COP28 – Delivering in the desert
Following a recent trip to Dubai to attend COP28, Ellis Eckland, Lead Portfolio Manager for the UBS Asset Management Climate Action Strategy, reflects on the key discussion points and areas of progress.
Experts and commentators will pour over the final wording of the agreement for weeks and months to come – and each will form a view as to whether COP28 can be viewed as a success, failure or somewhere in-between. It is the first time language on transitioning away fossil fuels has been included in the final agreement. This should be celebrated. However, those hoping for more are already pointing to a ‘litany of loopholes’ and weaknesses in the final wording.
It is the first time language on transitioning away fossil fuels has been included in the final agreement. This should be celebrated.
A healthy tension always exists at Conference of the Parties meetings. The extent to which the laggards and historic emitters are vilified vs. working with key actors and sectors to help transition to a lower carbon global economy is a delicate balance.
Ask the NGOs and climate justice advocates on how we should collectively tackle climate change, and you will receive a hard-line response. Indeed, U.N. Secretary-General António Guterres reiterated “The 1.5°C limit is only possible if we ultimately stop burning all fossil fuels. Not reduce, not abate. Phase out.” Such urgency is understandable given the scale of the challenge ahead. On the other hand, ask the politicians and C-suite and you will get a more nuanced answer. We need to balance pragmatism and idealism, while staying suitably ambitious.
The 1.5°C limit is only possible if we ultimately stop burning all fossil fuels. Not reduce, not abate. Phase out.
In some senses the 28th meeting (aka COP28), was no different – with tensions and stakes running higher than ever. In other ways though, a visible shift in approach was clear. At the plenary session on Day 1 a historic (and long awaited) agreement was reached on ‘loss and damages’ funding (i.e., payments from richer nations, with higher historic emissions, to poorer nations who are struggling with the financial and social consequences of increased flooding, heatwaves and other climate-related effects).
The fund will be based at the World Bank for an initial period of four years, after which its placement will be reassessed. The initial pledges from developed countries of just over USD 700 million appear to be scratching the surface of potential losses, which by some estimates would be the equivalent of less than 0.2% of the losses developing countries face as a result of climate change every year.1 The devil will be in the detail and when cash actually changes hands, but this is an important step forward.
For better or worse, big business showed up in force and progress is often made far beyond the hype and headlines. Below are four encouraging signs that I took note of as I visited the world’s largest and most important climate convention.
Beautiful south: The Global South took more of a lead on accelerating global decarbonization. There was a focus on Global South-to-Global South cooperation, with clear signs of partnerships and sharing of best practices between well-capitalized Middle Eastern powers and countries such as Brazil that offer high decarbonization potential.
Climate innovation: The corporate sector also emerged as a leading player in reducing emissions. While past COPs have consisted of an official ‘blue zone’ and a civil society focused ’green zone’, this COP was supplemented by a corporate led ’innovation zone’. Innovation zone exhibitions ranged from hydrogen networks and methane capture systems to renewable technologies and satellite systems to track negative carbon technologies. One provider even claimed to be able to watch the growth of every tree on Earth to see if nature-based offsets were really delivering! This innovation zone highlighted the role of the corporate sector in delivering commitments made by governments and civil society.
Out from the shadows: COP28 marked the first large-scale participation and decarbonization commitments by the largest developing country national oil companies (NOCs). These companies – who combined are much larger than the Western oil majors – are responsible for a significant portion of the world´s Scope 3 upstream emissions, as well as significant direct Scope 1 & 2 emissions.
As the CEO of a major national oil company, COP28 President Sultan Al Jaber was able to get his fellow NOC leaders to make commitments to rapid emissions reductions and a 2050 net-zero target. This resulted in a net-zero pledge by 50 of the largest national and international oil companies including Saudi Aramco and ADNOC, the UAE national oil company as well as Western majors such as Exxon, Shell and Total Energies. Historically national oil companies have been some of the worst emitters in the energy industry and have been viewed as clear climate laggards, so this was a major accomplishment.
Sea change: Major advances in the decarbonization of the maritime sector were evident, with a series of key announcements related to acceleration of hydrogen-based fuel production and the development of green shipping corridors in both the Atlantic and Pacific. Events were led by the International Maritime Association, the Mærsk Mc-Kinney Møller Center for Zero Carbon Shipping and major corporations with announcements of new low carbon vessels and fuelling contracts and accelerated development of green shipping corridors between Korea and the US and Canada, the UK to Norway and the Netherlands and from Chile to the Far East.
While this accord is not a binding document and there is going to be criticism of what is not in the text, it sends a signal to markets, industry and investors on the continued trajectory of transitioning the global economy to net zero. There is no turning back now.
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