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We Mean Business call for fossil fuel phase out by 2040s

© Shutterstock / kikujungboy CCFossil fuels plant releases smoke into the open air.
Fossil fuels plant releases smoke into the open air.

A month before the UN climate summit (COP28) takes place in Dubai a business coalition has sent an open letter to heads of state calling for a phase out of fossil fuels.

  • Pressure is growing on states to commit to fossil fuel phase out, even as politics demands an appearance of short term cost-cutting.
  • The call for the fossil fuel phase out comes as the IEA says even current policies will see a peak in oil demand this decade. Achieving more will require more stringent policy frameworks.
  • It looks as if the disconnect between the short term political perspectives of states and much of the private sector, and the need for long term investment stability, are setting the scene for a contentious COP28.

Renée Morin, chief sustainability officer of eBay (NASDAQ: EBAY) said: “Business and government must take decisive action to transition from fossil fuels to clean energy. By working together, we can create equitable solutions for communities everywhere.”

The coalition, organised by We Mean Business, represent over $1 trillion in global annual revenue. It includes  companies ranging from  Volvo Cars (ST: VOLV), BT Group plc (LSE: BT), Vodafone (LSE: VOD), Heineken (AS:HEIO), Mahindra Group, Godrej Industries Limited (BSE:GODREJIND), Unilever (LSE:ULVR), JLL (NYSE: JLL), Bayer (DE: BAYN), Royal Philips, Ørsted (CO:ORSTEd), IKEA, Nestle (SW:NESN), eBay (NASDAQ: EBAY), Decathlon and Iberdrola (MCE: IBE).

Signatories to the open letter call on leaders to set clear targets and timelines for phasing down and out unabated* fossil fuels, and back that up with policies enabling the rapid scaling of clean energy.

Mads Nipper, chief executive of Ørsted said: “In order to stay below the 1.5°C threshold and avoid catastrophic and irreversible damage, it is time to give up business as usual. Green energy is the most impactful solution for fighting global heating, and in our race against time, we need to build it now. We know that to lift this agenda, bold decisions and unprecedented collaborative action are required at all levels of society – within and between industries, businesses, and countries.”

What does the open letter say?

The letter states: “Our businesses are feeling the impacts and cost of increasing extreme weather events resulting from climate change. […] To decarbonise the global energy system, we need to ramp up clean energy as fast as we phase out the use and production of fossil fuels. This means turbocharging the renewables revolution, electrifying key sectors and massively improving efficiency — thereby creating the conditions for a rapid, well-managed and just transition away from fossil fuels. […]

“We call on all Parties attending COP28 to seek outcomes that will lay the groundwork to transform the global energy system towards a full phase-out of unabated fossil fuels and halve emissions this decade.”

The 131 signatories of the letter span Europe, Asia, Australia, North America and South America; represent many sectors, including power, road transport, health, tech, logistics, consumer goods and more; and include multinationals and SMEs — both vital in the just transition to a decarbonised global economy.

The letter signatories urge all governments to:

  • Set targets and timelines for the phase-out of unabated fossil fuels in line with 1.5°C, supported by national plans and policies to ensure a just transition for affected workers and communities. Wealthier countries have the responsibility to be first movers and support other countries in their efforts.
  • Accelerate the clean energy transition by committing to reach 100% decarbonised power systems by 2035 in advanced economies, and by 2040 for other countries, at the latest.
  • Support countries in the Global South in diversifying their energy systems and developing 1.5°C-aligned economic pathways, including through the provision both of finance that does not exacerbate unsustainable sovereign debt, and of capacity-building for just transition planning. This must be part of a broader alignment of public and private financial flows with the objective of an equitable global phase-out of fossil fuels.
  • Ensure clear pricing signals through a meaningful price on carbon that reflects the full costs of climate change — and reform and repurpose fossil fuel subsidies toward energy efficiency, renewable energy and other measures to support a people-centred and equitable clean energy transition.

The clean energy transition is unstoppable – and profitable

Fossil fuels account for roughly 80% of global energy supply, a figure that has barely changed for more than 25 years. The International Energy Agency (IEA) recently projected for the first time that fossil fuel consumption would peak before 2030 and then fall into decline, but this will only happen if planned policies and commitments are delivered. Moreover, the science tells us global emissions must peak by 2025 and halve by 2030 to keep the goal of limiting global heating to 1.5°C within reach.

The letter states the transition to net zero ‘could boost global GDP by 4% by 2030’ and calls on the collective efforts of financial institutions, fossil fuel producers and policymakers to work with business to deliver decarbonisation securely and efficiently.

Signatories also highlight their support for a tripling of renewable energy capacity – agreed by G20 leaders in September 2023 – urging a global target of at least 11,000GW alongside the doubling of the rate of energy efficiency by 2030.

The call for fossil fuel phase-out is putting pressure on what is likely to be an increasingly contentious COP meeting in Dubai in November/December 2023. Scientists are warning that the world is not on track to hit targets set by the international Paris Agreement, or avoid the human and economic cost of climate change.

The speed at which countries should phase out fossil fuels, alongside the thorny challenges of effective climate finance, are likely to be the most contentious issues for negotiators.

What makes this a particular challenge is that while companies are increasingly setting net zero targets, it is becoming clearer that net zero is a systemic challenge. Individual company attempts to address growing emissions are likely to falter if there is not swifter, clearer action by nation states.

Building on the fossil to clean energy campaign

We Mean Business Coalition recently launched the Fossil to Clean campaign to mobilise businesses and governments for the decisive action needed to phase out fossil fuels and ramp up clean solutions.

While recognising the great strides taken to scale-up climate solutions over recent years, the campaign highlights the continued burning of fossil fuels as the primary driver of climate change and demands immediate action from business and government. The letter to UNFCCC leaders is informed by the Fossil to Clean Principles for Global Fossil Fuel Phase-out.

SGV Take

Business are calling for clear action from heads of state at COP as there is increasing concern about the cost and impact of extreme weather – and increasing certainty about the link. Business wants a clear policy framework to underpin and inform investment decisions, and they are pushing states to provide that.

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