Does COP28 mark a clear path or a fork in the road?

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

The team has recently returned from the biggest climate event of the year, and in this month’s newsletter we address a key question: did COP28 deliver progress on Net Zero?

We explore the outcomes of the latest UN climate conference, including:

• Whether COP28 delivered on five key success metrics, including on fossil fuels
• Whether industry progress can help deliver the new Global Cooling Pledge
• How COP28 put food on the agenda
• Positive signs of global climate financial system reform
• A reflection on whether COPs are too big and need to be reformed

We’ll be back with more Net Zero Roundups in the new year. To stay up to date with what policy, business and finance leaders can do to get on course for Net Zero, click subscribe .

Under the spotlight

COP28 delivers powerful signal on need to end the fossil fuel era

From the moment it was announced that COP28 would take place in a petrostate with an oil and gas chief at the helm, there was deep concern that the climate talks would be marred by fossil fuel lobby interests, wilful disregard for the science and misguided optimism about the role of carbon capture and storage technologies.

However, from day one in Dubai, it was clear that many participants were determined that COP28 would be the moment the world called time on the fossil fuel era. In many ways, this goal was pursued with greater determination precisely because of where it was being held and who was steering the process. In our earlier analysis of COP28’s potential for success , we shared the view that COP28 President Al Jaber needed to seize the opportunity to pull off ‘climate jujitsu’ with his oil and gas peers and deliver a commitment to phase out fossil fuels.

After two weeks of intense negotiations, did COP28 deliver on this?

Fossil fuels finally put on notice

Assessment of progress: 6/10

The crowning achievement of the ‘UAE Consensus’ delivered by COP28 is the historic call for parties to contribute to a global effort on “transitioning away from fossil fuels in energy systems, in a just, orderly and equitable manner, accelerating action in this critical decade”. There are three key reasons to be hopeful about this commitment:

• It covers, for the first time ever in a COP outcome (after 28 years), the need to move away from all fossil fuels (not just coal).
• It focusses on the fuels themselves, rather than their associated emissions. The latter would have been the case if the language on ‘unabated fossil fuels’ from earlier drafts of the text was retained (code for extensive reliance on carbon capture and storage technologies).
• It clearly communicates the need for an urgent transition ‘in this critical decade’, putting pressure on parties to end fossil fuel production and consumption as fast as possible. ?

However, the commitment is far from perfect. It just ‘calls' on governments to make the transition, rather than requiring them to do so. ‘Transitioning away’ is also far weaker than the ‘fast, fair, full and funded’ fossil fuel phase-out NGOs and many governments, particularly small island developing states, wanted.

On coal, the text asks only for a ‘phasedown of unabated coal’, leaving potentially huge and largely unrealistic reliance on the use of carbon capture and storage (CCS) to address coal emissions. Later in the text, there is also a concerning ‘recognition’ of the role of ‘transitional fuels’ in facilitating the energy transition, widely understood to be a refer to gas.

There is reason to be concerned that these ‘loopholes’ will prevent the UAE Consensus from driving real world action. This was reinforced immediately after COP28 when Al Jaber himself said the Abu Dhabi National Oil Company will continue to invest in oil and gas production. This will confirm what many fear: that oil companies, particularly national oil companies, all still aim to maximise value from their fossil fuel assets and be the last one standing.

What can we make of COP28’s progress on climate finance, loss and damage, and more? Read our assessment:

Food for thought: are COPs too big and do they need to transform?

In the baking heat of the Middle East, over 100,000 people gathered for COP28 (at a considerable carbon cost from long-haul flights). Just two years ago, less than half that number attended COP26 in Glasgow. On the ground, we couldn’t help but muse: why has COP changed so much, and is it still fit for purpose?

There has been a fair amount of criticism of the ballooning of COP into a glorified trade show. It’s true that only a small fraction of the 100,000+ attendees had any involvement in the formal government-led negotiations. If COP was purely about government agreements, then it would be hard to argue with the concept of a significantly scaled-down COP.

But COPs are now, more than ever, a two-part event. Next to the formal negotiations, organisations from all around the world meet to share ideas on innovative technologies, business models, financial solutions and civil society campaigns that will drive the Net Zero transition. As the world recognises the urgency and value of the Net Zero transition, we think there is a strong case to see it as a welcome development that so many are invested in making it happen and coming together to accelerate progress.

The formal discussions at COP will always be essential, but so will the meeting of minds beyond the negotiating room. There is arguably value in the two taking place at the same time, in the same place, so real-economy progress can drive diplomatic decisions. But to truly leverage their split identity, COPs need to get better at bringing the two sides together to forge more practical, sector focussed, collaborative agreements, bridging the divide between diplomacy and real-economy action.

Quick intelligence

Progress in the cooling industry inspires confidence COP28’s Cooling Pledge can be achieved

With 2023 set to be the hottest year on record, COP28 brought some much-needed attention to sustainable cooling. Cooling is currently responsible for 7% of global emissions and energy demand for cooling could triple by 2050 . In response, over 60 nations signed UAE’s pledge to reduce cooling-related emissions by 68% by 2050, and review progress each year at COP until 2030. The targets, drawn from a UN report that the Carbon Trust contributed to, also include increasing the energy efficiency of new air conditioning units by 50% and increasing access to sustainable cooling.

These targets are welcome, but the proof will be in the implementation. 53 governments already include sustainable cooling in their national climate pledges, but face ongoing challenges in delivering accessible, affordable and climate-friendly cooling solutions. However, Carbon Trust analysis, also released at COP28, points to considerable progress within the cooling industry over the past two years, in particular a move towards more efficient equipment that uses low Global Warming Potential refrigerants and more engagement on supply chain emissions. This should enable governments to move closer to their cooling goals and encourage more governments to adopt the Global Cooling Pledge.

COP28 puts food on the agenda, but countries must now move beyond high-level commitments

COP28 was a landmark moment for recognising the role of food systems in tackling climate change, but whole systems transformation is now needed, as well as more finance to achieve it. Although the formal negotiations failed to make much headway on this topic, COP28’s dedicated food day (the first of its kind) produced the Emirates Declaration on Sustainable Agriculture, Resilient Food Systems and Climate Action , which includes an agreement from 158 countries to integrate food and agriculture into national climate pledges before COP30. Also on Food Day, the UN’s Food and Agriculture Organization launched the first of three roadmaps for feeding a growing global population without breaching the 1.5C global warming threshold. This first roadmap sets out critical targets for 2030, such as cutting livestock methane emissions by 25% and halving food waste.

Governments now need to follow through on these commitments and pursue transformative changes to food systems, rather than simply make current food systems marginally more efficient. A handful of countries showed intent to do so, by forming an Alliance of Champions for Food Systems Transformation at COP28. To deliver on these aims, the financial community will also need to scale finance for agri-food systems, which according to the FAO is “strikingly low” and plummeting compared to overall flows of climate finance.

MDBs deliver on call for more cooperation on climate finance

The formal negotiations at COP28 delivered little progress on the climate finance gap, but on the sidelines, development finance players agreed new collaborative approaches to scaling up much-needed funds.

In a joint statement , multilateral development banks (MDBs) agreed to create a common approach to reporting the climate impacts of their investments, which would help the banks to efficiently channel funds towards the most impactful mitigation and adaptation projects in the Global South. Moving from intent to action, a new platform was created to help public development banks share best practices and develop new approaches to financing sustainable development. This is crucial, as the innovative technologies and business models required to deliver climate action require novel financial instruments such as green guarantees. Together, these collaborative efforts could help speed up investment decisions, simplify access to climate finance and mobilise more private finance for climate action.

Our experience of working with MDBs and other development finance institutions shows that collaboration in these critical areas – sharing information, harmonising workstreams and coordinating investments – is key to addressing systemic barriers to providing climate finance at scale. Doubling down on these opportunities for greater alignment will be crucial ahead of COP29, which is being dubbed ‘finance COP’.

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

From the Net Zero Intelligence Unit

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?? At COP28 global leaders agreed to triple renewable energy capacity by 2030, but how can renewable technologies be scaled up exponentially? In the latest episode of our podcast, we discuss the role of innovation in building out offshore wind with guests Simon Sharpe, Lyndie-Hice Dunton and the Carbon Trust’s Megan Smith.

?Phasing out coal is fundamental to a just energy transition. To make the transition work, policymakers must involve and support workers and communities reliant on coal, ramp up renewables and grid infrastructure, and leverage a wide range of financing mechanisms. Read more in our latest policy briefing:??

??The Global Stocktake recognised multilateral development banks’ intent to strengthen collaboration for greater impact. In our latest insight, we outlined critical areas of collaboration to help MDBs avoid siloes and channel climate finance quickly and effectively.??

??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. ??