Weekly Climate Recap: COP Wrapped
That’s COP28 folks. The conference wrapped up this week (a day late) and the outcome of the first global stocktake can be read in full here. The full text is 21 pages and includes a litany of important items. To summarize the key takeaways I have provided some bullets but I would recommend reading the entire text to understand the exact takeaways. Also, based on previous iterations of the document, I would love to see the redline full version in all its messy glory. As with all negotiations, there was a lot of back and forth with a full account of what took place in the negotiating room covered quite well by Corporate Knights here. For a full recap of events, Carbon Brief has a great read here. With fossil fuel PR representatives, climate change deniers, and other representatives from groups actively trying to dissuade climate progress, some of the news that was released is quite surprisingly good.
Key Takeaways of COP28
🛢️ Fossil Fuels Explicitly Mentioned
What I consider to be the biggest takeaway, in a frankly groundbreaking moment, COP documentation explicitly mentions oil and gas. As it appears in item 28.(d):
“Transitioning away from fossil fuels in energy systems, 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;”
While this is nowhere near perfect and is in my opinion, still relatively lenient on fossil fuels, the message is clear: Fossil fuels time as a component of our energy system is limited. This sentiment is backed by many observers of COP, notably the Alliance of Small Island States as covered in their statement here
“But we must note the text does not speak specifically to fossil fuel phaseout and mitigation in a way that is in fact “the step change that is needed” it is incremental and not transformational”
Feedback from other was mixed with many agreeing that this text in the GST can largely be considered the beginning of the end of fossil fuels. In reality, a compromise was met that led to this verbiage being adopted. Given the pressure OPEC+ put on the negotiations, I consider this agreement a mild success but nowhere near the level required to be a fundamental change, rather, an incremental one.
🌀 Climate Finance
COP28 started off strong with the day one agreement for the loss and damage fund at COP28 with commitments flowing in from countries to this fund. However, pledges fell extremely short. In total ~US$700m was pledged by wealthy countries that are responsible for the bulk of emissions. It is estimated that the losses and damages faced by developing countries as a result of climate change is ~US$400B/year.
“On the premise of getting the loss and damage fund up and running as soon as possible to reach communities, developed countries pushed through a flawed structure … yet the millions promised for the loss and damage fund at Cop28 are a drop in the ocean of what is needed. This speaks to the hypocrisy we’ve seen in these discussions and the limitations of treating finance for loss and damage as charity rather than an obligation.”
-Lien Vandamme, Centre for International Climate Law
Other climate finance activity was 6 countries pledging $3.5B towards the Green Climate Fund. This funding was provided by Australia, Estonia, Italy, Portugal, Switzerland, and the US. The Green Climate Fund is established to help developing nations adapt to climate change. As stated on the Green Climate Fund website:
“As the world’s largest climate fund, GCF accelerates transformative climate action in developing countries through a country-owned partnership approach and use of flexible financing solutions and climate investment expertise.”
Keep an eye on the U.S. contribution to this fund as Trump has vowed that if reelected he would renege on the US$3B pledged by the U.S.
🌄 Tripling Renewables, Doubling Efficiency
I covered this in the first half of COP recap here, but given the importance, I want to write about it in more detail. As detailed in the GST under 28.(a):
“Tripling renewable energy capacity globally and doubling the global average annual rate of energy efficiency improvements by 2030;”
POLITICO has a great article here summarizing where we stand on our efforts to achieve this specific item in the GST.
Regarding renewables, should countries continue to add at the base of 2023, we will double our renewables capacity. Understanding financial incentives, declining prices, and other supportive tailwinds are only going to improve, this goal appears to be within reach and equates to a 17% growth rate, the same growth in capacity of renewables experienced between 2016 and 2023.
In terms of the renewable technologies likely to fulfill this goal, wind and solar will dominate. Hydro development will be fairly minimal due to the majority of available hydro resources being exploited already. Bloomberg actually has a great podcast covering this topic at length regarding the technologies that will drive this, potential issues, and key forecasting metrics, give it a listen here for more context.
Unfortunately, efficiency is the ugly duckling of the energy transition. While it would be amazing if more attention was paid to it given its incredible importance in decarbonizing the world (who doesn’t want to do more for less), it lacks the attention needed. As I covered previously, there is a ways to go with respect to energy efficiency though I think things will improve.
🐄 Global Methane Pledge
Briefly covered in the first COP article I published, I wanted to revisit and add some additional colour. Announced at COP28 was that fifty oil companies representing ~50% of all global production pledged to reach zero methane emissions in their operations by 2030. Methane is estimated to be 80 times worse in terms of its warming potential compared to CO2 and can be released at various points along the value chain of oil and gas production. A cool tool to see where methane is getting emitted is Climate Trace, you can use the tool to see methane emissions from the fossil fuel industry in the view I have created here.
Beyond oil and gas players commitments to reducing methane, governments around the world have agreed to join the Global Methane Pledge. This pledge has been signed by more than 150 countries and entails voluntary actions to collectively reduce global methane emissions levels by at least 30% from 2020 levels by 2030. According to the Global Methane Pledge website, the countries who have entered the pledge represent ~50% of global anthropogenic methane emissions.
🌳 Other Relevant Excerpts from the GST
Again, highly recommend reading the GST as it truly outlines where we go from here on our fight against climate change. But I also wanted to call out some excerpts of the GST that I found relevant.
28.(b): Accelerating efforts towards the phase-down of unabated coal power;
Relevant given the outsized impact that goal has on our global emissions. Also note the verbiage used, unabated, meaning that carbon capture plays a role here.
28.(e): Accelerating zero- and low-emission technologies, including, inter alia, renewables, nuclear, abatement and removal technologies such as carbon capture and utilization and storage, particularly in hard-to-abate sector’s, and low-carbon hydrogen production
Note the technologies mentioned here, nuclear makes an appearance which I discussed last week is transformational, carbon capture and storage / hydrogen also make an appearance… mixed feelings.
29. Recognizes that transitional fuels can play a role in facilitating the energy transition while ensuring energy security;
Wow I wonder which cartel lobbied for this item? It is clear here that transitional fuels is code for natural gas which I am not thrilled about and would strongly disagree on their relevance.
⏩ Looking Forward to COP29
Looking forward to next year’s COP, COP29 was supposed to be held in Russia. For very apparent reasons, this is no longer the case. There is a very particular order in which COPs rotate throughout the world based on UN rules. As such, COP 29 was supposed to be held in Eastern Europe, mostly composed of Warsaw Pact countries. With the EU vetoing Russia hosting of COP and Russia vetoing any eastern Europe NATO member states such as Poland, Latvia, or Finland, the remaining choices narrowed to Georgia, Azerbaijan, and Armenia. Despite tensions between Armenia and Azerbaijan, the nations concluded that Azerbaijan would hold the next COP. This full process and background is neatly covered by Heatmap here.
Concerns about Azerbaijan hosting the next COP are plentiful given its status as a net energy exporter of oil and gas. Energy consumptions chart below to highlight the state of the grid.
🫡 Conclusion
I really thought this was going to be more of a dumpster fire sort of write-up view on COP given how bad things were reported to have been going earlier this week. Fortunately, I can say that is not the case! While the verbiage surrounding fossil fuels was nowhere near as strong as I had hoped, the key words “fossil fuels” ended up in the GST, for me, that is a step in the right direction. Especially given the host country and president, the fact that this was the COP where fossil fuels were called out explicitly for the first time was extremely positive. Coupled with the variety of other positive news and baby steps (though we should be moving in leaps and bounds) I am pleasantly surprised at the relative success experienced at this COP. Again reiterating, the realist in me is pleased with the outcome, the dreamer in me is quite disappointed. I recognize the global clock on change ticks slow but to quote Bill Gates, “Most people overestimate what they can do in one year and underestimate what they can do in ten years.” While many see this pace of change as too slow, if you think back on how the world has changed in the past 3 decades since the Kyoto Protocol, it is truly astounding and I think that while the window is closing, the runway we have left will be transformational.
Next year at COP29 and the following year in Brazil for COP30 will be interesting to see progress and how countries react to the actions decided on at this COP. Onwards and upwards!
