Eva Cairns, head of sustainability insights & climate strategy, abrdn, reflects on week one at COP 28.
She said: “The first week of COP has struck a positive note with excitement among attendees that progress is being made across many different areas. A strong opening speech from the president and a swiftly agreed agenda suggested that the UAE can deliver on getting parties behind a common goal effectively. This was followed by a big success for the loss and damage fund, which was agreed with $420 committed on Day 1 (this has increased to nearly $800m since). There have been several declarations, pledges and initiative announcements with considerable funds committed to climate action, currently standing at over $83bn which is close to the climate finance promise made in 2009 of developed countries delivering $100bn to developing countries and that took 13 years to deliver. This included a commitment of $30bn by the UAE to fund solutions to tackle the climate change crisis.
“In particular, it was positive to see the Declaration on sustainable agriculture, resilient foods systems and climate action. Food has long been neglected and this Declaration has been signed by 134 countries, covering 70% of the world’s land committing to integrate food into their climate plans by 2025. I am also eagerly awaitingthe launch of the UN FAO net zero roadmap for food and agriculture to demonstrate what that pathway looks like for food production. This is expected on Food Day on 10th December. However, it is disappointing that the official Global Stocktake text being negotiated does not refer to food & agriculture action and it is proposed that discussions continue in June 2024 which many are not happy with.
“In addition to the food declaration (hopefully resulting in policies that mobilise private capital for transforming the food sector), the commitment of 117 countries to the Global Decarbonisation Accelerator will shift the pace and scale of the transition, for example by committing to triple renewables and double energy efficiency by 2030, and the creation of the Industrial Transition Accelerator co-funded by Bloomberg, creating new investment opportunities. There is a strong focus on transition finance and the need to consider a toolbox of solutions and financial instruments to transition every sector and region, and not leave heavy emitting industries behind.
“There is also a strong focus on people at this COP with the first ever dedicated health day and a declaration acknowledging the impact of climate change on health; a dedicated just transition day with the first ministerial roundtable on this issue, focused on how the transition can be delivered with social benefits for workers, communities and different community groups without leaving anyone behind. This is important at company and country level, eg the Just Energy Transition Partnerships are in place to support coal-dependent nations such as South Africa and Indonesia transition.
“Another announcement that is important for investors is the alignment of standards and integrity for voluntary carbon markets, which was announced on COP finance day. The VCMI, ICVCM, GHG protocol and SBTi have joined forces to develop an end-to-end integrity framework for carbon credits and six different carbon credit verification providers have also agreed to work together to harmonise standards. This will help address the continuous challenge around integrity and quality of carbon credits and enable the growth of carbon markets that need to be part of a holistic solution to mobilising capital for net zero.
“The oil and gas decarbonisation charter was hailed as a success with 50 oil and gas producers joining, the focus is on methane, routine flaring and operation net zero 2050 emissions (Scope 1 & 2) but I am most disappointed by the avoidance of tackling downstream Scope 3 emissions related to the use of fossil fuels and the lack of discussion on the need to phase out fossil fuels. All the extremely positive announcements, commitments of capital and declarations do not make up for the fact that a phase out of fossil fuels needs to be agreed.
“A second draft of the official COP28 global stocktake text has been released which is a core outcome of COP28. It is interesting to see how the text is evolving with options that include alternative wording on contentious issues, including a ‘no text’ option for many paragraphs in case Parties cannot agree. Paragraph 35 of the text will be the most debated one as it includes a call to action to all parties with several actions highlighted, including wording on the phase out of fossil fuels and of inefficient fossil fuels subsidies. This is very positive to see and would be a major success for COP28 if included in the final text, especially after that stark criticism of the COP28 president early this week in relation to his fossil fuel comments.
“Overall, we have seen ambition and considerable finance commitments, but to help mobilise private capital, there is still concern from investors that the policy incentives are not supportive of enabling investing for net zero by 2050. Emissions need to decrease by 43% by 2030 but according to country targets are on a trajectory to increase by around 10% instead and based on current targets, we are on a 2.5C trajectory. Investors need clear policy signals, for example, on tackling fossil fuel subsidies and carbon prices and addressing the challenges related to short term political incentives that can lead to derailing climate action. In recognition of this, it was positive to see the launch of a taskforce for net zero policy which will be led by the PRI to enhance collaboration on this topic.”
