries provide funding (they vehemently resist characterizing it as compensation or liability) for the irreversible impacts of climate change. The core of the argument, and the historical reality, is that the world’s wealthiest economies are those that have benefited the most from the fossil fuel era and produced the lion’s share of the emissions, while the countries with the smallest historical carbon footprint are bearing the brunt of the climate emergency.

“Developed countries such as the United States have long resisted the idea of loss and damage” for fear of being held financially liable for the carbon dioxide they’ve pumped into the atmosphere for decades,” The Associated Press explains. But more recently, “there has been a softening of positions among some rich nations that now acknowledge some form of payment will be needed, just not what.”

At this year’s conference, much of the debate has been on whether to set up a loss and damage funding mechanism, or “facility”, immediately, or build up to a decision in 2024 while taking time to decide how the new structure will operate.

German Foreign Minister Annalena Baerbock told AP there might be no agreement on loss and damage at this year’s COP. But she acknowledged that “countries that are particularly affected, who themselves bear no blame for the CO2 emissions of industrial nations such as Germany, rightly expect protection against loss and damage from climate change.”

“We’re all willing to find some substantial steps forward, but we’re not there yet,” said the EU’s Timmermans.

That isn’t sitting well with the Alliance of Small Island States (AOSIS), whose members are among the most vulnerable in the world to climate impacts like sea level rise. “We have come too far to fail on loss and damage finance. Three-quarters of humanity is relying on a favourable outcome at COP 27,” said AOSIS Chair Molwyn Joseph of Antigua and Barbuda.

“AOSIS has worked tirelessly this year to build consensus, devise a clear loss and damage response fund proposal, and ensure the commitment of the international community to come to COP 27 and negotiate on this issue in good faith,” he added. But now, “some developed countries are furiously trying to stall progress….not only are they causing the worst impacts of the climate crisis, they are playing games with us in this multilateral process.”

That position drew support from Oxfam, with climate policy lead Nafkote Dabi declaring that “more than 40 million people in the Horn of Africa are currently experiencing climate-induced hunger crisis. Pakistan is faced with $30 billion worth of loss and damage from the recent mass floods that left a third of the country under water. It is crucial that developing countries can access a formal fund to pay for the damages and losses they are already suffering today.”

“A two-year delay to assess whether or not to create a dedicated loss and damage fund would be utterly unacceptable, given the urgency of the climate crisis, and the delays that lower-income countries have already had to endure in receiving funds to combat climate impacts,” agreed Dr. Jeni Miller, executive director of the 130-member Global Climate and Health Alliance.

No ‘Stylish’ Walkout

But Pakistani climate minister Sherry Rehman said she had no plans for a “stylish” walkout, whatever the outcome of COP 27 negotiations on loss and damage, even though her country places 147th out of 182 in an index of climate vulnerability and readiness and went through the devastating floods that helped set the stage for this year’s deliberations.

“We are not asking for reparations,” Rehman said, during a panel session at the Pakistan pavilion in Sharm el-Sheikh. “It sounds really good. It’ll get you into all the headlines. I’d be a real hero.”

But while some participants at the COP are looking for harder-line demands on loss and damage, she explained that calls for reparations wouldn’t be an effective way to “keep the country in the discussions, to be responsible players at COP, which let me remind you is one vote, one country. One veto, one country. We would be laughed out of the room as irresponsible activists.”

At the same time, “we really, really need to work with completely focusing our energies on producing something in this COP 27 something that is tangible,” Rehman’s colleague Nabeel Munir, the lead negotiator for the G77+China bloc, told Bloomberg. “Something that we can take home and tell our people that we’ve been able to achieve something.”

So far, some of the shifts on loss and damage at this COP have included about $300 million in new funding pledges for a variety of loss and damage initiatives, pressure on India and China to contribute to eventual funding program, and a proposal from Barbados Prime Minister Mia Mottley that would see the world’s biggest polluters compensate smaller countries for loss and damage. One concern about the funding announced so far is that the lion’s share is devoted to the Global Shield, an insurance-based program led by Germany and the V20 bloc of vulnerable countries that would be tailored to individual countries’ needs and pay out quickly, but would not be suitable for all forms of loss and damage.

“It’s all voluntary, small bits of money,” said Rachel Cleetus, climate and energy policy director at the Union of Concerned Scientists, adding that the approach leaves out the biggest climate impacts that are ultimately uninsurable. “When you’re talking about sea level rise gobbling up land, what are you insuring at that point?”

German officials acknowledged to E&E News that Global Shield isn’t a comprehensive solution, but maintained it’s still a useful contribution.

“It is not a kind of tactic to avoid formal negotiations on loss and damage funding arrangements,” said Development Minister Svenja Schulze. “We need a broad range of solutions and respective funding for tackling loss and damage, including for loss and damage for slow onset processes and non-economic damages.”

Egypt Takes the Blame

It isn’t unusual for UN climate negotiations to continue beyond their scheduled close, and a poor or uncertain outcome at a late stage in the process doesn’t necessarily mean the conference will fail. But the problems to date at this year’s COP have been severe even by COP standards, and the pre-emptive blame for that failure has been falling on the host country.

The first week of the conference saw a constant drumbeat of concern over Egypt’s abominable human rights record and onsite logistics so poorly organized that it was difficult (and occasionally intensely unpleasant) for participants to do their work. The second week saw COP President Shoukry criticized for being absent from the process and hands-off in his approach.

“To be an effective COP president, you have to be clear on what you want to achieve,” Pulgar-Vidal said. But “That has not been clear this COP.” Instead, “we are suffering from a lack of clear vision.”

The Egyptian Presidency “got off to a slower start, and all the big negotiating issues are still on the table,” Meyer said. “So they are a little behind the curve and playing catch-up to try to get an acceptable outcome.”

Last year, an early outline of the cover decision was deemed “non-sensical” for its failure to mention energy or fossil fuels, but it at least appeared five days before the conference was due to close, in time to serve as a catalyst for intensive debate and negotiation.

But that timing was only possible because working groups had begun sorting through the “real crunch issues” weeks in advance, Meyer said. This year, four of the five working groups were only appointed earlier this week.

While the main blame for this year’s process is falling on the Egyptian Presidency, Meyer acknowledged that negotiating countries bear some of the responsibility for the slow pace. “Clearly, waiting late in the game to get going on the cover text and engaging ministers was the presidency’s decision,” he told Bloomberg. “But part of it is the games that are being played by other countries—both developed and developing countries in this process—to take negotiating hostages and hold their cards until the very last minute.”

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‘Explosion’ in Number of Fossil Fuel Lobbyists at Cop27 Climate Summit

Oil and gas industries have 636 representatives at Egypt conference – a rise of more than 25% on previous year.

There are more than 600 fossil fuel lobbyists at the Cop27 climate conference, a rise of more than 25% from last year and outnumbering any one frontline community affected by the climate crisis.

There are 636 lobbyists from the oil and gas industries registered to attend the UN event in Sharm el-Sheikh, Egypt. At Glasgow, the figure was 503, which outnumbered the delegation of any single country. This year the only country with a larger delegation is the United Arab Emirates, hosts of Cop28 next year, which has 1,070 registered delegates, up from 176 last year.

At Cop27, “the influence of fossil fuel lobbyists is greater than frontline countries and communities. Delegations from African countries and Indigenous communities are dwarfed by representatives of corporate interests”, said the group Kick Big Polluters out, which campaigns against the influence of fossil fuel lobbyists at the climate negotiations.

The data on lobbyists, compiled by the organizations Corporate Accountability, Global Witness and Corporate Europe Observatory, shows the growing influence of oil and gas interests at the climate talks. While many environmental groups hoping to encourage the transition away from fossil fuels say it can be beneficial to bring private interests to the negotiating table, these benefits risk being outweighed by the sheer size of the delegations and suspicions that lobbyists attend the talks to slow progress rather than discuss limiting their own industries.

Civil society groups fear that the increasing presence of fossil fuel lobbyists risks stymieing negotiations at an essential time, amid efforts to keep global temperature rises within the 1.5C of warming scientists agree is needed to prevent catastrophic climate change.

“The explosion in the number of industry delegates attending the negotiations reinforces the conviction of the climate justice community that the industry views the Cop as a carnival of sorts, and not a space to address the ongoing and imminent climate crisis,” said Kwami Kpondzo from Friends of the Earth Togo.

In a recent submission to the United Nations Framework Convention on Climate Change – the body that oversees Cop – to discuss the role of private business at the talks, a coalition of civil society groups said climate action would “continue to fail to meaningfully address the climate crisis as long as polluting interests are granted unmitigated access to policymaking processes and are allowed to unduly influence and weaken the critical work of the UNFCCC”.

In response, the United States Council for International Business pushed back against any suggestion that there should be limits on corporate interests at the climate talks, saying this would “damage and slow implementation [and] marginalise one of the most central constituencies in the UNFCCC process”.

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