Matheson LLP is adopting a pro-active information strategy around COP28 because we take the view that addressing climate change is an important economic and political context in which all our clients will be operating in years to come. This is the first in a series of insight pieces providing you with information around events leading up to our COP28 KI event and COP28 itself. Many of the discussions are reflected in the work of our partner-led ESG Advisory Group.
From COP27 To COP28
Delegates representing more than 100 Parties to the Paris Agreement met in Bonn from 5-15 June 2023. This was the first full in-person meeting since COP27 in Sharm el-Sheikh. The meeting in Bonn occurred at the mid-point on the path to COP28 which is due to begin on 30 November in the United Arab Emirates. A number of topics are emerging including accelerating the deployment of renewables and improving energy efficiency, equitable climate financing generally, and the loss and damage fund in particular.
Despite significant frustrations experienced in Bonn, discussions continued, notably in Paris, Brussels and, more recently, among the G20 Leaders in New Delhi. All of these meetings represent significant stepping stones towards COP28. This crucial year-end summit in Dubai will see the first review of the world's collective progress towards meeting the goals of the 2015 Paris Agreement of limiting global heating. This process is termed the Global Stocktake.
The Global Stocktake
COP26 marked the beginning of the two-year process under Article 14 of the Paris Agreement known as the Global Stocktake (GST). The first part of the process ended earlier this year and involved collecting the latest data on emissions, adaptation efforts, countries' nationally determined contributions (NDCs) and their national climate action plans.
The UN Climate Change Executive Secretary Simon Stiell called the stocktake a “moment for course correction” and described the exercise as one "intended to make sure every Party is holding up their end of the bargain, knows where they need to go next and how rapidly they need to move to fulfil the goals of the Paris Agreement.”
The next phase, the Technical Dialogue, concluded in Bonn and gave experts and climate representatives the chance to evaluate the data ahead of political discussions at COP28. The synthesis report on the technical dialogue was published on 8 September 2023 and it showed how far off the world is from reaching the goals of the Paris Agreement.
This first-ever global stocktake will conclude at COP28 and the objective is to drive the Paris Agreement’s ambitious cycle. The response will provide the basis for the next round of emissions reduction targets for 2035 and 2040, including new efforts to adapt to the impacts of climate change, and to raise financial and technical resources to support developing countries.
The Bonn Climate Change Conference: Equitable Climate Financing and the Loss and Damage Fund
A number of stumbling blocks delayed the opening plenary session at the Bonn Conference. These revolved around the phasing out of fossil fuels and the economics of a just transition. Part of the discussion involved the Like-Minded Developing Countries (LMDC) submitting a request to add an additional agenda item on scaling up financial support from developed country Parties, in line with Article 4.5 of the Paris Agreement and resistance to that proposal. At a practical level, these differences of opinion meant that it took almost two weeks to agree an agenda. More troubling, however, is the fact that this divergence is woven through most aspects of the climate change agenda.
Loss and damage was a key issue discussed during the Bonn Conference. Ireland played an important role in the agreement to set up the fund during COP27 and we wrote about this important development here. This decision involved setting up a transitional committee to develop both the fund itself and other funding arrangements to support relevant action. The committee held its first meeting in Luxor, Egypt, in March this year, and its second in Bonn just before the talks opened. In a theme which echoes the preliminary discussions, developed countries wanted to focus on funding arrangements outside the fund itself. This “mosaic of solutions” approach, previously supported as an alternative to the fund by the US and the EU at COP27, could potentially include finance from multilateral development banks, insurance schemes and humanitarian organisations.
Developing countries, by contrast, want to see the loss and damage fund set up as an operating entity of the UNFCCC, funded by contributions from developed countries, and delivering grants rather than loans, with the added proviso that some countries would be able to access funds more readily than others.
There were also discussions around supplementing this money with new sources of finance, such as taxes on aviation, shipping or fossil fuels. The Glasgow Dialogue, originally established at COP26 as a compromise when a loss and damage fund was not secured, is now mandated to inform the work of the transitional committee. While progress was made on operationalising the Santiago Network on loss and damage in Bonn, unfortunately no decision was reached on the host of the network, despite the constructive engagement of all Parties.
The Paris Summit on a new Global Financing Pact
The Bonn talks made it clear that climate finance has the potential to unravel negotiations. Less than a week after the session ended, many of the same delegates gathered in Paris on 22 and 23 June for a summit aimed to create a “new global financing pact” between the global north and global south. Leaders affirmed that addressing new global challenges would not be done at the expense of the fight against global poverty. With this objective in mind, they agreed on a shared ambition to win the battle against poverty and vulnerabilities; to stand united in increasing international solidarity; to protect global public goods; and to mobilize the additional resources it takes to meet these challenges, especially on the private sector side. (See our knowledge insights webinar on funding through the lends of ESG here). They acknowledged the importance of the UN Sustainable Development Goals Stimulus plan, as well as of other contributions including the “Bridgetown 2.0” agenda and the V20’s Accra-Marrakech Agenda in this regard.
The Brussels Ministerial on Climate Action: A Call to Triple Renewable Energy and Double Energy Efficiency
The annual Ministerial meeting on Climate Action was held on 13 July in Brussels. The president-designate, Sultan Al-Jaber, appointed in January 2003, outlined four paradigm shifts which will be key for discussions at COP28: “[f]ast-tracking the [energy] transition, fixing climate finance, focusing on people, lives and livelihoods, and underpinning everything with full inclusivity.” Stressing the importance of speeding up the deployment of renewables, president-designate Al-Jaber called on countries to join efforts to triple the world’s renewable energy capacity to 11,000 gigawatts and double energy efficiency by 2030. (We wrote about recent developments in Ireland's offshore wind and hydrogen sectors here). The president-designate's appointment was controversial from the beginning, and more so when he referred to a "phase out of fossil fuel emissions" which some took to mean that companies could continue extracting fossil fuels as long as carbon emissions were somehow captured. His subsequent description of a fossil fuel phasedown as “inevitable” and “essential" was significant but the clarification is still likely to disappoint many, including more than 80 countries who are hoping to secure a pledge to completely phase out fossil fuels at COP28.
COP28: Four Cross-Cutting Themes
The COP28 Presidency also published its two-week thematic programme. It incorporates four cross-cutting themes: Technology & Innovation, Inclusion, Frontline Communities and Finance. The countdown to COP28 has begun.
For further information on how any of these issues may affect your business, please contact a member of our ESG Advisory Group.