Why COP28 needs to double down in Dubai

COP28, the latest global climate conference, is underway in Dubai, against a backdrop of extreme weather events, global conflicts and accusations that the process has been taken over by fossil fuel interests.

The two-week gathering of negotiators, ministers, world leaders, businesses and investors will be framed by the publication of the Global Stocktake, which will set out how the 197 national governments attending COP28 have performed on their targets under the Paris Agreement, when they agreed to limit average temperature rises to 1.5C above pre-industrial times. 

The message is not going to be an encouraging one. On current policies, we are on track to see temperature rises of 2.4C, twice as high as today’s 1.2C. This level has already wreaked havoc around the world, encapsulated by flooding in the streets of Dubai and Jeddah in November.

The stocktake is not only meant to show countries where they are on their decarbonisation journey but also help them identify what they need to do to achieve their goals. It should lead to stricter environmental targets at government level, which will filter down to more stringent requirements for companies.

We already know some of what is likely to emerge from the summit – a target to triple renewable energy capacity by 2030, and to double the rate of improvements in energy efficiency, while oil and gas producers are likely to commit to ending methane emissions by the same date. Advances in satellite and digital technology mean that it is now easy to spot methane leaks from space – and it is harder for operators to not deal with them.

Meanwhile, likely battlegrounds at the conference will centre around commitments to phase out fossil fuels and financing from rich countries to tackle climate change in developing countries. 

Given the extreme weather we have seen, and the scientific evidence, there is also likely to be a stronger focus on how governments, citizens and business adapt to climate change, as well as how they cut emissions. That will create new requirements on companies, but there will also be new opportunities from the drive to make infrastructure and business more resilient.

It may be that agreement to phase out fossil fuel production depends on commitments from industrialised countries to properly contribute to the loss and damage fund. This was launched at COP27 in 2022 to finance adaptation in the world’s poorest countries – and the $400m of commitments from the EU, UK and US in the opening hours of the conference gives hope there may indeed be progress. 

There has been pressure on oil producing states to put some of their recent windfall profits towards the fund following the publication of a letter signed by 25 former global leaders including UK ex-prime minister Gordon Brown. 

Sustainable investors will be looking for a strong signal that global leaders are still committed to tackling climate change and that policies and actions – not just words and pledges – will ensue to rapidly drive the transition to a net zero economy, says Alexandra Mihailescu Cichon, chief commercial officer at RepRisk. 

Investors are keen to see companies move from making commitments to implementing action plans, although there are limits to what they can do to make them change. “Investors can nudge companies in the right direction but cannot transform a business that is, by nature, high in emissions into a zero-emissions business. Such a transformation requires regulatory intervention and technological advancements,” Mihailescu Cichon says.

Nonetheless, she adds, COP28 is expected to produce more meaningful policies and regulations to cut emissions. “Companies that have committed to net-zero without solid action plans and having not taken meaningful steps to implement those plans will face reputational risks, and risk being accused of greenwashing.”

Building on the success of 2022’s COP15 biodiversity summit in Montreal, there is also likely to be a bigger focus on nature and biodiversity, as understanding grows that that tackling climate change and protecting nature go hand-in-hand. Linked to this, COP28 will have a greater focus than previous summits on health, and on food systems – both in terms of the risks they face from climate change and their contribution to it (food systems account for around a third of man-made emissions and cause significant loss of biodiversity). Expect a focus on reducing meat and dairy consumption, as well as food waste.

On health, there is a growing recognition that climate-related events including droughts, floods, wildfires and heatwaves are having a growing impact on human health – heat-related deaths among those aged over 65 have risen by 70% worldwide in two decades, according to the World Health Organisation, for example.

We are also likely to see more focus on carbon markets and carbon pricing, with the COP presidency highlighting the transformation of climate finance as one of its key priorities, a move welcomed by Mark Kember, chair of the Voluntary Carbon Markets Integrity Initiative, which has just released new guidelines for high integrity carbon credits, among others. 

This scaling of carbon markets includes making progress on the standardisation of voluntary carbon markets to help move private capital towards climate action in developing countries. Indeed, several countries are looking at how voluntary credits can help them meet their carbon targets.

However, concerns remain about project quality and the credibility of carbon credits for businesses looking to participate in carbon markets. 

For carbon credits to contribute effectively towards the energy transition, there needs to be a shift from just a project-based approach to more systemic programmes aimed at, for example, decarbonising city transport systems or making agriculture more sustainable, Kember says. 

Like all COPs, this one will have areas where progress is negligible or painfully slow – but the fact that measures on renewables capacity, energy efficiency and eradicating methane emissions are likely to be introduced without controversy shows just how far we have come since the Paris climate conference in 2015.