Insights – COP28 UAE Reflections

The Sustainability Action Society of Capital Club Dubai presented a Post COP28 Analysis to reflect on outcomes and their implications for the private sector in the UAE. Many sustainability professionals gathered to find out how they can join the call to action in fulfilling the vision for a better future.

Expert Speakers:

Jamila El Mir, Senior Advisor, High-Level Climate Champions

Daxita Rajcoomar, Chief Sustainability Officer, Africa, Middle East and Asia, ENGIE

Aruna Narayanan, Founder & Chief Impact Enabler, Real Impact

Monaem Ben Lellahom, Group CEO, Sustainable Square

Overview of COP28 Analysis:

• 170 world leaders and 85,000 people attended COP28.
• Indigenous peoples, health, and trade as central themes; high-level themes shaping discussions on climate challenges; emphasis on technology, inclusion, and frontline communities; and establishment of a youth climate champion.
• Private sector’s involvement necessary for finance, sustainability, supply chains, and global market shifts.
• Collaboration involving Mayors and backing of Bloomberg, under the Leadership of the COP28 Presidency and the High-Level Champion, delivering a global coalition endorsed by around 70 countries with the aim of strengthening collaboration between national and subnational levels to deliver on climate action. City players and subnational governments play a significant role in local action and decision-making. Municipal budgets, plans, and development projects are determined by these entities.
• Business Philanthropy Forum held during the World Climate Action Summit, which aims to highlight the elevated role of the private sector, philanthropy, and public sector in delivering climate action.
• Nature featured prominently in COP28, more so than in previous COPs with their focus on renewable energy and other mitigation strategies. H.E. Razan Al Mubarak, UN Climate Change High-Level Champion for COP28 successfully elevated nature’s capacity to provide up to one third of the mitigation required by 2030 to meet the Paris Agreement. In doing so USD2.7b was announced across various portfolios, including forests, mangroves, oceans, coral reefs, and land restoration.

Some Big Wins Outlined:

• The political win with the declaration of the UAE Consensus was crucial.
• The launch of the Industry Transition Alliance, specifically targeting challenging sectors, marks a milestone. This is the first time that such a significant focus has been placed on these hard to abate sectors as a collective group. TAQA notably played a vital role in spearheading a global initiative focused on power utilities, through the launch of the Global Utilities Net Zero Alliance in collaboration with IRENA and the COP28 High-Level Champion.
• The global cooling pledge, which holds particular importance. With the rise in heat resilience becoming a prominent concern, this pledge addresses both mitigation and adaptation imperatives. These targets were incorporated into the Sharm el-Sheikh adaptation agenda.
• The remarkable achievement of the Loss and Damage Fund – an impressive amount of over USD700 million has been pledged to support this fund. However, there are constant voices expressing that this sum is inadequate.
• The Altera launch marked a significant milestone in climate finance, with an initial pledge of USD30billion. This finance platform is dedicated to promoting sustainable development and aims to achieve a total financing of USD250 billion by 2030.
• Over 150 companies have made a commitment to incorporate nature into their investment portfolios and mitigate any negative impacts on the environment. Additionally, COP28, in collaboration with Tencent and Masdar, has introduced the innovate for Climate Tech platform to promote and expedite climate innovation.
• The Ministry of Energy and Infrastructure has also unveiled the Earth Platform, focused on integrating AI technologies to monitor progress towards achieving net-zero emissions and implementing climate action.
• Additionally, the Global Summit on Technology echoed this success. Moreover, the buildings breakthrough initiative was introduced through a soft launch by Morocco and France, followed by further reinforcement. The cement breakthrough, spearheaded by the UAE and Canada, and other commitments regarding steel were also made during this period.

Key Points related to the Energy Sector:

• Transition away from fossil fuels has become a central dilemma and is sparking extensive debates. There has been a remarkable surge in momentum for transitioning away from fossil fuels, particularly for the UAE.
• Failure to achieve the Global Stock Take and fulfil climate commitments has intensified efforts to transition away from fossil fuels.
• There is a significant gap between climate targets and the current temperature rise. This realization has prompted nations to recognize the urgent need for robust and eco-friendly energy systems.
• Clean technology products are currently being emphasized. Current clean technology production is 3400GW. Target for clean technology production by 2030 is 11,000GW.
• In 2010, 37% of renewables integrated into global energy systems; in 2022, global progress rate of renewable energy was 83%. But not enough to reach 1.5 trajectory target.
• Nations recognized the need to triple renewable energy use and double efficiency. Renewed commitment to meet targets by 2030 or 2050.
• National climate action plans to be updated and reviewed in 2024 and 2025.
• Fifty oil and gas companies made a pledge towards a decarbonization charter. For the first time ever, the oil and gas sectors have agreed to commit to tangible targets. They have pledged to achieve net zero emissions by 2050 or earlier for their scope one and scope two emissions. Although scope three emissions are not yet addressed, this is still seen as a positive starting point.
• Focus on reducing flaring leakages of methane to decrease greenhouse gas emissions. Action needed to decarbonize the oil and gas sector and establish a fund for methane reductions.
• Cooling industry is often overlooked but contributes to increased emissions; transition to cleaner energy needed. Financing and attention required to reduce the impact of emissions in refrigeration and cooling systems. Targets set to decarbonize industries related to refrigeration and cooling.
• Discussion on hydrogen trade corridors and improving hydrogen production scalability and cost-effectiveness. Increased hydrogen deployment expected from 2030 onwards with improved scalability and pricing.
• Introductory talks on nuclear energy.

What are the financial implications of expediting the global pledges? 

COP28 has provided numerous feasible and fundable solutions related to climate issues. These solutions have gained traction and can be implemented effectively. There is also a focus on measuring the impact of financial contributions. However, it remains to be seen how much funding will be directed towards the right initiatives. At a smaller scale, businesses are increasingly recognizing the climate agenda as a potential opportunity. 

The issue in developing countries regarding energy infrastructure goes beyond policies and physical infrastructure. The problem lies in the financial aspect, as these countries often rely on free finance, which has led to an overwhelming debt burden. Upgrading energy grids requires substantial funding that developing countries do not possess, making it challenging for them to self-fund such projects. While the private sector offers some relief by providing financial assistance, there is tension between the receiving and giving end in terms of financing renewable energy projects. The need for funding is crucial, but there are complexities and concerns surrounding the type of finance available.

Why didn’t the carbon market agenda pick up much momentum during COP28?

The process of strengthening standards and ensuring transparency and accountability in the Voluntary Carbon Market (VCM) market is essential. KSA has successfully entered the VCM market with Public Investment Fund and aims to have regional carbon offset and credit projects. UAE has also launched the National Carbon Registry. 

During the COP28, banks in the UAE pledged AED1 trillion, but how is it being smartly allocated?

With limited available capital, investors are adopting a mix of approaches, including blended finance and philanthropic capital, to address the financial needs of the climate space. Philanthropy capital is playing a significant role in holding recipients accountable for the support they receive. It is not merely charity, as there is an expectation of accountability and involvement. This approach aims to build a solid foundation for sustainable development.

Green Climate Fund as an example, highlighting its ability to provide funding at a lower interest rate, which helps kickstart initiatives. The shift in capital towards these projects is compared to a pyramid structure, with building blocks needed to enable their development. The focus should be on these building blocks rather than solely on capital markets. There is a growing trend among angel investors towards impact investing.

What types of collaboration are needed to accelerate the uptake of the climate agenda?

The networks that connect various institutions and organizations regionally in the field of climate are currently quite weak. This weakness is apparent in the lack of collaboration among research institutions and NGOs. However, the private sector seems to have the strongest regional connections. This is because they often have regional offices across multiple countries, facilitating better networking and collaboration.

The GCC Council and League of Arab States as platforms, are effective, despite their heavy workload. However, these organizations have many other priorities to address, particularly in terms of security challenges. The League of Arab States took a noteworthy step during COP28 by initiating two soft task forces focused on nature-based solutions and circular economy. These small-scale initiatives are seen as important step forward in enhancing strong collaboration between private sector and public sector to unlock regional sustainability and environmental outcomes.

Attempts were made to discuss hydrogen at a regional level, but these were still in the early stages. There is need for both vertical and horizontal collaboration, urging individuals to communicate and exchange knowledge with others in their field across different countries.

Companies are now shifting their focus from scope one and two to scope three, to broaden their assessment by collaborating with their suppliers and clients to understand the full extent of the supply chain’s impact.