The 28th Conference of the Parties to the UNFCCC (COP28), the UN’s annual climate summit, will take place in Dubai from 30 November to 12 December 2023. For almost two weeks, state delegations will discuss climate finance, innovative technology for renewable energies, and the global threat to livelihoods posed by climate change. To achieve the goals of the 2015 Paris Agreement, the international community must pull together with the private sector. This is why the possibilities of the voluntary carbon market (VCM) will be officially discussed at a climate conference for the first time. Can this new focus on the VCM help to mobilise urgently needed funds to accelerate climate action?
Opportunities and challenges for climate action
Before it even begins, this year's COP faces several challenges. On the one hand, the Global Stocktake (GST) will be discussed, the first since the Paris Agreement came into force. The GST Synthesis Report of September 2023 is the result of a two-year assessment of progress in implementing the goals of the Paris Agreement. The report is sobering: we are a long way from achieving the 1.5 °C target. In order to limit global warming to this level, global greenhouse gas emissions would have to decrease by 43% by 2030 and by as much as 60% by 2035. On the other hand, a potential conflict of interest is being discussed in the run-up to the event. The host country, the United Arab Emirates, owes its riches to the oil and gas industry. Climate activists and other organisations are concerned about what progress can be made with Sultan Al-Jaber, CEO of the Abu Dhabi National Oil Company (ADNOC), appointed as President of COP28.
From new technology to finance: the four cross-cutting themes of COP28
In addition to the urgent findings of the GST synthesis report, the so-called Loss and Damage Fund is another important negotiating point at the upcoming COP. "Loss and damage" refers to the unavoidable effects of climate change that we can no longer avoid or mitigate through adaptation measures. To this end, the parties present at COP27 agreed on a fund to compensate for damage resulting from climate change. The details of this fund are now being finalised, in particular the question of who should pay, and how much.
Each day of the negotiations is dedicated to a different topic, but four cross-cutting themes will be addressed throughout COP28:
- Technology and innovation are essential for more than just the energy transition. The COP28 presidency even describes them in the programme as "the heart and center of everything we do". COP28 in Dubai aims to bring together governments, companies, multilateral organisations, universities, investors and start-ups to find innovative climate action solutions.
- The focus on the livelihoods of frontline communities emphasises the urgency of climate action for humanity. The effects of climate change can be felt in all areas of life. This is why this year's conference will include the first COP Health Day. Discussions will focus on how health systems should respond to climate change and how financing can be organised.
- COP28 aims to bring all interest groups to the table and to promote a greater focus on inclusion than previous climate conferences. The presidency is focusing on young people as the next generation, who will define the business landscape and should already have a seat at the negotiating table to help shape the future.
- The fourth cross-cutting topic is finance. How can financial resources be mobilised for climate action, and what innovative mechanisms can help? This question is crucial to realising sustainable change and creating a world with adaptive solutions.
Investing in innovative technologies, financing mitigation, focusing on the future business landscape, and mobilising funds for climate action in general: the potential of the private sector to contribute to global climate action is the fifth overarching theme running through the COP28 programme.
A focus on finance from the private sector
In addition to the cross-cutting themes of COP28, the role that the private sector must play in climate action is also made clear in the GST synthesis report. The report calls for a drastic increase in private investment in low-emission activities and technologies. In response, the COP28 presidency has appealed to governments and the private sector to come to the table with concrete measures. On the voluntary carbon market (VCM), companies can play a role beyond their own value chains, helping close financing gaps in international climate action. By financing certified climate projects, companies promote sustainable development worldwide, even beyond carbon reduction.
This year, the VCM is on the official agenda for the first time, and the international community at COP28 will jointly look for ways to strengthen and expand the voluntary market. This sends a clear signal to companies: financial support for climate projects – always as a complement to internal reduction measures – plays a vital role and is the right thing to do.
The fact that the VCM has more prominence than ever at COP28 shows how essential it is for the global community to pool resources for climate action. In 2021, the VCM was already valued at over US$1 billion. It therefore has great potential as an instrument for mobilising financial flow from the private sector.
As a stage for politics as well as the private sector, COP28 can create synergies, particularly for financing measures to combat climate change. A delegation from ClimatePartner will be on site in Dubai to follow developments and forge new partnerships. We are eager to see how the VCM will be addressed and what pledges not only governments but also the private sector will commit to.
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