Alex Scott and Laura Sabogal Reyes / Dec 2023
Opening ceremony of COP 28. Photo: Wikimedia Commons
As the dust slowly settles after a whirlwind COP28, the aftermath reveals a complex task for EU climate diplomacy. The final outcome is a mixed bag: historic on loss and damage funding and signaling the end of fossil fuels, but incremental in the delivery of real climate action that changes global emissions trajectories.
The critical centrepiece of the COP negotiations was the opportunity for governments to set guidance for countries’ next national climate policies, due to be submitted to the UNFCCC by 2025. They had the chance to agree how to address the gaps revealed by the recent stocktake of climate action: despite cataclysmic climate impacts only 1 in 6 countries has a national adaptation plan and emissions are still rising rather than being on track for the 43% cut by 2030 or 60% cut by 2035 that the science prescribes.
The UAE consensus does set an expectation that countries develop their next emissions targets in line with a pathway to limiting global warming to 1.5C, but leaves a glaring gap in the absence of a clear financial package for embarking on the energy transition or filling the adaptation finance gap. The issue of insufficient finance and economic opportunity for developing countries which choose to forego fossil fuel exploitation was the undercurrent throughout the 15 days of talks. Colombia’s environment minister Susana Muhamad was crystal clear in pointing out that rather than being rewarded for leading the pack on phasing out fossil fuels, Colombia’s economy is taking a hit. With no global safety net helping countries find alternatives routes to prosperity, they are left to their own devices to provide security to their citizens as they take action on climate ambition.
Deep in the COP negotiated texts could be a pathway to building this global safety net. Previously deemed politically unimaginable in the UNFCCC, countries agreed to make explicit calls on each other and global financial institutions to address the challenges of fiscal space (aka debt burdens) and explore new ways to mobilise the scale of finance needed for climate transitions, including taxation. These references have injected a new dimension into the discussions, reflecting the evolving landscape of climate finance. They underscore a global recognition of the imperative for predictable and sustainable sources of public finance as well as mobilising private sources.
This negotiated outcome was secured against a backdrop of political shifts on global economic governance. The UAE brought together the threads of several agendas for finance system transformation in the Global Finance Framework, bridging from Barbados’ Bridgetown Initiative to Kenya’s Nairobi Declaration and France’s Paris Pact for People and Planet.
COP28 was the launchpad too for other initiatives including the Global Expert Review on Debt, Nature and Climate to be carried out by Colombia, Kenya and France and a new commission exploring global taxation options that adds to the momentum started by the United Nations General Assembly vote for a UN Tax Convention.
Together these political initiatives and signals pave the way for broader resource mobilisation beyond the UNFCCC. The focus now shifts to the 2024 Spring Meetings of the World Bank and the International Monetary Fund, along with the upcoming Brazilian G20 presidency, to continue building momentum on the basis of the GST calls for a capital increase in the multilateral development banks and the inclusion of the G20 Common Framework. Although next year’s COP presidency, Azerbaijan, is an unknown quantity, it is clear it will be a finance COP due to the establishment of a new collective quantified goal on climate finance as well as the follow up to the calls in the UAE consensus. Brazil’s commitment to work as a ‘troika’ with the UAE and Azerbaijan presidencies over the next three years while they hold the reins of the G20 is a key opportunity to secure momentum on the broader finance agenda.
Overall, the outcome of COP28 emphasizes the importance of a mosaic of financing solutions which are flexible and innovative and that can adapt to the evolving needs of the climate crisis. The EU has a significant role to play in making sure these solutions are delivered – some member states like France and Germany are already taking a leading role. The EU will need to start by delivering on its own emissions reductions – with its next NDC update and a credible fossil fuel phase out plan. Crucially, the EU will need to join forces with other G7 and G20 members to start to answer the unanswered question over the global investment plan and support mechanisms that will help countries find routes to economic prosperity on a different path to the fossil fuel industrial path that the EU benefitted from.