Let’s not beat around the bush: COP30, the United Nations-sponsored global climate change conference hosted in Brazil, was a flop.
The hottest year on record, 2024, floods and fires call for increasingly urgent and effective action, says André Corrêa do Lago, president of the conference. However, the veteran diplomat makes no secret of the fact that the “consensus method” adopted at this and previous conferences does not allow for decisive action.
Each country, having in practice a right of veto, can threaten to derail the conference not only on proposals it considers unacceptable, but also on the mere proposal of topics for discussion, such as climate taxes or debt-for-nature swaps, i.e. loosening state budget constraints to encourage green investment. But beyond this, a deep rift has emerged over the proposal for a so-called road map for the transition from fossil fuels, which is not on the formal agenda but is being promoted by an EU-led coalition of more than 80 countries.
The road map did not appear in the final document due to strong opposition from countries such as Saudi Arabia, head of the Arab group, and Russia. China and India were also among the countries that did not support it. Eighty countries led by the European Union (which would like to introduce a “carbon border tax” as early as January next year) have decided to continue with parallel measures to overcome the impasse created by the COP30 conference, but unfortunately climate change is a global process that cannot be defeated by marching together and striking separately; assuming that the march is actually in unison: well-founded doubts arise if oil exporters and their allies have contested the fact that the reports of the Intergovernmental Panel on Climate Change, the United Nations body composed of the world’s leading climate scientists, represent “the best available science”.
But it is not just the road map promoted by the European Union. Other countries are taking action with ad hoc initiatives. For example, the Netherlands and Colombia will separately host what is being called the first international conference on the transition from fossil fuels in April. Brazil, the host country, has announced the creation of a trade and climate body independent of both the United Nations climate process and the World Trade Organisation to manage tensions fuelled by measures such as the pioneering carbon tax at the border.
In short, fossil fuels remain a solid investable asset class that will continue to be with us in the foreseeable future.
Disclaimer
This post expresses the personal opinions of the Custodia Wealth Management staff who wrote it. It does not constitute investment advice or personalised advice and should not be considered an invitation to carry out transactions in financial instruments.
