What would success look like at COP28?

Welcome back to the Net Zero Roundup from the Carbon Trust’s Net Zero Intelligence Unit. 

🚨Before discussing COP28, we’re excited to share that we’ve launched a limited podcast series!🚨

To tackle the climate crisis, we will need new ways of designing policy, doing business and consuming products, as well as some new technologies. A critical ingredient needed to achieve this is innovation.

We are exploring this in our new podcast – Net Zero: What’s innovation got to do with it? In our first episode, the Net Zero Intelligence Unit’s Simon Retallack and Nina Foster are joined by Sir Patrick Vallance, former Chief Scientific Adviser to the UK Government, to discuss the innovation lessons from the Covid vaccine rollout which could be applied to the challenge of achieving Net Zero. 

Click here to listen now, and subscribe to hear all four engaging conversations as soon as they are out.

In other news, there is only one week to go before the biggest climate conference of the year, and in this edition of the Net Zero Roundup, we spell out what COP28 needs to deliver to be a success.  

Under the spotlight  

Success at COP28 is a tall order, but fossil fuel phase-out and a fair deal on finance must be priorities 

Despite its controversial hosts, COP28 is still important.

In a week's time, world leaders will meet in the United Arab Emirates for COP28, the UN’s largest annual climate conference. This year, COP has already delivered its fair share of controversy. The host country’s status as a leading petrostate, and the COP President’s role as CEO of Abu Dhabi’s National Oil Company, has sparked concern that fossil fuel interests will interfere with the formal negotiations and compromise COP28’s ability to ramp up global climate action. 

However, a successful COP is not wholly or even mostly dependent on the President, and amid the controversy, COP28 is an opportunity to deliver tangible progress on key issues.

Crucially, COP28 marks the first time world leaders will be confronted with an in-depth assessment of global progress towards meeting the Paris Agreement targets. This ‘Global Stocktake’ will conclude at COP28 and offers the international community a chance to course-correct at a critical time: COP28 is taking place at the halfway point between 2015 (when the 1.5C goal was set) and 2030 (when emissions need to be halved to remain on track for 1.5C).

Pivotal political agreements are also being sought on an operating model for the Loss and Damage Fund agreed at COP27 last year, as well as ambitious renewable energy targets. Pressure is also mounting for COP28 to finally be the COP that delivers political consensus on the need to phase out (not just down) all fossil fuels (not just coal).

Five key ingredients for a successful COP28 

With time running out to limit warming to acceptable levels, the world needs to find ways of making COP28 a success, which must include: 

1. Climate pledges that halve emissions by 2030: Ahead of the conference, governments need to strengthen and resubmit 2030 pledges (Nationally Determined Contributions), aligning targets with what’s needed to remain on track for 1.5C. They should then use the findings of the Global Stocktake to create a framework for stronger 2035 pledges.   
2. A commitment to phasing out all fossil fuels: The Global Stocktake makes clear that phasing down some fossil fuels is not enough, and the COP28 agreement must reflect that. Transforming state-owned fossil fuel companies should be on the table and, to address the lion’s share of emissions, any commitments to decarbonise the oil and gas sector should include emissions from using (as well as producing) fossil fuels. Arguments from fossil fuel companies, that carbon capture and storage technologies can replace the need to reduce the production and use of fossil fuels, do not account for the reality that these technologies have not been proven at the scale.   
3. A commitment to tripling global renewable energy capacity by 2030: In parallel with phasing out fossil fuels, the energy transition requires a dramatic scale-up of renewables and a doubling down on energy efficiency. Tripling renewable capacity this decade would align with the International Energy Agency’s latest projections on what the world must do to reach Net Zero. 
4. An operating model for the Loss and Damage Fund: At COP27, countries agreed to create a fund to help vulnerable countries recover from climate change impacts. At COP28, countries must now agree on how to operationalise the fund, with clarity on eligibility, funding arrangements, sources of funding and governance structures. The Loss and Damage Transitional Committee has secured only a shaky level of agreement on the parameters of the operating model ahead of COP28. There were significant disagreements between developed and developing countries, particularly around hosting the Fund at the World Bank and the lack of obligation for countries to provide funding. To improve trust and reflect changes in responsibility for global emissions, COP28 should deliver an agreement requiring developed countries and high-emitters such as China and Saudi Arabia to contribute. 
5. A step-up in climate finance: Developed countries need to come to COP28 with clear plans to double adaptation finance and finally deliver on their long overdue commitment to provide $100bn to help developing countries reduce emissions. They must also make significant progress towards agreeing a new goal to replace the $100bn ahead of the 2024 deadline for the New Collective Quantified Goal on Climate Finance. COP28 should also sketch out what a transformed global financial system that could deliver Net Zero would look like, following commitments at COP27. 

Can COP28 deliver on these objectives? Read the Net Zero Intelligence Unit’s verdict, as well as our full vision for a successful COP28 below.

Quick intelligence 

Policy: Renewable energy targets at COP28 must come alongside a commitment to end fossil fuel subsidies 

There is a compelling case for COP28 to deliver a decisive commitment to phasing out fossil fuel subsidies. The IEA’s World Energy Outlook 2023 asserts that, although recent growth in renewable energy is encouraging, the world’s largest emitters, including China, must drastically speed up the transition away from fossil fuel use if the world is to achieve Net Zero by 2050. Targeted interventions on the economics of fossil fuels are therefore needed. 

Despite being a world leader in solar and wind (and on track to hit 2030 renewables targets ahead of schedule), China remains the world’s largest producer and consumer of coal, adding more new coal capacity than the rest of the world combined in the last five years. There are definite signs of hope within the IEA’s projections; coal use could peak in China as soon as 2025 based on current policies. However, China is still approving new plants and turning to coal to address energy security woes. 

According to recent IMF figures, China is the world’s biggest subsidiser of fossil fuels. These subsidies make coal plants economically viable even in the face of plummeting renewable energy costs. Removing subsidies would not only reduce emissions, but also raise revenues. These could be spent on grid upgrades and energy storage, allowing more renewables to be added to the system and in turn, facilitating a speedier exit from coal. The Global Stocktake synthesis report made clear that fossil fuel subsidies perpetuate business as usual and prevent renewables being ‘adopted at scale’. Therefore, alongside commitments to tripling renewable capacity, COP28’s final outcome should adopt the Stocktake’s recommendation to phase out inefficient fossil fuel subsidies by 2025. 

Business: Ambitious business action could accelerate fossil fuel phase-out from the sidelines of COP28 

The We Mean Business Coalition (WMB) is calling for COP28 to deliver a commitment to fossil fuel phase-out, and envisions a key role for businesses in catalysing change. Their vision involves businesses committing to phasing out fossil fuels within their operations by 2040, publishing clear transition plans outlining how they will achieve this, and encouraging Net Zero commitments among suppliers. If WMB’s ‘ambition loop’ plays out, this should influence more governments to signal support for fossil fuel phaseout in the formal COP28 negotiations. 

However, even if the formal negotiations don’t deliver, this could signal a pivotal moment on the sidelines of COP28. Our analysis showed emerging consensus at COP27 that Net Zero best practice for businesses should include specific steps around reducing dependence on fossil fuels. With discussions on standardising private sector Net Zero action set to continue during ‘accountability day’ on 4 December, it is crucial that non-state actors recognise that delivering on the goals of the Paris Agreement and phasing out fossil fuels, are two sides of the same coin.

Finance: COP28 must deliver a definition of transition finance which incentivises credible climate action 

To realise COP28 President Al Jaber’s paradigm shift in climate finance, COP28 needs to deliver a proper definition of ‘transition finance’. A common definition will help scale financing and ensure that funds intended to drive the transition to Net Zero actually lead to real-world decarbonisation. To address this challenge, the Glasgow Financial Alliance for Net Zero (GFANZ) is currently refining their definition (as well as methodologies for measuring the impact of transition finance), with a report to be launched at COP28. As defined by GFANZ, transition finance funds: climate solutions, assets and companies that are moving towards 1.5C alignment, and accelerating the managed phaseout of high-emitting assets. The report will shed further light on each of these elements.

We welcome GFANZ’ proposal to include emissions-based KPIs as a requirement for financing economic entities which are moving towards 1.5C. Currently, too many transition finance frameworks lack detail on whether and how to include these KPIs in lending agreements. To drive credible climate action, GFANZ should specify that KPIs need to contain clear metrics on absolute emissions reductions (rather than just emissions intensity, which is vulnerable to greenwashing), and that the debt should be directly linked to performance against KPIs.

From the Net Zero Intelligence Unit

Catch up on the latest publications from the Net Zero Intelligence Unit:  

🌡️Keeping 1.5C alive: ahead of COP28, the Net Zero Intelligence Unit’s Simon Retallack met with climate scientist and IPCC author, Professor Richard Betts, to take stock of progress on the global goal of limiting warming to 1.5🌍

💨 Are offshore wind targets a useful policy instrument? Our latest policy briefing outlines four lessons for leveraging bold targets and clear development plans for scaling effective offshore wind deployment. 🌊

❓Struggling to keep up with the fast-moving climate reporting and disclosure landscape? The Net Zero Intelligence Unit partnered with the @World Business Council for Sustainable Development to provide free step-by-step guidance for businesses, as part of their new Net Zero Guidebook. 📑

🏅As the year draws to a close, the Carbon Trust’s 2023 impact report highlights how the Carbon Trust places delivering impact at its core, from client successes to launching the Net Zero Intelligence Unit. ⭐

📧To stay up to date with news and events from the Carbon Trust more broadly, click here to sign up to the Carbon Trust’s email newsletter. ⬇️ 

Parting thoughts: The Net Zero transition in action

A new study has found that alternative proteins could replace a third of meat consumption in the UK by 2040. Meat and dairy are responsible for 14.5% of global emissions, and the government’s climate advisers are clear that meat consumption needs to drop by 35% by 2050 if the UK is to reach Net Zero by the same date. 

This comes as COP is set to have a dedicated ‘food day’ for the first time this year. Agriculture is a major contributor to greenhouse gases and at the same time, the climate crisis is a major threat to food security and the agricultural industry. As well as encouraging the shift away from meat-heavy diets, world leaders must accelerate efforts to reduce emissions and increase resilience throughout entire food systems, from farm to fork. 

This edition of the Net Zero Roundup was written by Chloe St George. Thanks for reading. To ensure you don’t miss out on future monthly Net Zero Roundups, click here to subscribe. 

If you would like to meet with the Net Zero Intelligence Unit in person during COP28, please reach out to nina.foster@carbontrust.com