COP28 Review
In this review of COP28, Castlefield's David Gorman takes a look at the latest UN Climate Conference COP28 and considers if the outcomes aligned with pre-conference expectations.
At the end of another year of extreme weather events across the world, COP28 recently concluded, with the great and the good jetting in to Dubai to talk all things climate. It’s safe to say that the need for progress is urgent.
Back in 2015, COP21 led to the Paris Agreement, which was a legally binding international treaty signed by 196 Parties. That Agreement came into force in November 2016 and was seen as a landmark in the multilateral climate change process because, for the first time, a binding agreement brought together nearly every nation in the world to combat climate change and adapt to its effects.
The main goal of the Paris Agreement was to limit global warming to 1.5°C, compared to pre-industrial levels, by 2050. The reason that a 1.5°C (rather than 2°C) increase was chosen is because the UN Intergovernmental Panel on Climate Change, or IPCC, believes that crossing the 1.5°C threshold risks unleashing far more severe climate change effects, including more frequent and extreme droughts, heatwaves and rainfall[1]. However, to limit global warming to 1.5°C, greenhouse gas emissions must peak before 2025 at the latest and decline 43% by 2030, now only a little over six years away.
So, what did we expect from COP28?
COP28 was billed as:
A prime opportunity to rethink, reboot, and refocus the climate agenda[2]
We were promised that this year’s COP would see the first “Global Stocktake” of the progress – or perhaps lack of it – made since Paris, eight years ago.
The event took place at Expo City in Dubai. Eyebrows were raised about the host country and many expected that the United Arab Emirates would use its COP Presidency to highlight its own status on the global stage. Hosting the largest climate summit ever gave the UAE the opportunity of using climate diplomacy to advance Emirati soft power, as it has done in the sporting arena.
The President of COP28 is His Excellency Dr. Sultan Ahmed Al Jaber of the UAE. He had a big job on his hands at the Conference, consulting with governments and other stakeholders, providing leadership and vision and – ultimately – brokering any agreements generated. He said that the four pillars of the conference would be:
- fast-tracking the energy transition;
- fixing climate finance;
- focusing on people, lives and livelihoods;
- and underpinning everything with full inclusivity.
Sultan Al Jaber, who holds a PhD in business and economics from Coventry University and was awarded an honorary CBE in 2013[3], is the head of Abu Dhabi’s National Oil Company (Adnoc) and is regarded as a highly effective business leader. He wants to get the Oil & Gas industry more involved in the climate transition, at a time when the oil majors seem to be rolling back on the limited commitments they’ve made to renewable energy.
Although the UAE announced plans this year to invest $54 billion to triple its supply of renewable technologies by 2030 and was the first Arab state to set a “net-zero” emissions target, 80% of government revenue still comes from oil and gas exports[4].
Sultan Al Jaber does have green credentials; before he headed Adnoc he ran Masdar, which has funded many renewables projects - mainly in the Middle East and Central Asia, but also the 620MW London Array offshore wind scheme.[5] However, despite the UAE’s 2050 Net Zero commitments, Adnoc has been ramping up Oil & Gas production. In 2018, it produced 3 million barrels per day, but set a target to increase this to 5 million well before 2030.
Although Adnoc has made some noises about carbon commitments, they don’t seem very convincing. Their focus seems to be more about decreasing carbon intensity rather than the overall level of emissions.
As first set out in Paris, the Global Stocktake was the key mechanism through which action on climate is assessed. It was pretty apparent, ahead of COP28, that the world is still falling short of meeting the ambitions of the Paris Agreement and it was expected that COP28 would offer a response to this concern.
There was much to discuss and there was certainly political pressure to announce an agreement of some kind. We felt it unlikely that we would get any meaningful move forward in terms of commitments. There might be a chance of a deal but it may be a watered down Agreement that some countries choose to ignore. Overall, with everything else that’s going on in the world just now, we thought it was right to be sceptical about prospects at COP28 – that way, we wouldn’t be disappointed.
So, what did we get at COP28?
Well, the great and the good did – mostly – turn up to the event. King Charles attended, as did Rishi Sunak, Ursula von der Leyen, Indian leader Narendra Modi, Prince Abdulaziz of Saudi Arabia and Pope Francis. However, Presidents Biden and Xi stayed at home, sending envoys instead.
We did get an agreement and Sultan Al Jaber is to be congratulated for brokering an agreement that treads a very fine line, satisfying the US and the EU on the necessity to use fewer fossil fuels while still keeping Saudi Arabia and other oil and gas producers onboard.
The agreement we have is the UAE Consensus[6], which was finally hammered out on Wednesday December 13th, a day later than scheduled. What is really significant about the Consensus is that no previous COP text has included a written commitment to transition away from all fossil fuels – so this is a first. The Agreement itself might be summed up by the phrase “transitioning away,”
Transitioning away from fossil fuels in energy systems in a just, orderly and equitable manner, accelerating action in this critical decade
The final agreement calls on countries to move their energy systems away from fossil fuels in a just and orderly way, and it is this qualification that provides some wriggle room for the less enthusiastic. The agreement also asks participating nations to contribute to a global transition effort rather than being forced to make the change on their own.
Natural gas will remain part of the global energy mix for years to come, with the final text of COP Agreement noting that gas “can play a role in facilitating the energy transition while ensuring energy security.” Gas producers have long argued that the fuel should complement the roll-out of renewable sources, such as wind and solar, which suffer from intermittency and lack of capacity.
As well as the final negotiated text, leaders made commitments aimed at accelerating progress toward the goals set out in the Paris Agreement. Over 100 countries committed to tripling renewable energy, the Loss and Damage fund was operationalized and funded, major players in the oil and gas sector committed to decarbonizing their direct emissions and taking significant steps towards reducing methane emissions and over 100 countries signed a declaration to focus on the impact of food and land-use changes on carbon emissions.[7]
Parties agreed on targets for the Global Goal on Adaptation (GGA) and its framework, which identify where the world needs to get to in order to be resilient to the impact of a changing climate and to assess countries’ efforts. The GGA framework reflects a global consensus on adaptation targets and the need for finance, technology and capacity-building support to achieve them.
The Green Climate Fund (GCF) received a boost to its second replenishment with six countries pledging new funding at COP28 with total pledges now standing at a record $12.8 billion from 31 countries, with further contributions expected.
Eight donor governments announced new commitments to the Least Developed Countries Fund and Special Climate Change Fund totaling more than $174 million to date, while new pledges, totaling nearly $188 million so far, were made to the Adaptation Fund at COP28.
At COP28, discussions continued on setting a ‘new collective quantified goal on climate finance’ in 2024, taking into account the needs and priorities of developing countries. The new goal, which will start from a baseline of USD 100 billion per year, will be a building block for the design and subsequent implementation of national climate plans that need to be delivered by 2025.[8]
What do we think?
The front page of the COP28 website now carries the strapline “We united. We acted. We delivered.”[9] The final agreement was greeted positively by many and it isn’t perfect but it is perhaps better than expected.
In his closing speech, UN Climate Change Executive Secretary, Simon Stiell said:
“Whilst we didn’t turn the page on the fossil fuel era in Dubai, this outcome is the beginning of the end,” Now all governments and businesses need to turn these pledges into real-economy outcomes, without delay.”[10]
The oil-producing nations who took part in COP28 (the likes of Russia and Iran didn’t) appeared to see what they wanted to see in the Consensus, with the Secretary General of the OPEC cartel talking about ensuring a balanced narrative on energy transitions and, when necessary, correcting misguided messages related to both hydrocarbon fuels and our industry.[11]
Others are disappointed by the final Agreement, for example the representatives of smaller nations and those looking for what they see as a more just transition. Senegal's climate minister, Madeleine Diouf Sarr, on behalf of the bloc of Least Developed Countries, said:
"It reflects the very lowest possible ambition that we could accept rather than what we know, according to the best available science, is necessary to urgently address the climate crisis." The agreement "highlights the vast gap between developing country needs and the finance available, as well as underscoring rapidly dwindling fiscal space due to the debt crisis. Yet it fails to deliver a credible response to this challenge."[12]
However as highlighted in the Global Stocktake, all these financial pledges fall far short of the trillions needed to support developing countries with clean energy transitions as well as implementing their national climate plans and adaptation efforts.
Positive momentum is building but, to make progress, the powers that be (elected and unelected) have to demonstrate the will to do something and commit the funds to making things happen. Also, what’s missing is much of timetable of events – we would have liked to have seen more of a definitive roadmap – namely, “doing this thing by that date” and lots of climate goals still have the feeling of being nice to have.
It is the turn of Eastern Europe to host COP29 next year and the event will take place in Baku, Azerbaijan. Many observers, this one included, are disappointed to see another undemocratic oil state hosting a global conference focusing on emissions reduction.
The UAE Consensus has more substance to it than perhaps we might have expected, but it’s now all about delivery and with so many other things going on in the world just now, the worry is that the green transition slips down the list of priorities.
Castlefield clients know that we avoid investing in companies exposed to the oil and gas industries because we want to see the global economy move away from a reliance on fossil fuels and we’d like to see this transition done in a way that is fair to all. So, any agreement to cut emissions and to allocate more cash to green infrastructure is to be welcomed. The trouble is that, on climate, we want deeds (and funds) not words, and that seems to be a bigger challenge.
Written by David Gorman
Information is accurate as at 13.12.2023. The opinions expressed are those of the author and they do not necessarily represent the views of Castlefield Partners Ltd.
[1] FAQ Chapter 2 — Global Warming of 1.5 ºC (ipcc.ch)
[3] COP28 President-Designate | H.E. Dr. Sultan Al Jaber - Bio (drsultanaljaber.com)
[4] COP28: Can oil-rich UAE lead global climate action? | Chatham House – International Affairs Think Tank
[6] COP28 UAE | COP28 delivers historic consensus in Dubai to accelerate climate action
[7] COP28: Wrap-up (mckinsey.com)
[8] COP28 Agreement Signals “Beginning of the End” of the Fossil Fuel Era | UNFCCC
[9] https://www.cop28.com/en/about-cop28
[10] COP28 Agreement Signals “Beginning of the End” of the Fossil Fuel Era | UNFCCC
[11] Saudi Arabia backs COP28 deal, praises flexible approach | Reuters