With COP28 in the history books, we’ve taken a look at some of the main agreements to come out of the latest edition of the conference, all of which interconnect, and have big implications for procurement and supply chain leaders over the rest of this decade.
COP28 has wrapped up in Dubai, and despite the conference going into the history books as yet another to come and go without any binding pledges that will keep global warming to within 1.5°C target, there were still plenty of positive outcomes from this year's edition.
The loss and damage fund for countries most devastated by climate change
The world’s wealthiest nations, who are the most significant contributors to the climate crisis, have collectively pledged just over $700 million to the loss and damage fund, which constitutes less than 0.2% of the annual irreversible economic and non-economic losses faced by developing countries due to global heating. This fund has been hailed as historic by developing countries, signalling hope for financial support from developed nations to address ongoing destruction. However, the pledged amount falls significantly short of estimates, with one NGO suggesting developing countries' losses run over $400 billion annually.
Running through the pledges, they include $100 million from hosts the UAE, matched by Germany, and slightly surpassed by Italy and France, who have committed $108 million each. The United States, the world’s top historical greenhouse gas emitter, pledged only $17.5 million, while the UK's £60 million pledge has been rightly criticised for not being new or additional, having been derived from an existing climate finance commitment.
Critics argue that the pledges, totaling over $700 million, are inadequate compared to the required funding – which should fall into the hundreds of billions of dollars annually. Climate justice experts stress that the funds should be new, additional, and provided as grants, not loans. Critics have also pointed out that the growing loss and damage that’s being experienced by the recipient nations indicate both the ineffectiveness and unwillingness of major nations to stick to the commitments they made as part of the Paris Agreement, emphasising the need for greater investment in adaptation and urgent emission reductions.
During negotiations, Mohamed Adow from Powershift Africa stressed the interconnectedness of loss and damage costs along with adaptation funding and overall emission reductions – the loss and damage fund, while a step in the right direction, is no use alone. It not only needs to be considered as part of a climate protection trifecta along with GHG emissions reduction and funding for climate change adaptation projects – the loss and damage fund needs to be expanded to money that is public, grants-based, new, and additional, in order to truly address loss and damage.
A deal to transition away from fossil fuels globally – but is it enough?
Negotiations at COP28 continued until 3am in Dubai on December 13, following criticism of the Global Stocktake draft. The main sticking point was the wording on the reduction, and – hopefully – eventual phase-out of fossil fuel usage worldwide.
EU and Small Island States insisted on a fossil fuel ‘phase-out’, while others favoured a ‘phase-down’ and an 'abatement' loophole, including hosts UAE, the US and the UK. A revised draft, published at 6am, showed improvement on adaptation and Indigenous rights, and the final text urges a transition away from fossil fuels “in a just, orderly and equitable manner, accelerating action in this critical decade, so as to achieve net zero by 2050 in keeping with the science”. This also includes a requirement for accelerated action in the period before 2030, a much-needed addition given the nature of still-spiralling global temperatures.
The text also highlights reducing non-CO2 emissions such as methane, calls for low-emission technologies, and encourages contributions towards emissions reduction. It addresses coal power phase-down, fossil fuel subsidy elimination, and transitional fuels, but it doesn’t address the loopholes that have been noticed by critics: adaptation goals lack clarity on specific objectives and funding pathways, and the language is deliberately phrased to still allow for fossil fuel subsidies and their usage in certain situations – all of which could lead to a far slower phase down than is required. As is often the case, there are few hard deadlines and virtually no consequences for inaction.
There’s obvious potential impacts for sustainable procurement
However, renewable energy to be tripled by 2030 – if drastic action is taken
As part of the agreement to shift away from fossil fuels, no matter how that might look in reality, there was also a commitment to both triple renewable energy, and double energy efficiency, by 2030.
While also non-binding, the renewables component does signal a clear intent for positive change, seen as achievable as long as strong commitments are made - although you could argue that this has yet to be truly shown by any nation since the Paris Agreement was formalised. Despite 2022 seeing the largest annual increase in renewable energy production since records began, accounting for 40% of global installed power capacity, the International Renewable Energy Agency (IRENA) quickly stressed the need for quadrupled annual investments in the energy transition if we want to actually meet this new commitment.
The Global Renewables Alliance, however, have said they see the agreement as a transformative move towards a clean, secure, and just energy future, marking the beginning of the end of the fossil fuel era – so perhaps there is hope for this pledge to become a reality.
The agreement commits to tripling renewable energy capacity to 11,000 GW and doubling energy efficiency by the end of this decade, in an attempt to get the world back on track for its previously-agreed target to reduce gross emissions by 45%. Renewables are commonly seen as the best and most cost-efficient way to stay on track for the 1.5°C target, since fossil fuel burning accounts for around 75% of all GHG emissions and 90% of carbon dioxide emissions. The goal was debated throughout the conference, saw initial pledges from 118 nations, and was later formalised in COP28's final agreement with around 200 signatories.
While think-tank Ember sees the goal as achievable based on the current growth rate, others, like BloombergNEF, are less optimistic, forecasting that – on our current course – renewables will produce 9,000 GW in 2030, well below the 11,000 GW needed. The cost of tripling renewables is bound to be a sticking point, estimated at around $2.5 trillion per year until 2030, while inflation also poses a big hurdle.
Post-COP discussions are expected to address all these barriers and ensure the necessary developments in energy grids – although, as we’ve said throughout this post, it remains to be seen whether binding commitments will be made, or if time will once again erode the bullishness that’s often seen during the COPs, and turn into yet more avoidable targets that we’ll spend the next decade apologising for.
