COP28, the annual conference to discuss a global collaborative approach to tackling climate change, will open on the afternoon of November 30, Japan time. This year, the event was held in the United Arab Emirates (UAE), one of the world’s leading oil producing countries.
Already, desperate messages are being heard highlighting the devastating costs of inaction. Leaders of 120 countries will be polishing their speeches, and Pope Francis is also scheduled to appear despite suffering from pneumonia.
But as always, this event is likely to end up being a waste of time and energy (of all kinds). However, even within this chaos, there are positive uses for crypto assets (virtual currencies).
Chaos called COP
First, let me briefly state my skeptical view.
The track record so far has not been good. The first COP (Conference of Parties), held in 1995, set concrete, legally binding targets and schedules to reduce greenhouse gas emissions in developed countries. We asked the governments of each country to do so. Almost 30 years later, nothing like it still exists.
This year’s conference was chaired by Sultan Ahmed Al-Jaber. He is also the CEO of state oil company ADNOC, which is expected to increase oil production next year following the recent upward revision of the UAE OPEC+ quota.
ADNOC is also actively expanding its international fossil fuel interests. I think oil executives are in a good position to talk to other oil executives, and ADNOC is also working to diversify its revenue streams. However, it is impossible to believe that there is no conflict of interest here. Indeed, leaked documents reveal that the UAE planned to use its host country status to discuss oil and gas deals with more than a dozen countries.
Governments around the world recognize that they need more funding to fight climate change. In 2009, donor countries agreed to contribute $100 billion (approximately 14.7 trillion yen) annually by 2020 to reduce developing countries’ dependence on fossil fuels. This goal was achieved only this year, but in any case it is no longer important. A recent report from the International Energy Agency (IEA) estimates that $2.7 trillion is needed annually.
There is no need to come up with all of this from public funds. Most developed world governments are struggling with shorter-term priorities, such as helping allies defend their borders, maintaining pandemic benefits and keeping banks from defaulting on their debts.
Emissions reduction policies lose popularity
Furthermore, emissions reduction policies may be unpopular with voters and could lead to political upsets. The surprising victory of far-right candidate Geert Wilders in the recent Dutch general election was due in part to dramatic emissions reduction measures proposed by the current government, including reducing the number of livestock grazed.
In Germany, support for the once-powerful Green Party has declined, creating room for the far-right party Alternative for Germany (AFD) to make a comeback. Many European countries are pushing back against EU plans to impose emissions taxes on shippers, and the EU will hold elections next year.
In other countries, leaders are also withdrawing their climate change commitments due to domestic pressure. In September, British Prime Minister Rishi Sunak announced that he would postpone the decarbonization plan to avoid “losing the buy-in of the British people”.
Germany is restarting some idle coal power plants this winter to avoid energy shortages. China has approved roughly 50% more coal power plants in the past two years than in the previous two years.
These are just a few of the many issues that stand in the way of aligning global incentives to finance the transition while curbing fossil fuel production and use.
However, we are encouraged to refrain from cynicism, as the COP is important in raising awareness of the importance of ‘doing something’. I’m all for doing “something,” but after 28 years of this conference, little progress has been made in understanding the economics of the problem or addressing the necessary incentives.
Perhaps Mr. Al Jaber will be able to marshal the wisdom of the delegates and overturn the national interests of some of them. But it is unlikely to work out, as Mr Al Jaber will have to do so for all delegates and the UAE does not necessarily set a good example.
Meanwhile, the costs of organizing such large-scale events (which are increasingly dominated by commercial interests) must be astronomical. More than 70,000 people are expected to take part, but it is unlikely that they will make it to Dubai by rowboat or bicycle.
Why is it important for crypto assets?
A legitimate question is when the vast sums of money spent on COP-related fuss will be redirected to focus not only on more efficient renewable energy generation systems, but also on technological breakthroughs that can help with adaptation.
One such breakthrough is Bitcoin (BTC). Bitcoin will in no way solve all the hardships posed by climate change, nor will it solve many of the barriers to renewable energy adoption. However, it will help decarbonization.
It wasn’t that long ago that Bitcoin was maligned for its environmental footprint. Investors and the general public alike refused to learn more about Bitcoin because it was harmful to the environment. Climate activists campaigned to change the program and politicians campaigned to ban mining.
Thankfully, study after study has disproved these false claims, and the movement has largely died down. Remember how Newsweek magazine claimed in 2017 that Bitcoin mining would use all the world’s electricity by 2020? We have come a long way since then.
The paper is not the only one to highlight the potential of Bitcoin mining to support greater investment in renewable energy and methane recovery. High-quality reporting from corporate research teams like Bloomberg and KPMG is also a strong support. The story has changed. Even misguided regulators have shifted their opposition to crypto assets to focus on illegal uses.
To sum it up too briefly, Bitcoin mining can economically support the construction and operation of renewable energy facilities, even small ones in remote areas, by acting as swing consumers. can. Bitcoin mining is virtually the only industrial energy user that is location-independent (mining equipment can be moved anywhere as long as it has electricity and an internet connection) and can be powered up or down relatively easily.
Additionally, Bitcoin miners can reduce methane emissions from fossil fuel production by powering machines that convert emissions into energy and generate income. According to the IEA, methane is responsible for around 30% of the temperature rise since the Industrial Revolution, and fossil fuel production is the third largest cause of methane pollution (after wetlands and agriculture). Removing some of this while ensuring the security of financial networks would be a win for energy companies, Bitcoin miners, investors, and of course the environment.
The first Bitcoin “delegation”
There’s a lot more to say on this subject, but in summary, Bitcoin is an important piece of the climate change adaptation puzzle.
And this year’s COP28 will include the first Bitcoin mining delegation. I don’t know the extent to which Bitcoin miners have participated in previous COPs, but I feel that the fact that there is an official “delegation” with high-quality experts this time is of great significance. I hope that the change in the story is almost confirmed and that constructive possibilities will expand further.
This also highlights how “early” Bitcoin is. The technology is misunderstood by many, its use cases are underestimated by many, and its potential remains largely unappreciated.
Misconceptions about the environment were painfully frustrating. However, Bitcoin’s participation in the most high-profile climate change conference can be seen as progress. There is still a long way to go, but events like this will help move the story forward and bring together different stakeholders to work together on the small steps that can take us all far.
｜Translation and editing: Akiko Yamaguchi, Takayuki Masuda
｜Original text: COP28 and Bitcoin: The Beginning of a Beautiful Friendship?