ROAD TO COP28: What to expect?

With record temperatures sweeping, wildfires raging, and the onset of the hottest week ever documented worldwide in early July, there is much less to be optimistic about the climate change since COP27. Apart from a few vital takeaways - such as the establishment of a Loss and Damage Fund - COP27 had its controversies. Many countries - specifically, developing nations - are frustrated with the slow progress, which some deem no progress at all. With COP27 arguably failing to demonstrate a reassuring plan to put the world on a more sustainable path, focus is now on the upcoming COP28 which will take place from 30 November to 12 December 2023 in Dubai.

In early July 2023, the Minister of Industry and Advanced Technology of UAE, Dr. Sultan al-Jaber, who will preside over the negotiations in COP28, has outlined his “four-pillar” agenda for COP 28. Accordingly, the discussions and negotiations at COP28 is expected to be shaped around the following pillars:

• fast-tracking energy transitions and cutting emissions before 2030;
• fixing climate finance by accomplishing the previous promises and introducing a new finance deal;
• focusing on adaptation to protect nature, people, lives and livelihoods; and
• supporting everything with full inclusivity (just transition).

There’s considerable attention from all over the world on COP28 as many critical agenda items are planned to conclude at COP28. We summarised some of the key themes we look forward to at COP28 which we expect will be one of the most important summits yet. Top of Form

Key Themes to Look Forward to at COP28

The Global Stocktake

Arguably, the most anticipated item at COP28 is that the first global stocktake (“GST”) will take place. The GST, formed within the framework of the Paris Agreement, serves as a mechanism for nations to collectively evaluate their individual greenhouse gas inventories and their efforts to reach “net zero” by 2050. The purpose of the GST is to assess progress toward restraining the rise in global average temperature to under 2^○C above pre-industrial levels, with a concerted effort to limit it to 1.5^○C. The GST aims to (i) incentivise nations to elevate their Nationally Determined Contributions (“NDCs”) and their targets for domestic emissions reduction and (ii) encourage such nations to take further actions before submitting their updated NDCs as of 2025.

The GST is expected to influence international climate change laws and policies during and beyond COP28 including the implementation of the Loss and Damage Fund. Further impacts are also envisioned as the GST aims to increase the cooperation of nations for establishing a global framework for carbon credit certification and trading.

Global Carbon Markets

Although carbon markets have existed for more than 20 years, the world was introduced to a new phase with the introduction of the Article 6 Rules during COP26 in Glasgow (“Article 6 Rules”), setting out a mechanism to form a global carbon market. The Article 6 Rules enables nations and private companies to cooperate based on the activities and engagement roadmap set out in Article 6 Rules, namely Article 6.2 and Article 6.4, to achieve their NDC goals under the Paris Agreement. However, Article 6 rules are still not operational as discussions regarding the mechanisms are yet to be completed. Negotiations of detailed rules and guidance of Article 6 rules at COP27 were deferred to COP28 and now, is one of the most anticipated topics of the summit.

Nature-based Solutions, Biodiversity and Climate Finance

Recognition of nature-based solutions and biodiversity markets were a point of discussion even before COP27. The Sharm-el Sheik Implementation Plan of COP27 (“Sharm el-Sheikh Plan”) emphasised the importance of restoring nature and ecosystems and encouraged nations to take ocean-based actions as part of their mitigation and adaptation plans. That said, no regulations, or more tangible encouragement items were introduced in COP27. Similarly, the Sharm el-Sheikh Plan has not introduced a new model for climate financing and only reemphasised the need to continue working on providing the existing goal of USD 100 billion funding.

We expect that introduction of more tangible steps to support nature-based solutions and biodiversity along with a more constructive climate financing model will be at the forefront of negotiations during COP28.

Loss and Damage Fund

The establishment of Loss and Damage Fund was a historical milestone from COP27 as the parties finally agreed on a compensation mechanism for developing countries affected by the crippling effects of climate change. That being said, the Fund is not yet operationalised, and substantial progress is required at COP28 to get the Fund up and running which will be one of the key goals of the summit. However, it may be ambitious to expect the Fund to be fully operationalised after COP28 but, more likely, COP 28 will discuss the governance system of the Fund and defer the funding details to a later stage.

Conclusion

The effects of climate change have not slowed down since COP27. Since the progress desired was not met at COP27, it is imperative for COP28 to expedite global efforts in resolving the issues. Starting from 30 December 2023, the world’s focus will be on Dubai to see, robust, ambitious, and tangible actions to mitigate devastating effects of climate change while providing a climate financing model that can lead up to a more sustainable path.

We will be present in Dubai to participate to all discussions and exchange insights with all the parties that may shape the geopolitical environment around us. We will share a separate article on key takeaways of COP28 once completed and continue to provide advanced guidance to our clients.