From 28 November to 12 December 2023, the city of Dubai will host the 28th UN Climate Change Conference, in the United Arab Emirates.
Over time COPs have evolved from conventions of restricted numbers of governmental representatives and experts into huge mediatic arenas, where decisions negotiated during the whole year are matured, presented, and adopted. So big expectations characterize all COPs, even if historic decisions are taken in just a few.
COP 28 is going to be a transition one, as the agenda does not include the adoption of more ambitious targets to reduce greenhouse gas (GHG) emissions.
The Paris Agreement, which is the current climate governance regime after the Kyoto Protocol, does not envision the strengthening of the Nationally Determined Contributions (NDCs) until 2025, even if they are not in line with the goal of keeping Earth’s temperature increase below 2 degrees or possibly 1.5 degrees by the end of the century.
NDCs describe Parties’ commitments to reduce emissions in different forms, ranging from absolute reductions (compulsory for developed countries), to GDP carbon intensity (such as in the case of China and India), to policies and projects implementation (as in most developing countries, where commitments are conditioned to funding and assistance from developed countries).
As a Party, the EU submits its NDC on behalf of the EU and its member states, relying on the centralized European emission trading scheme and the effort-sharing regulation applied to member states.
The very location of the next COP, in the center of an area dominated by Countries depending on fossil fuel extraction, does not seem to favor extraordinary commitments to fight climate change.
This does not imply that the meeting will be useless.
Some important issues are on the agenda to go on with the complex process of taking action on climate mitigation and adaptation.
Many world leaders, including Pope Francis (who just released an apostolic exhortation on climate, Laudate Deum, following the 2015 encyclic Laudato Sì) will attend COP 28 and will frame their visions and policies in the global context.
Even if other conventions, such as G7 meetings, and bilateral and multilateral agreements have been assuming increasing relevance, the COP is still the place to assess the results and develop the instruments for the next steps in global climate action. In this context the Presidents of the three major UN environmental conventions underlined the need to better coordinate the efforts to consider the inextricable links between climate change, desertification and loss of biodiversity
What’s on the Agenda
COP 28 will be the occasion to consider the Global Stocktake, which builds on the inventory of global emissions structured by country and by source, constituting the basis for future action.
We know that the emission peak, followed by a continuous reduction of global emissions, has not been reached, yet. The drastic reduction of emissions due to Covid 19 in 2020 has been almost completely compensated by a rebound in 2021 and further growth in 2022.
The Sixth IPCC assessment report, which summarizes the state of scientific knowledge, concluded with the publication of its synthesis report in March of this year, providing further evidence on human responsibility for climate change and on the urgency to act to avoid catastrophic consequences, also showing that some severe impacts are unavoidable and require rapid adaptation, while overshot of targets imply intensification of recourse to carbon removals.
On adaptation, the Global Stocktake puts in evidence that “most observed adaptation efforts are fragmented, incremental, sector-specific and unequally distributed across regions” and envisions a common adaptation framework taking into account the various phases of the policy cycle, including risk assessment, planning, implementation, evaluation.
At the same time, the Global Stocktake puts relevant attention to potential economic and social disruption implied by strong climate action, calling for a just transition and for the mobilization of enormous resources to drive sustainable investments to accompany the transition, and for providing funding from developed countries to assist developing countries – which constitute a permanent element of friction.
For this purpose, the Loss and Damage Fund announced at COP 27 should be formally instituted and become operative, through governance mechanisms and national contributions based on the principle of common but differentiated responsibilities.
In fact, its resources are destined to compensate the most vulnerable countries for the damages and losses caused by climate change deriving from countries’ historic emissions.
A recent preliminary agreement attributes to the World Bank the fund’s management, the precise endowment of which has not been established, yet.
COP 28 should also bring the final decisions on the technical and governance aspects of Article 6 of the Paris Agreement, which set the rules for new cooperative instruments, also leading to a global carbon market.
In particular, internationally transferred mitigation outcomes (ITMOs) could be transferred by a party exceeding its target under the NDC to another Party on a bilateral basis, providing the overall requirements for a global carbon price.
The global market could co-exist with the several emission trading systems already existing at different scales, from local to national, to regional, such as the EU ETS, which is the largest.
Moreover, the UN Supervisory body for the release of credits demonstrating emission reductions under another cooperative mechanism also supporting sustainable development should be instituted, contributing to creating a global market for these credits and implementing carbon abatements most efficiently.
COP 28 should bring the final decisions on the technical and governance aspects of Article 6 of the Paris Agreement, which are necessary to build a global carbon market
As in previous COP meetings, the EU intends to play a forefront role in pushing action, even though European emissions account for less than 10% of global emissions.
The EU’s ambitious commitments envisioned under its energy and climate policy and framed by the Green Deal and the Fit for 55 package are not conditioned by even efforts by other countries, such as China and the US as main emitters. Still, they are part of a long-term vision putting sustainability at the center of citizens’ quality of life and industry’s competitive advantage.
For this purpose, the EU negotiating delegation at COP 28 will put forward initiatives to phase out CO2-emitting fossil fuels, halt the building of coal power plants, and phase out fossil fuel subsidies.
Creating global convergence on these topics is not easy, so a role can be played by the implementation of existing voluntary pledges and the launch of new ones, not requiring unanimity under the rules of the global convention.
The impact of these “side” agreements needs to be investigated to assess their real contribution, which is potentially relevant.
The EU position itself is not monolithic, as Poland, the Czech Republic, and other nations won a concession that provides certain industrial sectors with the option to keep consuming fossil fuels if technologies are used to capture emissions. Also, no date to phase out fossil fuel subsidies has been set at the EU level.
The recent EU application of the Carbon border adjustment mechanism (CBAM) requiring reporting from importers of regulated carbon-intensive goods, in preparation for the actual taxation, constitutes an element of friction and potential trade dispute, in particular with China and the US, and a clear demonstration of the fundamentals of EU climate policy, which the next elections of the European Parliament could either confirm or alter, but not invert.
Upcoming IEP@BU Events
Il secondo appuntamento di una serie di tre working lunch realizzati congiuntamente da ECFR Roma, SDA Bocconi e l’Institute for European Policymaking @ Bocconi University.
An event co-organized by BAFFI, IEP@BU and SUERF to explore the tight relation between investors’ expectations, climate policy and regulatory uncertainty and risk assessment and discuss challenges and opportunities for financial regulation in contexts of high inflation, tight fiscal budgets and sovereign debt distress, growing climate-related events and by other key financial reforms, such as the European banking reform.
IEP@BU does not express opinions of its own. The opinions expressed in this publication are those of the authors. Any errors or omissions are the responsibility of the authors.