The OCO COP28 Report Card

John McIIroy | 10 Jan 2024 | General

When COP28 wrapped up at the end of last year it was described as both a triumph of climate diplomacy and a stark betrayal of urgency. Now that the dust has settled and we have had time to look at the detail behind the headlines, we present our review card for COP28 and what it means for investment.

To assess the results of COP28 we decided to take a methodical approach and compare what we thought needed to happen with what actually happened. This is based on the four key themes discussed in our previous blog.

Theme 1: a plan for energy transition (Our rating: C)

If energy transition is designed to limit global warming to 1.5 degrees Celsius above pre-industrial levels, then COP28 is falling well short. Analysis from the International Energy Agency has shown that if all the pledges made last year were delivered, the reduction in 2030 emissions would represent only around 30% of the emissions gap that needs to be bridged to get the world on a pathway compatible with limiting global warming.

Before COP28 we asked whether the final text would tell us where energy investment is going in the future. Like the overall summit, the answer is mixed with a combination of renewables and abatement technologies.

Regardless of the furore over fossil fuels (more on that later), the big winner was renewables with delegates agreeing to the International Energy Agency route map of tripling global renewables capacity. Energy technologies were also a winner with a commitment to double energy efficiency included in the final declaration.

The headline grabber from COP28 was fossil fuels. While it is a diplomatic achievement that moving away from fossil fuels has been included for the first time in 30 years, the language in the text has left the door open for the continued use of fossil fuels. As a result, we expect further investment in Carbon Capture and Storage technology and new production technologies that reduce carbon emissions from production rather than final use.

There is agreement on the need to reduce carbon emissions in energy transition, but the fault lines run along whether this means keeping the carbon in the ground or extracting and using it in a way that avoids the associated emissions. The next few years will see investment in both areas with the biggest danger being if investment or incentives become a choice between renewables or carbon capture rather than supporting both.

Our rating (C): Energy transition pledges still fall well short of what is required to deliver the 1.5c target and are not helped by divergent opinions on how this will be achieved. While there is significant investment going into renewables and energy efficiency the financial barriers remain for developing countries.

Theme 2: Technology at the heart of food security (A-)

Agriculture and food systems was a winner at COP28 as the theme moved up the agenda, and for the first time enjoyed a full day dedicated to how it impacts climate. The signing of the Leaders Declaration on Food Systems, Agriculture, and Climate Action was an early positive at the event, directing countries to place food systems at the heart of climate ambitions and mobilising $2.5 billion to make it happen.

Some of the key takeaways from the event show the direction of travel for future food systems investment. This includes agreement on finance and technical support for scaling up adaptation and resilience, greater focus on the use of early warning systems to support farmers, and improved management of water in agriculture and food systems. A group of partners also announced a $200 million collaborative effort to offer countries quality technical cooperation in sustainable technologies.

Of course, the meeting was not without controversy, and many delegates were disappointed with the emphasis on adaptation rather than mitigation. The result is that most of the investment in this area will be going towards innovations in plant science, AgriTech and big data/tech solutions.

Our rating (A-): food systems are now a core pillar of the COP agenda and the link with climate transition has been confirmed. Significant funding is being directed into this area, but a focus on adaptation rather than mitigation will narrow the impact.

Theme 3: Preventing or paying for Loss and Damage (B-)

Loss and damage broadly refers to efforts to avert, minimise and address any loss or damage associated with climate change impacts. Who pays for loss and damage has always been a sticking point at COP discussions, with wealthier nations typically trying to avoid any sense of paying compensation. COP28 proved to be different, and a historic agreement on the first day to operationalise the Loss and Damage Fund created a sense of optimism among delegates.

The Fund is most likely to be operationalised along the lines of the Santiago Network first established after COP25 in 2019. This network helps developing countries access to knowledge, resources, and technical assistance needed to address climate risks​​ by connecting providers of technical assistance (civil society, non-governmental organizations, and the private sector) with those that need it most.

Over £500 million has already been pledged to the fund but this falls well short of what is required to make a difference, and work is needed to turn this ambitious plan into action.

Our rating (B-): COP28 has finally delivered an agreement on loss and damage, but some problems remain and this will have a limited impact without financial backing.

Theme 4: Looking to new sources of finance (C)

Finance goes to the heart of everything else that is discussed at COP meetings, and the summit finished with some big numbers. For example, $12.8 billion was pledged to the Green Climate Fund (GCF) which provides a range of financing instruments for developing countries. The United Arab Emirates also announced it would invest $30 billion in a new climate investment venture that it hopes will mobilise $250 billion by the end of the decade.

However, these financial pledges still fall short of the trillions that will eventually needed be to support developing countries with clean energy transitions, implementing their national climate plans and adaptation efforts. In truth, most of the big finance decisions have been pushed back to COP29 where a new climate finance goal, the New Collective Qualitative Goal (NCQG), will be discussed.

Prior to the summit, we had discussed the growth of philanthropic climate investors and COP28 did see some major announcements that brought public and private investors together.  For example, several leading climate-focused donors including the Bezos Earth Fund joined forces to launch the Allied Climate Partners investing platform to generate $11 billion in investments in developing countries.

Our rating (C): There were some large funding commitments made at COP28 but the problem remains that developing countries need more financial support and better financing structures. Many are suffering from an increasing debt burden and there is still no agreement on concessionary finance for capital-intensive infrastructure or renewable projects. Too many decisions have been pushed back another year to COP29.


Think local rather than global to make a difference

COP discussions will always walk a tightrope between keeping everyone on board and moving at a sufficient pace to make the necessary changes. This top-down approach, with delegates operating from secure invitation-only compounds, can feel like a remote experience for people dealing with the impact of climate change.

A complementary approach to these international negotiations is to create opportunities through local and regional authorities – groups that play a key role in climate action and transforming the lives of their citizens. This bottom-up approach allows them to move at a faster pace and act in line with local needs.

Organisations working in economic development, investment promotion, and trade can make an impact through this localised approach by attracting sustainable investment, sparking innovation, and trading in a way that supports a just climate transition. At OCO we have seen how local decision-making has made a difference to local communities and we want to help more organisations to increase their impact.

With that in mind, we will be sharing our thoughts and ideas in a series of upcoming blogs. These cover many different approaches to strategy, marketing and business development, and will start to answer some questions that have the power to transform your local area:

  • How can trade strategies reduce the local carbon footprint?
  • How can we attract sustainable FDI?
  • How can we use trade and investment as a tool for sustainable growth?
  • How can we attract the climate innovators of tomorrow?
  • How can economic development policies help reduce carbon emissions?