Climate action is accelerating and fossil fuels are coming to an end

On December 13, 2023, the 28th Conference of the Parties (COP28) to the United Nations Framework Convention on Climate Change (UNFCCC), which lasted for two weeks, officially concluded in Dubai, United Arab Emirates. As the Conference of the Parties (COP) to complete the first global stocktaking of the Paris Agreement, and also hosted by OPEC (Organization of Petroleum Exporting Countries), the conference attracted more than 110,000 registrations, twice the number of participants at COP27 in Egypt, and was the largest climate conference to date.

COP28 is a critical juncture related to whether the global climate goals can be achieved as scheduled, but due to many factors such as the severity of the climate crisis, the pressure on the global economy, and the sensitivity of geopolitical issues, the convening of this conference faces a complex global environmental background. Even so, COP28 made significant progress on the transition to fossil fuels, loss and damage, global adaptation targets, climate finance, methane reductions, gender and health, and reached the final "UAE Consensus", marking the beginning of the End for Fossil Fuels and strengthening the global consensus on climate action.

However, in view of the continuous trend of global warming, the reality of the crisis that the world is approaching the tipping point of catastrophic climate cannot be ignored, and the time and space left for climate action are shrinking rapidly, and more active, rapid and effective climate action is urgent.

Reach a consensus to wean away from fossil fuels

According to the conclusion of the first global stocktake obtained at this conference, the world has indeed made significant collective progress in achieving the temperature target of the Paris Agreement, and the global temperature rise is expected to fall from 4°C before the signing of the Paris Agreement to 2.1~2.8°C assuming that the latest submitted Nationally Determined Contributions (NDCs) are fully implemented. Despite this, global temperature rise is expected to be higher than the 1.5°C and 2°C targets set by the Paris Agreement. The meeting reaffirmed global emission reduction targets for future phases, limiting global warming to 1.5°C by reducing global greenhouse gas emissions by 43% by 2030 and 60% by 2035 compared to 2019, and achieving net-zero CO2 emissions by 2050.

According to the latest Global Carbon Budget Report, global carbon dioxide emissions from fossil fuels are expected to grow further in 2023 to 37.5 billion tonnes, up 1.1% from 2022 and 1.4% from 2019 levels, and are expected to bring carbon dioxide concentrations in the air to a new high of 419.3 ppm in 2023.

In order to meet the 1.5°C greenhouse gas reduction target, the conference focused on fossil fuels and their global warming effects, and the final text identified the need to "transition away from fossil fuels in a just, orderly and equitable manner, and accelerate action in this critical decade to achieve science-based net zero emissions by 2050".

Although the text did not ultimately adopt the long-called "phase out fossil fuels" language, as UN Secretary-General António Guterres said, "fossil fuels" as the main cause of climate change are finally mentioned in the outcome document, which is a breakthrough for the UN Climate Change Conference, especially for the OPEC countries.

In addition, negotiators pledged to triple global renewable energy capacity by 2030 and triple the annual growth rate of global average energy efficiency, accelerate the phase-down of coal-fired power without carbon reduction facilities, accelerate the development of zero- and low-emission technologies, significantly reduce non-carbon dioxide emissions, especially methane, and phase out inefficient fossil fuel subsidies that do not address energy poverty or a just transition.

A number of collective declarations on climate change mitigation have been signed to solidify action. 116 countries have signed the Global Declaration on Renewable Energy and Energy Efficiency, proposing that by 2030, the world's installed renewable energy capacity will triple that of 2022, or more than 11 billion kilowatts, and the rate of energy efficiency improvement will be doubled every year, from 2% to 4%. 50 oil and gas companies announced that they have signed up to the Decarbonization of Oil and Gascharter(OGDC), announcing net-zero emissions by 2050 and near-zero methane emissions from upstream operations by 2030, and avoiding direct combustion without energy use. In addition, 61 countries have signed the Global Cooling Pledge, committing to reduce all refrigeration-related emissions by at least 68% by 2050 compared to 2022.

Strengthen climate finance financing arrangements

Climate finance has long been at the heart of the COP. However, the world still faces a huge climate finance gap, which is one of the main reasons why current climate action is lagging behind the path to achieving climate goals under the Paris Agreement, and all regions of the world are suffering from the impacts of climate change. The findings of the global stocktake show that human beings have clearly contributed to global warming of about 1.1°C through major activities that emit greenhouse gases, and that the impacts of climate change are already being felt in every region of the world, especially in countries that have contributed the least to climate change. Therefore, a robust financing mechanism is needed to close the inequitable financing gap in the current climate context.

On the first day of COP28, the General Assembly adopted a new financing mechanism to help developing countries, which are particularly vulnerable to the adverse effects of climate change, cope with economic and non-economic losses and damages, including extreme weather events and slow-onset events, through the establishment of a Loss and Damage Fund. The Fund has a four-year transition period. During the transition period, the World Bank will be invited to operate the fund as its Financial Intermediary Fund (FIF). To date, the fund has secured nearly $800 million in financial commitments, including $100 million from the UAE, $245 million from the European Union, and $50.5 million from the United Kingdom.

On the agenda of the US$100 billion climate finance target for developed countries, the General Assembly decided to further develop a draft negotiating text for the new Collective Quantitative Targets (NCQG) to finalize the details at COP29. While there were many differences on the funding sources, timeframes, quality and quantity, and working methods of the NCQG at the NCQG's High-Level Ministerial Dialogue at this conference, we expect that at COP29 next year, the NCQG's clarity will be as encouraging as this year's Loss and Damage Fund.

In addition to this, multiple developments were made during COP28 on climate finance commitments. For example, the Green Climate Fund, the Adaptation Fund, and the Least Developed Countries Fund under the United Nations have received financial support from developed countries to varying degrees. The UAE has announced that it will inject US$30 billion into its new private climate fund, ALTéRRA, of which US$5 billion will be used to support developing countries in solving their climate finance challenges and US$25 billion will be used to leverage institutional climate investments. For example, although the Biden administration has pledged to provide $3 billion in funding for the Green Climate Fund, it has also clearly stated the difficulty of the funds being passed by the US Congress.

Consensus on adaptation to climate change has been strengthened

On the issue of adaptation to climate change, COP28 continued COP27's focus on adaptation. To raise awareness, the United Nations has released a graphic titled "Why 1.5°C Matters", which visualizes the long-term effects of continued global temperature increases. Humanity will face irreversible negative impacts from climate change in areas such as drought and wildfires, food, sea level, and ecosystems, and the strengthening of adaptation measures is indispensable.

The emphasis on adaptation was further reflected in the text of the General Assembly resolution. In terms of early warning systems, the General Assembly called for universal access to early warning systems for extreme weather and climate events by 2027, and invited development partners, international financial institutions and operational entities of financial mechanisms to support the implementation of the "Full Early Warning Coverage" initiative.

The Conference set a number of adaptation targets for climate change action up to 2030, including significantly reducing water scarcity caused by climate change, achieving climate-resilient food and agricultural production, food supply and distribution, achieving resilience to climate change-related health impacts, reducing climate impacts on ecosystems and biodiversity, and improving the resilience of infrastructure and human settlements to climate change impacts. At the same time, the conference clarified the framework for the Global Adaptation Goal (GGA), noting that adaptation action and support should be undertaken and supported from different dimensions of the iteration of the adaptation cycle, including (a) impact, vulnerability and risk assessment, (b) planning, (c) implementation, and (d) monitoring, assessment and learningpracticeFour aspects.

The global stocktake also highlights the gap in adaptation finance, noting that the adaptation finance needs of developing countries are estimated at US$215 billion ~ US$387 billion per year by 2030. To meet the adaptation financing gap, developed countries should at least double adaptation finance by 2025 from 2019 levels. At the same time, a balance between mitigation and adaptation is needed to meet the climate finance commitments of developed countries.

In terms of collective declarations and commitments, the COP28 UAE Declaration on Climate Relief, Recovery and Peace was adopted at the conference, which was signed by 80 countries, including China and the United States, and 43 international organizations, to jointly provide financial support for climate adaptation and resilience building, strengthen coordination and cooperation, and improve the resilience of climate-vulnerable regions and people. At the same time, the UAE and China, the presidency of the conference, jointly launched the "COP28 UAE Joint Statement on Climate, Nature and People" to strengthen national planning and actions on climate action, biodiversity conservation and land restoration, which was signed by 18 countries. On the impact of climate change on human health, more than 120 countries have signed the COP28 UAE Declaration on Climate and Health to accelerate action to protect people's health from the increasing impact of climate change. On food security, 159 countries adopted the COP28 UAE Declaration on Sustainable Agriculture, Resilient Food Systems and Climate Action to address climate change while keeping agriculture and food systems safe. On gender issues, the COP28 Gender-Responsive Partnership for a Just Transition & Climate Action was launched, which was supported by 68 countries, including China and the United States, to address the unequal impact of women in the context of climate change.

Follow-up and unresolved issues

The main purpose of this global stocktake is to review countries' climate commitments and actual progress at this stage, and to provide guidance for the development of the next phase of Nationally Determined Contributions (NDCs). For the submission of the next stage of NDCs, the conference decision pointed out that the parties should submit their next NDCs to the Secretariat at least 9~12 months before COP30 in 2025, and required that the new NDCs of all parties should reflect the progress of the current NDCs, and reflect the country's highest climate ambitions, reflecting common but differentiated responsibilities and the different capabilities of countries according to their respective circumstances.

In response to the content of the new NDC, the final resolution encourages parties to submit their NDCs through 2035 in the new NDCs. In this regard, China's special envoy for climate change, Xie Zhenhua, has said at COP28 that the Chinese government is ready to put forward new goals and new measures for China's NDC to the Paris Agreement by 2030 and 2035 in 2025.

Despite the success of the conference, the current progress in climate action still leaves a huge legacy for the rest of the world, especially in small island states (SIDS), which is facing imminent crises, compared to the huge gaps in addressing climate change that have been recognized. At the same time, on some key issues, such as the progress of Article 6 of the Paris Agreement, countries refused to adopt the latest proposals for Articles 6.2 and 6.4 on the last day of the COP28 negotiations, and the design of the cooperation and implementation mechanism between countries has not been able to reach a new consensus, and the discussion on the details has been further postponed to the next climate change conference. However, from another perspective, the main reason for the rejection of this proposal is that they are worried about the fairness of the voluntary carbon market and the difficulty in ensuring the quality of carbon credits, which also reflects the stricter requirements of all parties for the implementation of emission reduction targets, and is also an important statement of hope to rectify the global voluntary carbon market.

Looking back at the progress of COP28, there is no doubt that this climate change conference is the hottest, most controversial and most urgent in history. The Global Tipping Points report, released during the conference, pointed out that as global warming continues, the Earth is about to usher in five catastrophic climate tipping points, including the death of coral reefs in warm waters and the disruption of atmospheric circulation in the North Atlantic. At the same time, however, there is ongoing debate on key issues such as the "phase-out of fossil fuels", "climate finance commitments from developed countries", "the CBAM (EU Carbon Border Adjustment Mechanism)", and "a just transition".

The Conference has made important progress on many issues, but humanity still has a long way to go in addressing the challenge of the climate change crisis. As Simon Steele, Executive Secretary of the UNFCCC, said, "Although we have not been able to completely turn the page of the fossil energy era in Dubai, this result is the beginning of the end".

We also hope that in the future, COP29 and COP30 in Azerbaijan and Brazil, more issues on climate action will be addressed, and governments, businesses, financial institutions, and a wider range of institutions and individuals can participate in climate action to accelerate the progress of achieving global climate goals by 2050.

(Wang Yao is the President of the Green Finance Institute of China Finance University; Liu Huixin is the Executive Director of the Climate Finance Research Center of the Green Finance Institute of China Finance and Economics University; Cui Ying is the Vice President of the Green Finance Institute of China Finance University)