Just like in 2023, the 28th Conference of Parties (COP28) has wrapped up. This year’s summit represented a pivotal moment for the energy transition. Naturally, the world’s largest climate conference was crammed with critical discussions on the state of climate, industry, energy, and the impact of global emissions.
Now that the summit is over, our team of fact-finding reporters has the key takeaways and next steps we can expect. We’ll cover the major discussions, fundamental disagreements, and, more importantly, their potential impact on energy-wise investors like yourself. Here’s everything you need to know from COP28.
Funds for Vulnerable Countries
From day one of the massive climate summit, delegates centered on the vulnerability of less affluent nations, particularly those that have been hit the hardest by disaster and devastation. The UN talk set the Loss and Damages Fund into motion, which is designed to be a resource in catastrophic events like earthquakes, tsunamis, and other cataclysmic events.
The fund is designed to relieve vulnerable nations after any climate-related event to rebuild infrastructure and farmland and repair damages. The World Resources Institute president and CEO estimates people in vulnerable countries will face up to 580 billion dollars in climate-related damages in 2030, with a hefty growth in the following years.
Although the pledged contributions toward this fund on the first day of COP28 included a $100 million commitment from the United Arab Emirates, the pledges still fall woefully short of the estimated climate-related losses and damages. Still, operationalizing the fund can help offset the disaster costs for nations in need.
Compared to two years ago, when it seemed the fund would be impossible to get off the ground, the number of pledges and countries that stepped up is encouraging.
Assessing the Progress of the Paris Agreement
The world’s first-ever Global Stocktake to assess the progress of the Paris Agreement of 2015 took the main stage in this year’s conference. The stocktake provides an opportunity to analyze the collective progress toward the goal of decreasing temperature rise by 1.5° Celsius by 2030.
During this assessment, nations reported on the steps they’re taking to adhere to the Paris Agreement goals. At the same time, the global analysis provides clarity on future goals, as well as identifies potential gaps in progress efforts. This year’s conference featured the first inventory of its kind, which is set to take place on a five-year rotational basis.
Dubbed the UAE Consensus, the climate assessment outlined an aggressive framework to reach net-zero emissions by 2050 through the extreme migration wave from fossil fuels as an energy source, which has long since been said to impact global temperatures significantly.
Additionally, the consensus mobilized a staggering $85 billion in funds for climate action. With 198 Parties committing to ramp up climate action, the UAE Consensus will prove to be a critical turning point in climate efforts moving forward.
Fossil Fuels on the Way Out?
Naturally, a key topic of COP28 was the rapid transition away from fossil fuels as an energy source. In fact, this year was the first time the decision to migrate away from oil, coal, and other fossil fuels was an official outcome set by the UN. Although oil and gas interests posed significant resistance, several countries refused to back down and reached an agreement that could be the beginning of the end for fossil fuel usage.
However, the call to move away from fossil fuels is not without contingency plans for the transition. The deal left wiggle room for transitional fuels, like natural gas, and gave leeway to oil and coal producers who invest in carbon-capturing technologies. Loopholes allow fossil fuel interests to continue the transition in an orderly fashion, as opposed to an abrupt cessation with potentially cataclysmic economic impact.
The key emphasis of the agreement entails tripling renewable energy resources and technologies to accommodate the global power necessities. This ambitious goal is set for the year 2030, with 130 nations on board with the sprint towards renewables.
Food Security and Course Correction
Continuing in a series of first-evers, global food production negotiations reached a milestone during this year’s conference. Prior to COP28, food scale and production have remained notably absent from UN climate talks. This year, 134 countries agreed to move food to the forefront of their climate efforts.
Within the agreement, nations resolved to implement sustainable agriculture systems to counteract waste, emissions, and imbalance said to be caused by food production. The negotiations included encouragement to implement multi-sectoral solutions, including “resilient food systems,” which account for global climate change and ensure a food supply despite cataclysmic climate-related events.
Participating countries must implement food and food systems by 2025 to adhere to the substantial food policy reform.
Reduced Methane Emissions Commitments
The climate summit saw a significant movement towards curbing methane pollution, and a greenhouse gas said to be more than 20 times more potent than carbon dioxide. The collaborative effort announced over $1 billion and new grants and funds to cut methane in the oil and gas, waste, and agriculture industries. These funds represent a significant contribution to the goal of mobilizing billions more to diminish methane emissions.
Angola, Kenya, Kazakhstan, Romania, and Turkmenistan joined 150 other nations in pledging to commit to cutting global methane emissions by 30% by the year 2030. China committed to include methane emissions in its successive NDC, while the US revealed new methane restrictions prior to the COP negotiations.
By 2025, pledging nations must demonstrate evidence of their progress to remain on target for the 2030 methane emissions goals.
Forrest and Land Use Gain Ground
In 2021, 140 world leaders pledged to halt and reverse forest loss and land degradation by 2030. This year, agreeing countries vowed to ramp up financing deforestation efforts to meet the end-of-decade goal.
Last year, forest and land use saw a big win with the announcement of four country packages aiding the Democratic Republic of Congo, Ghana, Papua New Guinea, and the Republic of Congo. This year, several announcements noted increased funding to these nations and others to protect and restore forests and land.
Though significant friends were pledged, the World Resources Institute claims private and public funds must allocate higher cash flow to reach deforestation goals. Additionally, partnerships must be formed with indigenous peoples and organizations to remain a united front against losing forests and land resources.
Where Nations Couldn’t Agree
Despite the many agreements that took place in Dubai, several delegates were left less than optimistic about the COP28 outcomes. The lead negotiator of the Alliance of Small Island States (AOSIS) felt the inclusion of carbon capture technology and other elements gave pause to the desired outcome. She further said the course correction was insufficient to avert a climate crisis, noting the solution “has not yet been reached.”
Others claim the negotiations lacked detail in adaptation targets, leaving room for potential loopholes or avoidance. Additionally, despite the pledges raised during the world climate summit, many delegates argue that it is not nearly enough to accomplish the climate goals laid out in the Paris Agreement. It seems, despite the depth of negotiations laid out in COP28, the outcomes are not enough for some climate activists.
What’s Next?
Now that the climate conference has concluded, energy investors can expect a massive departure from fossil fuels and an increased emphasis on renewable energy infrastructure. Although the Dubai negotiations have ceased, the action is only just beginning. To adhere to the lofty timeline goal, nations and delegates must now put into action their pledges and commitments to finance climate solutions, renewable energy infrastructure, and fundraising.
The globe will look to nations, like the United States, United Arab Emirates, India, and China, to lead the charge for the energy transition. Nations that rely heavily on fossil fuels will see a significant turn away from oil, coal, and gas in response to the negotiations of COP28. With the financial pledges and climate commitments made at this year’s climate summit, the following months until COP29 will prove pivotal to the energy transition and progress towards the goals of the Paris Agreement.
Who’s Going to Pay for That?
Of course, one of the biggest questions on everyone’s mind following the Dubai Consensus is, “Where is all that money coming from?” Although organizations, even oil and gas industries, have committed billions towards the climate change effort, ultimately, that cost trickles down to taxpayers and energy investors. Although the aggressive climate goals may sound admirable, one must consider the economic ramifications they could present.
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