COP28: renewed climate commitments follow first global stocktake

The 2023 United Nations Climate Conference of Parties (COP28) to the United Nations Framework Convention on Climate Change (UNFCCC) concluded last week in Dubai, notably marking the first UN global stocktake since the 2015 Paris Agreement.

COP28 was an opportunity for the UNFCCC to set future goals and assess progress to date in respect of the various climate-focussed goals agreed under the UNFCCC framework. The primary objective of the UNFCCC is to stabilise greenhouse gas (GHG) concentrations at a level that prevents dangerous human interference with the climate system. 

Global stocktake assessment

The Paris Agreement, agreed by the UNFCCC at COP21 in 2015, set a target of keeping the global temperature increase to well below 2°C above pre-industrial levels, with the aim of achieving 1.5°C or less. To measure progress towards this target, the Paris Agreement requires the parties to complete a global stocktake every five years. COP28 marked the first global stocktake, at which the UNFCCC assessed its collective efforts and achievements in reducing GHG emissions and adapting to the impacts of climate change.

Prepared in advance of the COP28, the written technical report shows that the world is not currently on track to meet these goals. This assessment set the stage for negotiations and discussions at COP28. King Charles, speaking at the opening, warned that the world is "dreadfully far off track" in its climate ambitions.

Following the assessment of progress towards the Paris Agreement goals, the UNFCCC negotiated its first global stocktake agreement at COP28. This agreement presents an opportunity for the UNFCCC to correct course towards achieving climate-related initiatives, setting new targets and objectives to realise the Paris Agreement goals.

The transition away from fossil fuels

In the global stocktake agreement The UNFCCC reinforced the 1.5°C goal and called for global efforts to transition “away from fossil fuels in energy systems in a just, orderly and equitable manner, accelerating action in this critical decade, so as to achieve net zero by 2050 in keeping with the science”. 

This agreement is not legally-binding on signatories, with critics citing several technicalities, including the option of continued use of “transitional fuels” such as gas, and the absence of a call to “phase-out” oil, coal and gas — which many countries and climate groups had been calling for.

The deal seeks to support this transition by also accelerating the adoption of technologies that have low or no GHG emissions, including emerging technological solutions such as carbon capture, which could help address emissions from sectors for which it will take longer to reduce fossil fuel reliance.

Pledges and agreements 

COP28 also provided the opportunity for numerous pledges and agreements in addition to the Global Stocktake.

The Global Renewables and Energy Efficiency Pledge saw 123 countries, including the UK, commit to:

• tripling the world’s capacity for renewable energy generation by 2030; and 
• doubling the global average annual rate of energy efficiency improvements from approximately 2% to over 4% every year until 2030.

63 countries, including the UK, joined a further pledge to reduce cooling-related emissions resulting from air conditions and fridges. The Global Cooling Pledge commits to a reduction by 2050 of cooling-related emissions by at least 68% compared to 2022 levels.

With the potential of this pledge being enacted into UK law, organisations, from those owning cold storage business to those responsible for operating air-conditioned offices, may find themselves subject to legal or policy changes implemented to achieve this objective.

Greater pledges have also been made for the Green Climate Fund (established to assist developing countries in adaptation and mitigation practices to counter climate change), with a further commitment of $3.5bn during COP28. This brings the total amount pledged over the next four years to $12.8bn over the next four years.

Separately, a newly established loss and damage fund was agreed with the objective of providing funding to developing countries particularly vulnerable to the adverse effects of climate change. Initial commitments to the fund totalled $700m.

Task Force on Climate-Related Financial Disclosures (TCFD)

The disbandment of the TCFD was also announced at COP28. The TCFD was established in 2015 to monitor and promote climate-related financial disclosures. Its disbandment, as anticipated, follows the release of the TCFD’s 2023 status report in October, marking the body’s fulfilment of its remit.

From 2024, the International Sustainability Standards Board will adopt responsibility for climate-related financial reporting.

Climate-resilient debt clauses

Countries and development banks have committed to the inclusion of climate-resilient debt clauses (CRDCs)in their lending agreements. CDRCs permit lenders to defer repayment of principal for up to two years in instances of severe climate-emergencies or natural disasters. Interest is added at the end of the deferral period.

UK Export Finance, the UK’s export credit agency, has agreed to incorporate CRDCs into new and existing deals with Senegal and Guyana. A further ten countries are considering the incorporation of CRDCs. Separately, credit rating agencies are also looking to ensure that the use of CRDCs do not cause credit rating difficulties for borrowers relying on such clauses.