An Israeli army tank takes a position along Israel's southern border with the Gaza Strip on June 5, 2024, amid the ongoing conflict between Israel and the Palestinian militant group Hamas. (Photo by JACK GUEZ / AFP)

Widening Geopolitical Fault Lines Challenge Collective Action on Climate

Geopolitical fragmentation and wars overshadowed COP29. A more resolute international community should focus on stopping wars, which may not only save lives but also preserve the global compact on climate change and in turn save the planet.

November 27, 2024
Rabah Arezki, Tarik M. Yousef

The United Nations Climate Change Conference (COP29) held in Azerbaijan this year wrapped up in tumultuous fashion, as representatives of “highly dissatisfied” poorer nations walked out in protest. While COP29 was ultimately salvaged with a deal to provide $300 billion in annual “loss and damage financing” to the world’s most vulnerable states, the unmistakable take-away was of a fraying geopolitical order increasingly challenging the type of multilateral cooperation on which the climate agenda depends. Along with two major wars in Europe and the Middle East, and the return of Donald Trump to the White House in January, the climate agenda looks to be in trouble unless peace can be restored and the compact on climate preserved.

 

Geoeconomics of Energy

Over the past decade, efforts to combat climate change have evolved from a fringe issue to the front and center of global policy concerns. Yet the intensifying strategic rivalry between the United States and China is putting pressure on global collective action, with the world increasingly separating into two corresponding camps—the Global North centered around the U.S. and the Global South around China. As a result, cracks have become more apparent in the coalition supporting climate action, which has largely been driven thus far by the priorities of Western countries.

One example of this is the climate agenda’s sole focus on the supply side of fossil fuels and other sources of energy while ignoring demand-side considerations. This is increasingly seen as self-serving on the part of Western countries, which are massive consumers of fossil fuels and home to major oil corporations operating internationally. Moreover, only a coordinated effort on both supply and demand sides—at the local and global levels—will likely be effective in achieving the “swift, just and equitable transition” agreed to at COP28 in the United Arab Emirates.

In addition to these tensions, two global shocks have further revealed the confluence of geopolitics and energy markets, giving rise to what may be termed the “new geoeconomics” of climate and energy. The first shock, the war in Ukraine, has had a more direct impact on energy and climate actions. The second, Israel’s devastating assault on Gaza, is having a more indirect effect.

The war in Ukraine has underscored the new risks of disruption to energy supply. Concerns about energy security jumped to the forefront of policy priorities, especially in Europe, alongside the energy transition agenda. Higher international energy prices pushed politicians, wary about the political fallout from rising energy costs, to take steps aimed at shielding consumers and firms. Price controls and subsidies, which had long been policy tools in developing countries, have spread to advanced economies. These measures have come at a steep budgetary cost and added to the growing burden of public debt, especially for developing countries with constrained access to international capital markets. Given the cost of the energy transition, higher energy prices will make it more difficult for countries to sustain climate action in the future.

The war in Gaza has not directly affected energy prices, although it has exacerbated fears about the implications of a wider, open regional war that could dramatically disrupt energy markets and supply. But the divergent reactions from various governments to the wars in Gaza and Ukraine have further exposed the double standards of the Global North and deepened mistrust among the Global South in the so-called “rules-based order.” More generally, the exclusive focus of the global policy agenda on climate change at the expense of festering conflicts, developmental issues and humanitarian crises lays bare the fault lines in the global system and makes it more difficult for the international community to negotiate a lasting and sustainable solution to the climate crisis.

 

Uneven Progress

When Donald Trump was elected president of the United States for a second time in November, he made it abundantly clear in his victory speech that he will pull the U.S. out of the Paris climate agreement and bolster hydrocarbon production domestically. That move may lead to increased backtracking on climate actions more broadly, considering the strategic importance of energy in the competitiveness of big economies, including in tech-driven industries. Moreover, strong industrial policy, which requires keeping energy costs low, is also gaining momentum in the Global North and taking precedence over climate issues due to domestic political pressures, the security of global supply chains, and strategic competition with China.

To be sure, progress toward “greening” the energy sector has been substantive, but it has also been uneven. Indeed, investments in renewable energy have increased remarkably, especially in advanced economies. Progress in developing countries, on the other hand, has stalled due to the limited fiscal space. In the meantime, foreign direct investments in oil and natural gas have remained resilient with major discoveries around the developing world. While these discoveries are seen as “carbon bombs” in the Global North, developing countries view them as important “energy additions,” especially to Sub-Saharan African countries where half of population lacks access to electricity. The prioritization of energy addition over energy transition in the Global South should also be understood as the result of the unfulfilled promise of a $100 billion per year transfer agreed to at COP21. That broken promise has eroded confidence in developing countries and has only been partially resolved at COP29.

The continued fragmentation of the international community will slow down decarbonization with catastrophic consequences for the planet. Indeed, the lifespan of hydrocarbons in the global energy mix will likely be extended, preventing the dominance of renewable alternatives. In advanced economies, digital platforms are investing proactively in nuclear energy to ensure they have enough energy to meet the explosion of demand on account of artificial intelligence. Given the more immediate economic priorities of developing countries, coupled with the abundance of hydrocarbon resources in the Global South, technology such as carbon capture and sequestration can considerably reduce emissions from fossil fuel consumption—albeit with challenges.

In order to course correct and prevent a derailing of the climate agenda, confidence-building measures will be needed, such as fulfilling promises on financial and technology transfers from the Global North to the Global South. But beyond the realm of climate actions, a greater sense of urgency is needed toward resolving the conflicts in Gaza and Ukraine. The international community should focus on bringing an end to ongoing conflicts, which will not only save lives but also help preserve the global compact on climate and ultimately save the planet.

 

The opinions expressed in this article are those of the authors and do not necessarily reflect the views of the Middle East Council on Global Affairs.

Issue: Political Economy
Country: Palestine-Israel

Writers

Nonresident Senior Fellow
Rabah Arezki is a nonresident senior fellow at the Middle East Council on Global Affairs. He is a director of research at the French National Center for Scientific Research (CNRS) and a senior fellow at Harvard University’s John F. Kennedy School of Government. In addition, Arezki is a research fellow with the Economic Research Forum… Continue reading Widening Geopolitical Fault Lines Challenge Collective Action on Climate
Senior Fellow and Director
Tarik M. Yousef is a senior fellow and director of the Middle East Council on Global Affairs. Prior, he served as senior fellow and director of the Brookings Doha Center and was a nonresident senior fellow in the Foreign Policy program at the Brookings Institution in Washington, DC. He is a research fellow with the… Continue reading Widening Geopolitical Fault Lines Challenge Collective Action on Climate