Over the past two weeks, nearly 100,000 public and private-sector senior officials, negotiators, and executives along with NGO and climate leaders have descended upon Dubai, UAE to attend the annual United Nations Climate Conference: COP28.While this year’s convening drew quite a bit of skepticism given the COP28 President Sultan al-Jaber and the UAE’s deep ties to the fossil fuels industry, the conference drew record-breaking number of private sector attendees and kicked off with a first-ever Business & Philanthropy Climate Forum held during the first two days to foster better cross-sectoral progress towards achieving climate and nature goals.
Framing the agenda for this year’s COP is the first global stocktake of the Paris accord, which was set to review progress since the accord was signed and make recommendations for the next round of national climate plans, which governments must submit to the U.N. next year. A technical analysis for the stocktake published in September offered a downbeat assessment: There has been some progress since 2015, but governments are far from meeting the Paris agreement’s temperature targets.
With the stocktake in mind, several highly anticipated commitments and agreements were accomplished during this COP convening, including over $85B of financial pledges spanning across the design of the Loss and Damage Fund; an update to and progress on the Global Methane Pledge; a framework for voluntary carbon markets; and the establishment of a Global Climate Finance Framework that offers innovative ways to further unlock the climate finance necessary to combat the climate crisis, to highlight a few. Furthermore, for the first time in COP history, the reference to “fossil fuels” was included in the final agreed upon Global Stocktake text. While the text lacks a specific commitment to either phase out or phase down fossil fuels, contrary to the calls from numerous countries, civil society groups, and scientists, it calls on countries to continue to contribute to the just transition away from fossil fuels.
That said, more than ever before, this COP made clear that corporations will continue to play a pivotal role in providing capital to close the financing gap, delivering market signals, and driving innovation to make net zero a reality. Over the two weeks, a record number of companies showed up in Dubai to demonstrate the concrete steps they are taking to address previously intractable problems like eliminating methane emissions, supporting nature-based solutions, investing in resilience and adaptation, leaning into emerging technologies and new solutions, and publishing clear and verifiable net zero transition plans, and identify allies and partners needed to help them on their transition.
In terms of key takeaways for the private sector going forward, this COP demonstrated that organizations that are dedicated to, aligned with and are executing on their voluntary commitments will continue to be showcased and identified as industry leaders to the benefit of their business. On the other hand, those who are lagging and/or not taking the necessary steps to transition their operations and business to a low-carbon economy are finding it harder to maintain the status quo and, in some cases, are being publicly blasted by senior public officials for their inaction.
Lastly, the COP28 Presidency announced that Azerbaijan will host COP29; a decision that did not come lightly as Climate Convention diplomacy was directly inserted into Eastern European geopolitics. Over the weekend, Russia intentionally blocked COP29 hosting applicants (Azerbaijan and Armenia, with Bulgaria and Serbia having shown some interest) — branding all as insufficiently “neutral.” However, in a somewhat surprising move, with potentially positive peace implications beyond climate matters (calming tensions around the Nagoro-Karabakh conflict), Armenia decided to back Azerbaijan’s bid to host the next COP and in doing so withdrew its own bid. In exchange, Azerbaijan agreed to support Armenia representing the Eastern European region within the Climate Convention’s management bureau as well as some other unstated deals between the warring countries and Russia.
SUMMARY OF KEY COP28 ANNOUNCEMENTS
Loss and Damage Fund: An agreement was met on the Loss and Damage Fund, designed, and structured to assist the world’s most vulnerable and poorest communities to aid in payment for the irreversible impacts of climate change, with the most recent tally of the fund pledge is now at $792M. The fund will sit under the World Bank, who will serve as the interim trustee for the first four years. Developing countries have continuously argued that positioning the World Bank, whose presidents are appointed by the U.S., would give those countries that donate into the fund a significant influence over it and would ultimately result in higher fees for those countries receiving funds. Given so, the jury is still out on the Bank’s ability to restructure internally to be able to appropriately manage and deploy the fund. While $700M may appear to be a great deal of money, it is equal to less than 0.2% of the annual irreversible economic and non-economic losses experienced by developing countries due to global warming. Given its current pledge levels, the fund’s capability to issue sizeable grants to emerging communities that can offer meaningful impact instead of loans and without a long-term funding mechanism in place is highly unlikely.
New $30B ALTÉRRA Climate Fund: The UAE along with BlackRock, TPG, and Brookfield jointly launched a new $30B climate fund, ALTÉRRA, which is currently the largest investment vehicle for climate change action. The fund is intended to drive private-sector capital towards climate investments, with a heightened focus on pushing such capital towards emerging communities within the Global South. The topic of climate finance remains on two tracks: 1. within the negotiations, and 2. outside. In the draft COP28 decision text, there is a heavy push for increased financing for both adaptation and mitigation actions, though the scope and form of a successor to the current goal of $100B per year in North-South climate funding won’t be decided until COP29. Outside the negotiations, the discussion is better tethered to reality, with many meetings about blended finance and a plethora of other policy and financial-related instruments being tested to rapidly increase funding from the current $1.3-$1.5T annually. Special attention is being given to the mix of technology and financial incentives needed by hard to abate sectors and to increase adaptation financing generally but particularly in emerging economies.
Additional Finance Developments
Voluntary Carbon Markets Joint Framework: The framework was introduced with a goal of safeguarding the integrity of voluntary carbon markets (VCMs) — addressing standards on both the demand and supply sides. Considering previously received feedback and skepticism, the standards include checking that emissions reductions are credible and durable as well as ensuring no double-counting between companies and countries claiming the credit. Additionally, the framework notes that transition credits have the potential to be an important enabler, specifically targeting the early retirement of coal-fired power plants. It has become more and more evident that the formality of structure around and investment in VCMs is a significantly important platform for businesses and individuals to take proactive steps in addressing climate change, support emission reduction projects, encourage innovation, foster global collaboration, and align with evolving consumer and investor expectations.
Oil and Gas Decarbonization Charter: Exxon Mobil Corp and Saudi Arabia’s Aramco along with 50 companies pledge to cut methane emissions through the end of routine flaring by 2030 and near-zero upstream methane emissions. The pledge also includes a new methane tracking program to hold signatories accountable. The companies that joined the pledge collectively represent more than 40% of global oil production. None of the pledged companies agreed to cut oil and gas production. There continues to be a debate regarding the term “unabated” and over whether it will be economically feasible anytime soon to mechanically remove CO2 from the atmosphere at scale and store or use it, so it is permanently sequestered. This lies at the core of Sultan Al Jabar’s remark that the science doesn’t indicate that the phase out of fossil fuels is necessary to stay within 1.5 degrees of warming. While theoretically there could be some significant technological breakthrough allowing carbon capture and storage (CCS) to become feasible, but since there is no clear prospect this will happen, the fossil fuel industry is essentially asking humanity to bet its future on this becoming a reality.
Additional Energy Developments
Nature / Biodiversity
Joint Statement on Climate, Nature, and People: In collaboration with the People’s Republic of China, in its capacity as the President of the Convention on Biological Diversity (CBD COP15), the COP28 Presidency announced a Joint Statement on Climate, Nature, and People. In doing so, this statement indicated a renewed dedication among 11 significant country-led partnerships and alliances to harmonize and concurrently execute their strategies for both nature conservation and climate initiatives.
UAE Declaration on Sustainable Agriculture, Resilient Food Systems, and Climate Action: Over $2.5B has been mobilized to support the food-climate agenda through 134 countries that endorsed the UAE Declaration on Sustainable Agriculture, Resilient Food Systems, and Climate Action. The 134 signatory countries represent nearly 500 million farmers, produce 70% of the food we consume, and are responsible for 76% of all emissions from global food system or 25% of total global emissions. Also, in support of this declaration, The Bill & Melinda Gates Foundation and the UAE announced the launch of a $200M partnership focusing on agricultural research, scaling innovations, and funding for implementation.
Additional Agriculture Developments
Gender / Youth
Climate Gender Equity Fund: USAID, with support of Amazon, has launched the Climate Gender Equity Fund (CGEF) as one of the first major activities of USAID’s $250M Climate Finance for Development Accelerator designed to mobilize $2.5B in public and private climate investments by 2030. With an initial commitment of $6M between USAID and Amazon, CGEF aims to secure at least $60M from other funders. CGEF will reach women climate leaders in global emerging markets where USAID operates. This is complemented by Amazon’s separate $50M investment in women-led and women-founded climate technology companies through the Climate Pledge Fund’s Female Founder Initiative.
Additional Gender / Youth Developments