COP28 Key takeaways for business

Introduction

The 28^th UN Climate Change Conference of the Parties (COP28) was hosted in the United Arab Emirates (UAE) from the  30^th of  November to  the 13^th of December. It brought together the 198 signatory countries of the Paris Agreement, to check progress against agreed targets and last year's COP27 commitments. The decision to hold COP28 in a Petrostate was controversial from the outset, which sparked significant debate and resulted in the greatest number of stakeholders from the fossil fuel industry ever attending a COP. The President of the COP, Sultan, Dr Ahmed Al-Jaber, is the CEO of Abu Dhabi National Oil Company. 

The North Star of the COP28 Presidency was to keep 1.5^oC within reach. The science says that in order to meet this goal, the world must get to net zero emissions by 2050 and reduce emissions by 43% by 2030 compared to 2019. The agreement reached at this COP did not live up to that ambition. What actually resulted was 198 countries approved a roadmap for "transitioning away from fossil fuels" - a first for a UN climate conference to be fair - but the deal still stopped short of a long-demanded call for a "phase-out" of oil, coal, and gas.

The headline COP28 results are detailed in The First Global Stocktake Agreement (so-called "UAE Consensus")¹. This insight unpacks the key takeaways that businesses need to know.    

All documentation from COP28 can be found on the COP28² and the United Nations Climate Change³ websites.

First Global Stock Take Agreement

The major commitments contained in the final negotiated agreement include:

• An unprecedented reference to transitioning away from fossil fuels in energy systems in a just, orderly, equitable manner, accelerating action in this critical decade, so as to achieve net zero by 2050 (in keeping with the science).
• Raised ambition on expectations for the next round of Nationally Determined Contributions (NDCs) from countries by encouraging "economy-wide emission reduction targets".
• Tripling renewable energy capacity globally and doubling the global average annual rate of energy efficiency improvements by 2030.
• Accelerating efforts towards the phase-down of unabated coal power.
• Accelerating efforts globally towards net zero emission energy systems, utilising zero- and low-carbon fuels well before or by around mid-century.
• Accelerating zero- and low-emission technologies, including renewables, nuclear, abatement and removal technologies such as carbon capture and utilisation and storage, particularly in hard-to-abate sectors, and low-carbon hydrogen production.
• Accelerating and substantially reducing non-carbon-dioixde emissions globally, including in particular, methane emissions by 2030.
• Accelerating the reduction of emissions from road transport on a range of pathways, including through the development of infrastructure and rapid deployment of zero and low-emission vehicles.
• Phasing out inefficient fossil fuel subsidies that do not address energy poverty or just transitions, as soon as possible.
• Nature was included in the climate agreement for the first time to align with the Global Biodiversity Framework and a commitment to halting deforestation by 2030.
• Building momentum behind the financial architecture reform agenda, recognising the role of credit rating agencies for the first time and calling for a scale-up of concessional and grant finance. 

While the Agreement calls on all countries to move away from the use of fossil fuels, it misses several key requirements many governments including USA, China, EU and Ireland were pushing for. These will now move to the COP29 agenda in a year's time and include:

• The requirement to phase out fossil fuels and a clear timeline.
• Agreement to operationalise carbon markets pending since the 2015 Paris Agreement.
• Phasing out all fossil fuel subsidies vs only "inefficient" in the Agreement and clarifying on current vague references to "transitional fuels".

For Small Island Nations and much of the Developing World, funding the transition from fossil fuels is neither meeting the funding expectations required nor supporting a just transition. According to Anne Rasmussen, lead negotiator for Samoa, the process had failed Small Island Nations and the final agreement has "a litany of loopholes".⁴

"I came from my home islands to work with you to solve the greatest challenge of our generations, to build a canoe. We have built a canoe with a weak and leaky hull. Yet we have to put it into the water because we have no other option."

- John Silk, the negotiator from the Marshall Islands.

COP28 Agreement takeaways

The key business takeaways and initatives from COP28 are outlined below.

The context for COP28 was the world’s first Global Stocktake of progress against the 2015 Paris Climate Change Agreement (COP23). This stocktake is to take place every five years under the Agreement and is a process for countries and stakeholders to assess distance to target. It informs the next round of country level climate action plans under the Paris Agreement (nationally determined contributions, or ‘NDCs’) to be put forward by 2025. It highlighted that Parties are currently not on course to achieve their goals outlined in the Paris Agreement. The UN Environment Programme Emissions Gap report⁵ released ahead of the COP showed the world had heated to over 1.2^oC already with global emissions still rising. This message of how far off-track progress is was acknowledged in the Global Stocktake Agreement and it “encourages” Parties to come forward with ambitious, economy-wide emission reduction targets, covering all greenhouse gases (GHG), sectors and categories and align with the 1.5°C limit in their next round of NDCs by 2025. This is seen as weak given the distance to target and urgency of the climate emergency. According to UN Climate Chief Simon Stiell this first stocktake that concluded at COP28 revealed that progress is not fast enough, but it is undeniably gathering pace.

"The current trajectory is just under 3^oC of global warming equating mass human suffering, which is why COP28 needed to move the needle further".

- UN Climate Chief Simon Stiell.

Climate Finance

On climate finance, progress was made in some areas, but not to the levels hoped. This included:

• Operationalisation of the Loss and Damage Fund⁶ where developed countries which are most responsible for the climate emergency have in total pledged $792 million to the fund, which falls short of the $400 billion needed in losses that developing countries face each year.
  • The United Arab Emirates and Germany both pledged $100 million to the fund.
  • Ireland has pledged $27.1 million.
  • The European Union has pledged $27.1 million.
  • The United States, the largest producer of oil and gas last year, has pledged $17.5 million.
• Momentum was built behind the financial architecture reform agenda, recognising the role of credit rating agencies for the first time, calling for a scale-up of concessional and grant finance.
• The Green Climate Fund (GCF) financing mechanism of the UNFCC, the world’s largest climate fund reached record funding level at COP28 with six new pledges: Australia, Estonia, Italy, Portugal, Switzerland and the United States. It now holds a portfolio of $13.5 billion and several pledges were made supporting developing nations initiatives.
• A framework for the Global Goal on Adaptation (GGA) was made and recognition of the urgent need to significantly scale up adaptation finance beyond existing levels. However, no new funding targets were agreed.

"Many vulnerable countries are drowning in debt and at risk of drowning in rising seas. It is time for a surge in finance, including for adaptation, loss and damage, and reform of the international financial architecture."

- UN Chief António Guterres

Several pledges and initiatives across energy efficiency, renewables and hydrogen were launched including:

• Global Renewables and Energy Efficiency Pledge to triple worldwide installed renewable energy generation capacity to at least 11,000 Gigawatts (GW) and to double the global average annual rate of energy efficiency improvements to more than 4% by 2030. Ireland was part of the 132 countries who signed.
• The Global Decarbonisation Accelerator (GDA) to activate the decarbonisation of Industry, Energy and Transport Sectors by facilitating access to key enablers such as policymaking & standards, financing, infrastructure & technology. Key aims are:
  • Focus on renewables ramp-up: Develop 11,000 GW of renewable energy (3 times the current capacity).
  • Energy efficiency: double the global average annual rate of energy efficiency improvements from around 2% to over 4% annually.⁷
• 39 countries (excluding Ireland) signed the Declaration of Intent on Mutual Recognition of Certification Schemes For Renewable And Low-carbon Hydrogen And Hydrogen Derivatives. The declaration outlines an agreement to endorse the ISO standards method for GHG emissions assessment of hydrogen, which are set to cover over 80% of the future global market in hydrogen and its derivatives.

Methane Reductions across Oil and Gas, Agriculture, and Waste

COP 28 highlighted the global methane emissions from key emitting sectors Oil and Gas, Agriculture, and Waste. The Global Methane Pledge was agreed covering methane from the key sectors. It aims to reduce global methane emissions by at least 30% from 2020 levels by 2030.

• For Oil and Gas – the Oil and Gas Decarbonisation Charter was launched and calls for the industry to align to net zero by or before 2050 and eliminate routine flaring by 2030.
• For Agriculture - The Enteric Fermentation R&D Accelerator was launched with $200 million in funding announced to accelerate methane mitigation in livestock production.
• For Waste - $100 billion in investment was announced to tackle methane from organic waste. The target is to reduce methane from waste by 1 million tonnes annually by 2030⁸.

COP29 and COP30

The next COP29 is expected to be hosted by petrostate Azerbaijan from 11-22 November 2024, and Brazil as COP30 host from 10-21 November 2025.

“COP28 has delivered, for the first time at climate talks, a clear call on countries to transition away from fossil fuels. The deal is not perfect, but one thing is clear: the world is no longer denying our harmful addiction to fossil fuels. “We have the solutions; we know what needs to be done. And action can no longer wait.” 

- Inger Andersen, Under-Secretary-General of the United Nations and Executive Director of the United Nations Environment Programme.

How Davy Horizons can help

Davy Horizons sustainability advisors work with plcs, large private companies, government bodies, semi-states, and not-for-profits to incorporate sustainability credibly in their organisation and value chains aligned to regulation, industry best practice and customer demand. We provide sustainability consultancy services to businesses across all sectors including on:

• GHG emissions measurement, setting and validating to Science Based Targets and development of Climate Transition Plans.
• CDP questionnaire submission for Climate Change, Water and Forests.
• Training of board, senior management, Sustainability Committees and operational leads.
• Assurance and Verification Statements of ESG data for annual reporting.
• Sustainability reporting support, including CSRD and EU Taxonomy-aligned disclosure and reporting.
• ESG briefings for Investor Relations in Capital Markets.

Sources:

[1] UNFCC, Outcome of the first global stocktake, 13 Dec 2023, https://unfccc.int/sites/default/files/resource/cma2023_L17_adv.pdf

[2] https://www.cop28.com/en/

[3] https://unfccc.int/documents

[4] Countries reach ‘historic’ COP28 deal to transition from fossil fuels (ft.com)

[5] https://www.unep.org/resources/emissions-gap-report-2023

[6] https://www.unep.org/news-and-stories/story/what-you-need-know-about-cop27-loss-and-damage-fund

[7] www.cop28.com. (n.d.). COP28 Presidency launches landmark initiatives accelerating the energy transition.

[8] www.nrdc.org. (2023). Food Waste Solutions on the Menu at COP28.