Good COP or bad COP?

The 28th Conference of the Parties (or COP28) being held in Dubai from 30 November to 12 December promises some daunting negotiations. Although the outcome of the conference will be uncertain right up to the last minute, this climate jamboree will have the merit of illustrating a branch of mathematics with numerous applications in the humanities: game theory and – its most famous example – the prisoner’s dilemma.

In game theory, this dilemma describes a situation in which participants can expect a collective solution that is more satisfactory for everyone, provided that they cooperate, but where it is also rational to prioritise personal interest to the detriment of the collective interest. This results in an equilibrium that is suboptimal, called the Nash equilibrium after the Nobel prize winner made famous by the 2001 film A Beautiful Mind. The fight against climate change is a typical illustration of the prisoner’s dilemma: it is in humanity’s interests to act in concert to restrict climate change and safeguard the planet, but each entity on a stand-alone basis – countries, companies, citizens – are pulled in the opposite direction by an egotistical tendency that incites them to prioritise inertia. In concrete terms, when a country chooses to restrict its greenhouse gas emissions, this has a short-term economic cost. It therefore runs the risk of being dominated by other countries that do not act in the same way. In other words, the benefits of making this effort are shared collectively, whereas its cost is born individually.

This means that each player is incentivised to limit their own efforts and this pushes the optimal collective solution further away. The various climate reports published by the IPCC, UN and OECD unanimously draw this conclusion, in light of commitments made at previous COP summits.

The emergence of consensus at COP28 looks inconceivable given the proliferation of complex issues, not to mention highly diverging interests. Whilst combating global warming appears to be a shared objective, the means and efforts required to achieve it are less so. And the agenda for this COP promises to be jam-packed. It includes taking stock of progress on the Paris Agreement of 2015, and guaranteeing the loss and damage funding held by the World Bank for developing countries, to also help them to adapt to climate change. The issue of substituting fossil fuel energy with renewable energies will also be at the heart of debates. The challenges are immense.

“Our house is burning and we’re looking the other way,” said French President Jacques Chirac in 2002 at the World Summit on Sustainable Development in Johannesburg, and it still resonates today. But as the planet warms and the resulting natural disasters are ever more visible, cooperation no longer seems an option. Good COP or bad COP? We will find out on 12 December whether COP28 has delivered a Copernican Revolution.

Final version of 29 November 2023 by Clément Inbona, Fund Manager, La Financière de l’Echiquier (LFDE).