Experts discuss key outcomes from COP28 including the shift away from fossil fuels and the intensification of scrutiny in energy policy. They explore the role of countries in global climate policy, the division over climate finance, impact of extreme weather, and preview COP29's focus on climate finance.
The global stock take at COP 28 resulted in a historic agreement to transition away from fossil fuels in energy systems, aiming for net zero emissions by 2050, with the inclusion of all fossil fuels in the transition language.
Climate finance discussions at COP 28 highlighted significant divisions and polarization between developed and developing countries, with insufficient commitments to bridge the financing gaps and fund adaptation, making the challenge of financing climate actions a major focus in the coming years.
Deep dives
Transitioning away from fossil fuels at COP 28
The global stock take at COP 28 resulted in a historic agreement to transition away from fossil fuels in energy systems, aiming for net zero emissions by 2050. This marked the inclusion of all fossil fuels, not just coal, in the transition language. However, the lack of concrete targets and the need for countries to incorporate these actions in their future policies remain uncertain, depending on political risks and the outcomes of elections. The implementation of the transition away from fossil fuels will vary among countries, particularly in light of differing national circumstances and the responsibilities of developed nations versus developing ones.
Climate finance challenges at COP 28
Climate finance discussions at COP 28 highlighted significant divisions and polarization between developed and developing countries. While progress was seen on some fronts, such as the activation of the loss and damage fund and initiatives for a new global financial framework, overall commitments to bridge the financing gaps and fund adaptation were insufficient. Adaptation finance, in particular, remains substantially underfunded compared to mitigation. With the increasing effects of extreme weather events and climate change, the demand for climate finance will likely rise, and the challenge of financing these actions will be a major focus in the coming years.
Carbon markets and the progress at COP 28
Although there was a failure to adopt Article 6 and establish a comprehensive carbon market framework, progress was seen in the voluntary carbon market (VCM) realm. The VCM received significant acknowledgement and engagement, demonstrating its growing importance. While uncertainty remains due to the delay in Article 6 adoption, the commitment of countries to sign deals related to Article 6.2 projects shows a continued interest in market-based mechanisms. Moreover, the role of carbon markets in achieving NDC targets and balancing development goals will depend on how countries formulate their policies in the compliance market. The carbon market landscape will continue to evolve, with a focus on renewable energy generation capacity and the need for a collective global financial framework.
As the dust settles after COP28, with world leaders finally agreeing to shift energy systems away from fossil fuels, scrutiny of the climate impact of energy policy is set to intensify in 2024.
The thorny issue of finance is likely to dominate the climate debate this year, and with economic and geopolitical uncertainty still dominating the headlines, energy markets are in for a bumpy ride.
In this episode of the Platts Future Energy podcast, S&P Global Commodity Insights' experts Anna Mosby, Sara Giordano, Agamoni Ghosh and Eklavya Gupte take a deep dive into some of the key outcomes from COP28 and how they might affect climate policy moving forward.