The US and Israel’s war on Iran has caused oil and gas prices to soar, with the world now preparing for the possibility of another energy crisis.
The conflict, which has seen Iran respond with missile strikes across the region, has killed more than 1,000 people so far and sent global markets into disarray.
With shipping through the critical Strait of Hormuz paralysed and direct attacks by both sides on fossil-fuel infrastructure, some of the world’s biggest oil and gas facilities have paused production.
On 9 March, oil prices soared above $100 per barrel for the first time since Russia’s invasion of Ukraine in 2022, amid fears of long-term disruption to global energy supplies.
While US president Donald Trump has said that rising oil prices are a “very small price to pay” for “safety and peace”, the conflict is already pushing import-dependent countries to invoke emergency measures to protect consumers.
In this Q&A, Carbon Brief looks at how the war has disrupted energy supplies, the impact on oil and gas prices, which parts of the world are being hit hardest and what it could mean for efforts by some to transition away from fossil fuels.
- How has the Iran war disrupted energy supplies?
- How has the Iran war impacted oil and gas prices?
- Which parts of the world have been most affected by the crisis?
- What does the Iran war mean for efforts to transition away from fossil fuels?
How has the Iran war disrupted energy supplies?
On 28 February, the US and Israel launched a large-scale military attack on Iran, which has responded with counterattacks across the region.
On 2 March, Iran said that it would attack any vessel travelling through the Strait of Hormuz, a narrow waterway used to transport around a quarter of global seaborne oil trade and a fifth of the world’s liquified natural gas (LNG) supply.
According to the UK’s maritime security agency, UKMTO, around 10 vessels have been attacked in or near the Strait of Hormuz since Iran’s threat.
Ship traffic through the Strait of Hormuz has since come to a “virtual standstill”.
While Saudi Arabia and the UAE can reroute some of their crude oil production via pipelines to avoid the strait, Kuwait, Qatar and Bahrain have no alternatives, according to Bloomberg.
As a result of the effective closure, oil storage facilities in the region are filling up. Saudi Arabia has started to reduce oil production, as there is limited storage and limited export options due to the strait remaining closed to shipping, reported Bloomberg.
Other energy infrastructure has also been caught in the crosshairs of the conflict, leading to site closures at a number of oil and gas facilities.
For example, Iranian drones targeted the giant Ras Laffan gas facility in Qatar, which is responsible for about a fifth of global LNG supply. The QatarEnergy facility subsequently paused production and “will take weeks to restart”, reported Reuters.
Additionally, Saudi Aramco paused work at one of its refineries due to a fire caused by debris from an intercepted drone attack. One of the largest oil storage terminals in the UAE halted operations and a range of other energy sites across the Middle East have ceased operations.
The combination of the effective closure of the Strait of Hormuz and disruption to energy infrastructure in the region has led to oil and gas prices surging to their highest levels in several years.
How has the Iran war impacted oil and gas prices?
Global oil and gas prices have been rising since the first US and Israel attacks on Iran in late February.
On 2 March, the Guardian reported that Brent crude – the global oil price benchmark – had risen by up to 13%, standing at a “14-month high” of $82 (£61) a barrel.
Experts at that stage warned that a prolonged closure of the Strait of Hormuz could continue to push up prices and lead to a “1970s-style energy shock”, according to CNBC.
By Monday 9 March, oil prices had soared above $100 (£74) per barrel for the first time since Russia’s invasion of Ukraine in 2022.
Prices hit $119 (£88) a barrel at one point on Monday, as shown in the chart below, amid fears of long-lasting disruption to global energy supplies.
US president Donald Trump called rising oil prices a “very small price to pay” for “safety and peace”, reported the Independent.
By Tuesday 10 March, the Guardian reported that the price of a barrel of oil had “tumbled” to around $91.70 (£68), after Trump suggested the war could end “very soon”.
(The Islamic Revolutionary Guards Corps said it would “determine the end of the war”, not “American forces”, reported France24.)
The price of gas has also risen across Europe and Asia.
Prices “soar[ed”, reported Al Jazeera, after LNG production was halted by Qatar’s state-run energy company. (See: How has the war disrupted energy supplies?)
This led to gas price jumps “amid concerns about supplies”, said the New York Times.
Subsequently, the price of gas in Europe rose by up to 45% to around €46 (£40) per megawatt hour (MWh) on 2 March.
European gas price futures increased by as much as 30% on 9 March, according to Bloomberg. Prices stood at around €60/MWh (£52/MWh) compared to a past peak in 2022 of above €300/MWh (£260/MWh), said the outlet.
Bloomberg noted that “prices are still well below the records reached” after Russia’s invasion of Ukraine in 2022, as highlighted in the chart below.
Gas prices in Asia have more than doubled since 28 February, with some countries “struggling to find prompt” supplies.
In the UK, the price of gas has doubled since the start of the current conflict, although it has subsequently fallen back to around 75% above pre-crisis levels.
While domestic consumers are currently protected by the price cap for gas and electricity, some forecasts suggest bills could hit £2,500 a year – a rise of 50% – when the cap is updated in July. (There is currently no cap for consumers of heating oil.)
In the US, gas prices have only risen by 11% since the end of February, according to the Wall Street Journal. The US gas market is relatively insulated from global price spikes because it has limited export capacity. (The Wall Street Journal attributed this instead to “record” domestic production “cushioning” the country from the price jumps in other parts of the world.)
Meanwhile, the price of petrol (or “gas”, as it is known colloquially) in the US has increased by 19%, noted the New York Times. Even though the US is a net oil exporter, it is still affected by international price spikes, as the market for oil is globally interconnected.
The crisis has also raised the price of electricity, heating fuel, fertilisers, food and other products in many parts of the world.
Which parts of the world have been most affected by the crisis?
The impact of the Iran war has been felt around the world, in particular in areas reliant on oil and gas imports.
Below, Carbon Brief looks at how different regions have responded to the conflict so far.
Asia
Asia’s biggest economies are “highly dependent” on oil and gas imports that transit through the Strait of Hormuz, reported the Financial Times, adding that they are now “racing to secure new sources”. About 80% of all oil volumes through the strait go to Asia, according to the International Energy Agency (IEA).
East Asian nations, such as South Korea and Thailand, “have been hit especially hard” and have already announced measures such as capping petrol prices, according to BBC News. It said Vietnam plans to temporarily remove taxes on fuel imports and the Philippines has announced plans for a four-day working week for most public offices.
Reuters noted that Bangladesh “relies on imports for 95% of its energy needs” and has announced the early closure of all universities as part of emergency measures to conserve energy. The newswire says the country also halted operations at nearly all its state-run fertiliser factories, redirecting gas to power plants.
Myanmar, meanwhile, has announced a “sweeping fuel rationing system for private vehicles”, said another Reuters article.
On 9 March, China announced its “biggest retail fuel price cap increase in four years” for retail petrol and diesel, said Reuters. Additionally, diplomatic sources cited by Reuters said that China is “in talks with Iran to allow crude oil and Qatari liquefied natural gas vessels safe passage” through the Strait of Hormuz.
China is the main buyer of Iranian oil and has funded gas facilities in Qatar, meaning “billions of dollars are at risk from a widening war”, according to the New York Times.
However, India could be the “most vulnerable” to the war’s energy supply shock, according to the Hindustan Times.
On 3 March, India’s petroleum and natural gas minister Hardeep Singh Puri was quoted by the Economic Times saying that “India has sufficient reserves of crude oil and petroleum products to manage short-term disruptions”.
Three days later, the Hindustan Times reported that the US announced a “temporary 30-day waiver to Indian refineries” to continue to purchase Russian oil “already stranded at sea”. However, the Financial Times reported that analysts said that the crude oil freed up by this is a “drop in the ocean”, equivalent to only four days’ of Indian demand. (The New York Times said that the “dramatic change in energy markets could not have come at a better time for President Vladimir Putin of Russia”.)
India has invoked emergency measures to redirect supplies of liquefied petroleum gas “away from industrial users to households”, reported Bloomberg. Cooking gas supply and fertiliser plants have been given top priority, said the Times of India.
Middle East
Beyond the impact on energy, air and drone strikes in the Middle East have damaged key infrastructure, including water desalination plants.
The region is dependent on desalination plants for much of its drinking water. The Associated Press reported that, “in Kuwait, about 90% of drinking water comes from desalination, along with roughly 86% in Oman and about 70% in Saudi Arabia”.
It adds that “hundreds of desalination plants sit along the Persian Gulf coast, putting individual systems that supply water to millions [of people] within range of Iranian missile or drone strikes”.
The Financial Times noted that climate change is exacerbating water security concerns in the Gulf, where temperatures can exceed 50C in summer and there are “no permanent rivers”. It adds that climate change is “driving erratic rainfall patterns and contributing to low water storage” in the region.
The Middle East is also one of the world’s largest producers of fertilisers. Around 35% of the world’s exports of urea – a nitrogen fertiliser that “underpins around half of global food production” – passes through the Strait of Hormuz, according to the Financial Times.
As a result, the newspaper said that “granular urea prices in the Middle East have risen by about $130 to around $575-650 a tonne”.
The spike in the price of gas – a key element in fertiliser production – is also affecting fertiliser prices.
Europe
The disruption to global oil and gas supplies is driving up energy prices across Europe.
“The EU imports more than 90% of its oil and around 80% of its gas, making European countries highly exposed to fluctuations in global oil and gas prices,” according to Reuters. Europe’s gas market is particularly vulnerable at the moment, because it is emerging from winter with storage tanks depleted.
Bruegel said that Europe is “far less dependent on Gulf oil and LNG than China, India, Japan or South Korea”. However, it said that it is “not insulated”. It added:
“Oil and LNG are global markets: any blockage of the Strait of Hormuz could trigger immediate price spikes that would hit Europe regardless of its limited physical imports.”
The Financial Times reported that “European electricity prices are swinging wildly from daytime to evening as the Iran war’s disruption to gas supplies accentuates growing volatility in Europe’s power markets amid the rise of renewables”.
Petrol prices are also surging. UK average diesel costs have hit a 16-month high and the French government is asking a watchdog to check that petrol stations are not unfairly raising prices to profit from a rush for fuel.
Euronews reported EU leaders are “considering reviewing taxes, electricity network charges and carbon costs tied to energy prices as a quick fix for struggling industries”.
Meanwhile, EU economy and finance ministers gathered in Brussels to discuss how to respond to surging energy prices. According to Euronews, ministers have discussed the possibility of releasing oil reserves, but say that it is “not yet the right time”.
Other regions
Africa
In Africa, oil-producing Nigeria, Angola and Ghana are well-positioned to benefit from surging global prices, although the gains may not be evenly distributed. However, importing countries, such as South Africa, Kenya and the Democratic Republic of Congo, are at risk.
Every “$20 a barrel jump in Brent” could cause “a knock” of about 1% and 3% on South Africa and DRC’s GDP, respectively, according to Bloomberg analysis. Trade bottlenecks and the lack of refinery capacity in these countries could also lead to fuel shortages, it said.
While oil exporters could see windfall gains, “most African households will have to grapple with higher costs of living” since “most food and goods” are transported by road across the continent, noted the Associated Press.
The crisis, however, “may reinforce calls for African nations to diversify their energy systems and reduce dependence on imported fuels” through “long-term investments in renewable energy”, said Dr Kennedy Mbeva, research associate at Cambridge’s Centre for the Study of Existential Risk, as quoted in the story.
Australia
While Australia is a key gas and coal exporter, its dependence on petrol and diesel imports could leave it vulnerable, especially its agricultural and mining sectors.
The Australian Financial Review reported that Australia’s biggest gas producers – Santos and Woodside Energy – are “cashing in on the conflict…with deals struck at more than double recent market rates”.
Latin America
Major Latin American economies are “cautiously watching” the war’s impact on energy prices on their economies, reported El País.
The newspaper cited experts saying that for Venezuela – whose “modest but strategic share” of oil production is now under “direct scrutiny from the White House” – the crisis might result in additional revenues, to the tune of “around $2.4bn”.
It also quoted Mexico’s president, Claudia Sheinbaum, reassuring citizens that “compensation mechanisms [are] in place to prevent price increases from impacting” them.
While Brazil’s state-owned Petrobras “could benefit” from the crisis, said Reuters, the conflict “may spark grain contract cancellations and fertiliser shortages”.
Finally, a comment in Colombia One argued that the country’s “energy importance” could translate into “fiscal breathing room” and that oil gains could “financ[e] renewable energy without undermining fiscal stability”.
What does the Iran war mean for efforts to transition away from fossil fuels?
The rise in global fossil-fuel prices as a result of the war has prompted some leaders to recommit to boosting their energy sovereignty through the deployment of renewables.
Yet, the conflict has also been taken as an opportunity by supporters of fossil fuels to argue for more domestic oil-and-gas production, as a way to boost energy security.
In response to the crisis, Teresa Ribera, the executive vice-president of the European Commission who oversees the “clean, just and competitive transition”, said in a statement that the “answer is not new dependencies, but faster electrification, renewables and efficiency”, adding:
“The real risk is not moving too fast on clean energy, but too slowly. The clean transition is Europe’s shield against volatility.”
According to the South Korean newspaper Chosun Daily, the country’s president Lee Jae Myung said the crisis presented a “good opportunity to swiftly and extensively transition to renewable energy”.
In the UK, where there has been mounting pressure to relax government restrictions on the expansion of fossil-fuel extraction in the North Sea, prime minister Keir Starmer used a speech responding to the conflict in the Middle East to say:
“We…have the right plan for our energy supplies. Building up clean British energy like never before, decreasing our dependence on volatile international markets and creating the energy security and independence we need.”
Simon Stiell, the UN climate chief, said the crisis “shows yet again that fossil fuel dependence leaves economies, businesses, markets and people at the mercy of each new conflict or trade policy lurch”.
According to the Guardian, he added:
“There is a clear solution to this fossil-fuel cost chaos – renewables are now cheaper, safer and faster-to-market, making them the obvious pathway to energy security and sovereignty.”
UN secretary-general António Guterres said in a statement that renewable energy offers countries an “exit ramp” away from fossil-fuel dependence. He added:
“Homegrown renewable energy has never been cheaper, more accessible or more scalable. The resources of the clean-energy era cannot be blockaded or weaponised. There are no price spikes for sunlight and no embargoes on the wind.
“The fastest path to energy security, economic security and national security is clear: speed up a just transition away from fossil fuels and toward renewable energy.”
Dr Markus Krebber, chief executive at the German energy giant RWE, wrote on LinkedIn that the crisis raised the importance of “fixing the grids”, electrifying “everything that makes sense” and “relentlessly scaling renewables”. He said:
“The imperative of our time: The more we electrify, the less we import fossil fuels. The less we import, the more resilient we become.”
BusinessGreen reported on how the disruption to energy supplies is “pushing up petrol prices – and boosting the case for electric vehicles”, citing analysis of potential costs for UK drivers by the Energy and Climate Intelligence Unit (ECIU).
News outlets have cited Nepal and Ethiopia as examples of countries that rely on fossil-fuel imports, which have taken steps to accelerate the electrification of their road transport.
Some commentators noted that the rhetoric around boosting energy sovereignty through renewables matched narratives seen following Russia’s invasion of Ukraine.
While European countries have cut their dependence on pipeline gas from Russia, much of that dependence has instead moved to imports of LNG from the US. Prof Jan Rosenow, energy programme lead at the University of Oxford, told a recent briefing for journalists:
“There’s a lot more LNG in the mix. But when you look at the dependency rate of Europe on oil and gas, it hasn’t really gone down. We have diversified, but we haven’t really managed to scale the alternatives fast enough and I think now we pay the price for that.”
Despite this ongoing reliance on fossil fuels, there has been growth in wind and solar capacity both in Europe and elsewhere in recent years. There has also been rapid growth in some developing countries.
Some analysis has pointed to the example of Pakistan, which massively increased its use of solar power amid a surge in LNG prices linked to the war in Ukraine, as a possible model for other countries. This could be particularly appealing for other countries that rely heavily on fossil-fuel imports – and are, therefore, exposed to price spikes.
Isaac Levi, an analyst at the Centre for Research on Energy and Clean Air (CREA), told Heatmap News:
“This is the first oil and gas crisis-slash-pricing scare in which clean alternatives to oil and gas are fully price-competitive…Looking at the solar booms, we can expect this to boost clean-energy deployment in a major way, and that will be the more significant and durable impact.”
The solar panels driving such “booms” are cheap imports from China. Some experts have noted how China is well-placed to navigate a new energy crisis. Prof Jason Bordoff and Dr Erica Downs, both from the Center on Global Energy Policy at Columbia University, wrote in Foreign Policy that the Iran war “could consolidate China’s energy dominance”. They wrote:
“Rapidly expanding grids or deploying large volumes of solar, wind and storage is exceedingly difficult without deepening reliance on Chinese firms and materials.”
Tom Ellison, deputy director of the Center for Climate and Security and a former member of the US intelligence community, wrote in Sustainable Views that reliance on the “autonomous electricity production” of wind and solar would be preferable to fossil fuels:
“They do not rely on continuously operating pipelines, ports or shipping lanes that can be switched off, blockaded or hit by a hurricane. There is no Strait of Hormuz or Nord Stream II for clean energy.
“That is not to say clean energy is risk-free. No system is. But the challenges of clean energy, including China’s dominance of key material and mineral supply chains, are more manageable than those of fossil fuels.”
King’s College London researchers writing in the Conversation considered the geopolitics of a similar conflict in a world “powered by renewables, not fossil fuels”. They noted that renewable construction depends on critical minerals, adding:
“While mineral supply chains remain uneven…they do not converge on a single chokepoint.”
Some analysts noted that increases in fossil-fuel prices and the benefits of a cleaner energy system would not necessarily guarantee a surge in low-carbon investment.
Bloomberg cited David Hostert, global head of economics and modeling at BloombergNEF, who explained that higher energy prices could spark inflation, leading to higher interest rates and, therefore, higher costs to deploy clean energy.
According to Morningstar equity analyst Tancrède Fulop, this was part of the reason why the last energy crisis did not lead to a universal surge in renewable capacity. “Renewable companies materially under-performed because of those high interest rates,” he told Climate Home News.
The post Q&A: What does the Iran war mean for the energy transition and climate action? appeared first on Carbon Brief.
Q&A: What does the Iran war mean for the energy transition and climate action?
Brazil’s environment minister says he is “very optimistic” that the Tropical Forest Forever Facility (TFFF) – a new rainforest fund to channel private and public finance to developing nations – can meet a key $10 billion funding target this year, and is not at risk from his country’s elections next month.
The TFFF, launched by Brazil at COP30 in the Amazon last November and co-led by Norway, is intended as an alternative to traditional grant-based forest finance. The fund aims to raise $125bn in public and private capital, invest it in bond markets, and then pay countries that keep their forests standing from the annual returns. Donor contributions needed to get it going have tailed off after an initial burst.
Speaking to Climate Home News on the sidelines of Climate Week in New York, Brazilian environment minister João Paulo Capobianco pointed out that in less than a year since its official launch, the TFFF has already secured $7.3bn from governments.
“How many other initiatives can say that?” he asked. “Of course, if you have $7 billion, it’s easier for more countries to consider their own contribution. And not just countries – non-governmental organisations also. We are expecting even more support.”
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As its initial target, the TFFF aims to raise $10bn in seed capital from governments by the end of 2026, and still needs to fill a gap of $2.7bn. Its backers say that for each dollar in public funding, they can secure $4 from the private sector. Critics say the $10bn goal barely covers the fund’s expenses and would not allow it to make any significant payments to forest countries.
Because setting up its financial architecture, raising the starting capital and making the first investments will take time, experts say the TFFF is unlikely to generate any payments for developing countries before 2028.
Seeking new pledges
Capobianco told Climate Home News that Brazil is still in talks with potential new contributors to the fund, among them China, Korea and Japan, and said he hoped to see more pledges announced at the upcoming biodiversity and climate COPs in October and November. The Netherlands is expected to up its first small contribution and Canada may also come in, according to other sources close to the TFFF.
Because the fund was not created as part of the UN climate talks and is hosted by the World Bank, developing countries can contribute without taking on wider donor responsibilities for climate finance. Brazil and Indonesia – both large emerging rainforest nations – have each pledged $1bn to the TFFF.
Earlier in September, the UK became the latest country to pledge funding – promising a loan of £400 million (about $540 million). Capobianco welcomed the contribution and noted that Britain has also said it will keep “under review” the possibility of putting in more.
Currently the largest donor is Norway, which announced a $3bn pledge last year at COP30 in Belém. However, that pledge came with conditions, among them that the fund must reach $10bn in sponsor capital by 2026, and that Norway’s contribution can’t make up more than 20% of that total. Over the longer term, this means the fund must raise $15bn from governments to unlock Norway’s full investment.
Comment: UK’s budget juggling trick with rainforest loan for bus-fare cap needs transparency
Speaking at a forest finance event in New York, Norway’s environment minister Sigrun Aasland said the country’s pledge was made not “only out of solidarity but because of shared interests”, adding that protecting rainforests is critical for climate and biodiversity goals as well as for national security.
“Tropical deforestation matters to people in the Amazon and in the Congo. But let’s not forget that it also matters to global food production and to the cost of living in Oslo or in London,” she said.
At the event, Guyana’s minister of natural resources Vickram Bharrat said the TFFF is “one in a menu of options” to finance forest protection in developing countries. He added that to boost its capital “maybe we should put some amount of pressure on oil companies to contribute to the fund”.
Upcoming election “not a risk”
Brazil, which has been pivotal to getting the fund off the ground, is now heading into a national election that could see the country swing back to an anti-climate stance if right-wing candidate Flávio Bolsonaro beats current left-wing President Luiz Inacio Lula da Silva. Capobianco, however, said the election result does not pose a risk to the TFFF.
“It’s a global initiative, not a Brazilian initiative. We proposed the first idea, but nowadays it’s a global initiative,” he said. “We believe the investor countries and the tropical countries together have the possibility to continue this process.”
In Brazil, the first round of voting is scheduled for Sunday, October 4. If no candidate wins more than 50% of valid votes, a run-off ballot will take place on October 25.
COP30 roadmap to end deforestation will invite countries to draft domestic plans
In July, the TFFF board adopted a charter, which outlines the instrument’s objectives and values, including that 20% of the payments made to tropical countries will go directly to Indigenous people and local communities.
The charter also says the TFFF board may comprise up to 12 member countries during the initial phase. Currently, seven seats are filled by the Democratic Republic of Congo (DRC), Germany, Brazil, France, the Netherlands, Norway and Indonesia.
The board has also formally incorporated the Tropical Forest Investment Fund (TFIF) – the TFFF’s investment arm that will trade bonds in financial markets – hosted in Luxembourg.
The post Brazil confident new rainforest fund will reach $10bn donor milestone appeared first on Climate Home News.
Brazil confident new rainforest fund will reach $10bn donor milestone
Patrick Schröder is a senior research fellow at Chatham House’s Environment and Society Centre.
A climate summit serious about implementation cannot afford to leave major emissions reductions off the table. Yet, that is the risk COP31 faces unless it makes reducing raw material use central to the way countries decarbonise their economies.
On the sidelines of the UN General Assembly in New York last week, COP31 host Türkiye laid out proposals to accelerate emissions cuts in the next decade. Its plans include global goals to increase the share of recycled products in material use to at least 15% (up from 6.9% in 2025) and halve waste generation by 2035.
COP31 offers an opportunity to connect efforts to improve material circularity with stronger national climate commitments and mitigation pathways. But these targets could be a lot more ambitious.
The case for circularity
The Paris Agreement cannot be delivered through cleaner electricity alone. We must also reduce the emissions that are embedded in the way we extract resources, manufacture products, build infrastructure and dispose of waste.
Circularity principles are pivotal to credible mitigation pathways: designing technologies and products to last, repairing and reusing them, and reducing demand for virgin resources.
The scale of the opportunity is striking. A recent European Environment Agency review found that adopting such principles could deliver average global emissions reductions potential of 52% in the waste sector against a business-as-usual scenario, 48% in construction and buildings, 28% in transport and mobility, 26% in industry and 24% in agriculture.
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These figures make a compelling case for raising circularity ambitions across the economy, offering the promise of far more than better recycling bins.
In fact, recycling minerals used in cleantech equipment, for example, illustrate the extent of the emissions savings available. The carbon footprint of minerals and metals recovered from secondary sources is up to 80% lower than those produced from new mining and processing, according to the International Energy Agency.
A major EU-funded project estimates that recovered materials could substitute up to 56% of Europe’s primary critical raw material requirements by 2050, provided they achieve the necessary quality. The main takeaway goes beyond Europe: yesterday’s products can become tomorrow’s strategic resources while mitigating climate change.
In this light, a target to increase the share of recovered material use to 15% isn’t enough.
The evidence-based Circularity Gap Report found a 17% target by 2032 is possible and could unlock additional emissions reductions amounting to several gigatonnes of CO2.
Reducing material demand
A higher circularity metric is only part of the answer, however. An economy can increase its recycling rate at the same time as extracting more primary materials if total material demand keeps growing.
The tougher issue governments need to address is identifying what reductions in primary material use are needed.
The Circularity Gap Report uses an indicative benchmark of eight tonnes of virgin materials consumed per person annually. This is already being translated into policy: Germany’s 2024 circular economy strategy aims to reduce primary resource consumption, with the German Federal Environment Agency identifying six to eight tonnes per person as an ambitious target.
Reducing primary material demand will require a closer integration of energy and resource policies. Efficient EVs charged with solar power can complement better public transport and walkable cities, while batteries designed to be repaired and reused for stationary energy storage before being recycled will reduce the materials footprint of transport and clean energy services.
Coordinated infrastructure development and urban planning can prevent unnecessary overbuild, while renovating existing building stock reduces demand for new steel, cement and aluminium, which are emissions-intensive to produce. Connecting industrial waste heat to district heating networks can further reduce energy demand and emissions.
What governments should agree at COP31
COP31 can translate this approach into three concrete commitments.
First, governments should agree a stronger circularity ambition, supported by material-footprint indicators and milestones. The presidency should seek recognition of these priorities in negotiated outcomes, alongside concrete delivery partnerships under its COP31 Action Agenda.
Second, countries should include quantified circular economy measures in their updated nationally determined contributions (NDCs) and implementation plans. Such measures should include reuse, material efficiency and circularity targets, as well as transparent estimates of emissions savings that avoid double counting across sectors. By the end of 2025, countries had developed 101 national circular economy roadmaps and action plans, yet these often remained disconnected from their NDCs.
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Third, climate finance should support the delivery of circular solutions such as material recovery at scale, investments into circular critical mineral value chains beyond mining, developing a circular plastics economy, and designing buildings and cities that support material reuse. Developing countries need technology, affordable finance and support to deliver these ambitions, including for the informal workers whose livelihoods depend on recovering and recycling materials.
The test for COP31 is to reach an agreement that can start the transformation of our production and consumption systems and how they are financed.
A headline circularity target will achieve little without policies that address absolute resource demand and deliver measurable emissions cuts. But COP31 offers an opportunity to make circularity a central element of climate policy, with targets strong enough to matter and institutions equipped to deliver them.
The post COP31 must aim higher to cut emissions from the use of materials appeared first on Climate Home News.
COP31 must aim higher to cut emissions from the use of materials
An exceptional El Niño is building. The World Meteorological Organization (WMO) says it has intensified to very strong levels and is likely to last at least through February 2027. If its current trajectory holds, it could become stronger than anything seen since WMO monitoring began four decades ago.
That is bad news for agriculture. El Niño – a naturally occurring weather phenomenon – can scramble rainfall patterns across the world, bringing drought to some regions and floods to others. And this time it is unfolding against the backdrop of a significantly hotter climate, with farmers already contending with unreliable growing seasons, extreme heat and less predictable rainfall because of global warming.
El Niño expected to bring next record-hot year as soon as 2027
We are seeing the consequences already. In Sri Lanka, drought linked to El Niño has dried wells and reservoirs and cut into crops and farmer incomes. Indonesia is experiencing its worst wildfire season in 11 years, with prolonged drought and extreme heat exacerbated by El Niño. And in Peru, authorities are preparing for the opposite extreme: intense rains, flooding and landslides which the national civil-defence agency says could affect around 1.2 million people.
These impacts will multiply as El Niño intensifies.
And yet, just as the risks to food production are rising, the money available to help farmers withstand them is shrinking.
10% funding decline in 2024
A forthcoming analysis from the Food and Agriculture Organization (FAO) shows that climate-related development finance for agrifood systems is moving in the wrong direction. In 2024, the latest year for which data is available, it fell by 10 percent compared with a 2 percent overall decline. The sectors that put food on our tables — crops, livestock, forestry and fisheries — received just 5 percent.
Yet this is precisely the moment when climate investment in agriculture needs to grow, not shrink. It can help communities adapt, build resilience and protect food security, while unlocking larger flows of public and private finance. Agriculture feeds us, supports the livelihoods of well over a billion people, and is often the first sector hit by drought, floods and extreme heat. Cutting that investment now is a false economy.
One failed harvest can plant the seed for the next crisis, forcing farmers to eat the seed they have saved for planting, sell livestock or tools, or take on debt. It can also deepen food insecurity, disrupt supply chains and drive up prices, showing up months later in supermarket aisles far away.
The Central American Dry Corridor, stretching through much of the region, shows both how exposed farmers are, and what investment can do. Based on an analysis of 41 years of satellite observations, FAO finds that some crop and pasture areas there face more than a 50 percent chance of agricultural drought over the coming months.
About half of Central America’s 1.9 million producers of maize, beans and other basic grains live in the Dry Corridor. Many grow food both for sale and for their own families. When a harvest fails, they lose both income and dinner.
El Salvador project conserves water and soil
In El Salvador, which lies within the Dry Corridor, more than 50,000 farmers have adopted practices to better withstand drought and increasingly unreliable rainfall through RECLIMA, a project financed by the Green Climate Fund and implemented by FAO in partnership with the government of El Salvador. It has substantial national co-financing, including from the country’s Environmental Investment Fund.
El Niño can intensify El Salvador’s annual mid-season dry spell, known as the canícula, turning it into a longer, harsher drought just as maize needs water most.
For María Cristina Corvera de López, a second-generation farmer in rural Nahualapa, adapting means changing how every drop of rain is captured and used. She plants trees alongside her crops to provide shade and minimise evaporation and uses simple irrigation channels and a homemade drip system to conserve water. Instead of burning stalks, leaves and husks after harvest, as generations before her did, she turns them into mulch to hold moisture in the soil.
“The effects of climate change are a constant challenge,” she says. But the new techniques have made her farm more resilient to El Niño as well. Where she once harvested about 50 bags of maize per acre, she now gets around 80, even during droughts. It’s enough to feed her family and sell the surplus.
Managing risk now cuts future costs
Together, these adaptations can mean the difference between losing a crop and getting through a dry season with enough food, seed and income to plant again. They are also the result of climate finance invested before disaster strikes.
RECLIMA shows what that kind of adaptation investment can buy. Adaptation accounted for 45 percent of climate-related development finance to agrifood systems in 2024, and multilateral development banks are directing more agricultural finance towards resilience. That shift reflects a growing recognition that adaptation is a form of risk management, not just a development cost.
We need much more of it. The same investments that help farmers withstand El Niño also enable them to adapt to a hotter, more unpredictable future. Cutting investment in the people who produce our food just as climate risks intensify does not save money. It simply pushes a much larger bill into the next harvest, the next food crisis, and the next El Niño.
The post As El Niño intensifies, we should be investing more in the world’s farmers appeared first on Climate Home News.
As El Niño intensifies, we should be investing more in the world’s farmers
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