What Happened at COP28 and What it Means for Climate Action

COP28 was nothing short of a rollercoaster, exceeding initial expectations but casting a mixed shadow on the ongoing fight against climate change. While the summit kicked off with a remarkable agreement on day one, unveiling a loss and damage fund that reached $700 million in pledges. Some found the overall climate agreements, though historic, not nearly ambitious enough. As we’ve navigated through the highs and lows of this two-week summit, here are our top three key takeaways from COP28.

1. Commitment to Transition Away From Fossil Fuels

The final day of COP28 marked a pivotal moment as global stocktake negotiations concluded. After 36 hours of intense negotiations following the rejection of a previous draft, nations agreed on a commitment to "transition away from fossil fuels." This milestone represents the first unanimous agreement on such a commitment. The ambition, though a step forward, falls short of the transformative goals envisioned by the Paris Agreement. 

The revised text is now more explicit than ever in portraying the gravity of the climate emergency and more detailed about the measures the world needs to take. This includes substantial reductions in greenhouse gas emissions aligned with 1.5°C pathways and tripling global renewable energy capacity by 2030. While the outcome might have lacked the ideal level of ambition, the added detail does lay a foundation for policymakers and future COPs to build upon. 

The agreement underscores the importance for corporations to adapt their strategies to align with the heightened global climate ambition. The detailed measures outlined in the agreement provide a roadmap for businesses to contribute meaningfully to the global transition away from fossil fuels, setting the stage for innovative solutions, sustainable investments, and long-term resilience in a changing climate.

2. Waves of Support for Voluntary Carbon Markets

This year’s COP reinvigorated support for and commitment to the voluntary carbon market (VCM). With a roundtable on Finance Day that featured US climate envoy John Kerry and ministers from Singapore, the UK, Ghana and Indonesia, this event marked the most substantial political endorsement the market has ever received. In addition to John Kerry, other influential figures, including EU Commission President Ursula von der Leyen and former UK Prime Minister Tony Blair, championed efforts to revive the market as a pivotal means of driving investment toward real climate solutions that would otherwise go unfunded. The collective support underscores the conviction that an effective carbon market is an indispensable and critical component in addressing the climate crisis’s challenges. 

The VCM landscape saw many other promising announcements and proposals, including guidance from the CFTC, solidifying carbon credits’ position as an important emerging commodity class, and a Consultation Report from IOSCO to promote the integrity and orderly functioning of VCMs, adding another level of trust and financial integrity to the market.

Crucially, prominent entities like SBTi, VCMI, GHG Protocol and ICVCM joined forces to establish an End-to-End Integrity Framework, which more clearly outlines how they collectively guide the voluntary decarbonization journey. For corporates, this will provide clarity on how carbon credits fit into their overall net zero strategies and should build confidence in investing in the market. 

Other prominent VCM commitments included: 

• John Kerry also shared updates on the Energy Transition Accelerator, set to be fully operational by Earth Day 2024 and mobilize up to $200 billion in energy transition finance for developing countries by 2035. 
• The LEAF Coalition announced a groundbreaking emissions reduction announcement with the Brazilian state Acre, amounting to 10 million tonnes.

Collectively, these developments play a crucial role in building trust and confidence in the VCM.

3. Challenges and Limited Progress in Article 6 Negotiations

Article 6 negotiations proved more fractious than anticipated, with disagreements on technical issues like the relationship between different registries and the format for declaring trades. Article 6.2 still awaits agreements on key ongoing issues (the revocation of corresponding adjustments and the integration of registries), while the implementation of Article 6.4 is once again delayed. There is some hope that next year will bring Article 6.4 into operation, but key issues, particularly concerning methodologies and approaches to removals, remain unresolved.

The rejection of draft texts and the reopening of previously settled issues further complicated negotiations. Despite the tensions, governments are still making progress under Article 6.2 with the first bilateral trade expected this month. Several countries have forged agreements in recent months, and leading countries like Singapore, with the help of Sylvera, will further inject momentum into the process. We expect to see much more activity under Article 6.2 in 2024.

Join our COP28 debrief this January

As we reflect on the nuances of COP28, we need the private sector to take bold climate action and steer us toward a sustainable future. Many of the developments at COP28 lay the foundation for companies to turn their climate strategy into corporate strategy and expedite net zero progress. 

For a deeper dive into the outcomes of COP28 and an exploration of the crucial role the private sector can play, join us in our upcoming January webinar.