COP28: Daunting Stakes and Pivotal Decisions on the Table

• CommentaryEnergy Security · Geoeconomics · Infrastructure
  by Diana-Paula Gherasim

In a world of increased geopolitical fragmentation, wars, economic hardship, industrial and technological competition, for the international community focusing on climate change and the energy transition will not come as an easy task. Yet it is crucial and urgent for our collective survival. Against the backdrop of the war in Ukraine and the 2022 energy crisis, the issue of security, in all its forms, has grown to be central in international fora such as the G20[1] and to dominate domestic agendas. Energy security, but also food security, water and medicine security and defense are at the forefront of efforts, casting a shadow over the urgency of the climate crisis in the immediate term. At the same time, the acceleration of destructive weather phenomena at a current level of warming of 1.15°C[2] above pre-industrial level has made it into the daily news headlines and raises concerns of whole areas becoming un-insurable and un-inhabitable, of decreasing agricultural yields, of accelerated environmental degradation and loss of biodiversity and, overall, of an open Pandora box unleashing all threats to human security and well-being. The world must come to the realization that for every bit of degree of global warming, the consequences will be increasingly dire and potentially even irreversible where tipping points are crossed. The 28^th edition of the United Nations Climate Change Conference (COP 28) is opening with the hard task of taking steps ahead on climate change and make a synthesis out of opposing views.

The Global Stocktacke: turning science into action

First stop on the agenda of the COP28 is the Global Stocktake, put in place by the Paris Agreement in 2015, which must reflect the progress made on holding the global temperature increase to well below 2°C and pursuing efforts to limit it to 1.5°C. This is a moment of collective acknowledgement that the world is nowhere near to being on track to meet these objectives. Globally, greenhouse gas (GHG) emissions should be reduced by -43% by 2030 and -60% by 2035[3], whereas in 2022 GHG emissions were still on an upward trend of +1.4% compared to 2021[4]. Hence, this Summit must turn scientific knowledge into bold decisions on mitigation efforts. Among the initiatives on the table that could positively contribute there is the tripling of the share of renewable energies and doubling the energy efficiency by 2030, a focus on decarbonizing the power system, supporting the decarbonization of energy intensive industries, and stopping the addition of new coal power plants to the international energy system.

Phase out or phase down? The fossil fuels grand dilemma

Phasing out fossil fuels is the elephant in the room. The EU's mandate[5] includes a call for the phase-out of unabated fossil fuels and peaking their consumption in this decade, while the UAE COP presidency[6] positioned itself in support of a "phase down" of unabated fossil fuels and China referred to a phase-out as "unrealistic"[7]. In addition, the controversial term "unabated" raises the question of the extent to which the world can and should rely on carbon capture and storage (CCS) technologies, as not all stakeholders seem aligned behind the understanding that CCS cannot replace the need for massive GHG emissions cuts. The EU will also push for phasing out those fossil fuels subsidies which do not address energy poverty or the just transition, knowing that fossil fuels subsidies in the EU more than doubled in 2022 (122bn€)[8] vs. 2021 (56bn€) as Member States intervened to protect consumers from high energy prices, with a similar trend at the global level where explicit fossil fuels subsidies reached 1.3 trillion$ in 2022 (vs. 0.5 trillion in 2020)[9].

Emerging and vulnerable countries claim for transition funding

Climate-related financing will be the key priority of emerging and vulnerable countries who need more than 2 trillion $ annually[10] to make the green transition happen. For them, sustainable development requires increasing capital flows from developed to developing countries to address issues such as the high cost of debt, the foreign-exchange hedging costs, or the need for de-risking tools. Whereas the climate finance provided to developing countries has increased in 2021 to reach 89.6bn$, this still fell short of fulfilling the 100bn$/y pledge. Hence, fulfilling and reaffirming this pledge and getting an agreement on the operationalization of the Loss and Damage Fund established at COP27 will be on top of the agenda. Concerning the Loss and Damage Fund, among the key issues discussed during the pre-COP meetings and that are expected to be clarified and formalized at the COP are: the funding base (US and EU want it as broad as possible, including countries such as China or UAE, but it could also potentially rely on new taxation mechanisms or carbon markets as innovative sources of funding), a clear methodology for determining who should benefit with priority from the funding available, putting at the core the issue of climate vulnerability, and the governance of the fund. More broadly, the expectation in the Global South is that the work started with the Paris Pact for People and the Planet to be continued in the spirit of making the financial sector evolve towards a more inclusive one.

From methane to adaptation, the role of diplomacy is in question

Importantly, methane emissions will also be an issue high on the agenda, as it has grown to be a cooperation field in the US-China relations[11], underlined by the expected tripartite organization (US-China-UAE) of a "Methane and Non-CO2 Greenhouse Gasses Summit" at COP28. For the EU, this could be an opportunity to announce its most recent Regulation aimed at reducing energy sector methane emissions in the Union and within its global supply chains, including by submitting new contracts for oil, gas and coal imports to the same set of monitoring, reporting and verification requirements as EU producers, starting with January 2027[12]. The topic of climate adaptation has also been listed as a matter of priority by the COP28 Presidency and needs more actionable plans and improved accountability. According to the IMF, adaptation costs will reach 0.25% of global GDP, with notably high costs for small, island nations reaching up to 20% of their GDP. Following the launch of the Glasgow-Sharm-el-Sheikh work programme on the global goal on adaptation (GGA) at COP26, countries had two years to work on designing a clear GCA framework (targets, processes, actions etc.)[13] and, while an agreement on specific targets is not a done deal yet[14], its adoption is considered a key success indicator for the COP28[15]. To summarize, key decisions are expected from the COP28: a push for a massive deployment of renewable energies and energy efficiency, an operational Loss and Damage Fund and steps towards the concretization of the agenda of the Paris Pact for People and the Planet (e.g. innovative financing methods), a clear methodology for channeling support to the most vulnerable countries, taking steps on the phase out of fossil fuels and on the reduction of methane emissions, as well as improving climate adaptation. At the end of the day, this COP is also about figuring out the trust one can still have in the power of diplomacy to create an impetus for change to protect the climate and the environment as a public good.

[1] G20 New Delhi, Leaders' Declaration, 9-10 septembre 2023, paragraph 38.i: "Emphasize the importance of maintaining uninterrupted flows of energy from various sources, suppliers and routes, exploring paths of enhanced energy security and market stability, including through inclusive investments to meet the growing energy demand"

[2]https://public.wmo.int/en/media/press-release/global-temperatures-set-reach-new-records-next-five-years

[3]https://unfccc.int/documents/631600

[4]https://edgar.jrc.ec.europa.eu/report_2023

[5]https://www.consilium.europa.eu/en/press/press-releases/2023/10/16/cop28-council-sets-out-eu-position-for-un-climate-summit-in-dubai/

[6]COP28_Publish_Letter_October_2023_EN (unfccc.int)

[7]China climate envoy says phasing out fossil fuels 'unrealistic' | Reuters

[8] European Commission, EU Climate Action Progress Report 2023

[9] Simon Black, Antung A. Liu, Ian Parry, Nate Vernon, "IMF Fossil Fuel Subsidies Data : 2023 Update", WP/23/169

[10]https://www.imf.org/en/Blogs/Articles/2023/10/02/emerging-economies-need-much-more-private-financing-for-climate-transition

[11]https://www.state.gov/sunnylands-statement-on-enhancing-cooperation-to-address-the-climate-crisis/

[12]https://ec.europa.eu/commission/presscorner/detail/en/IP_23_5776

[13] https://unfccc.int/topics/adaptation-and-resilience/workstreams/glasgow-sharm-el-sheikh-WP-GGGA

[14] https://www.wri.org/insights/global-goal-on-adaptation-explained

[15]https://www.cop28.com/letter-to-parties

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