By Simon Jessop and Tommy Wilkes
DUBAI/LONDON (Reuters) – This week’s landmark climate deal at COP28 will only help accelerate efforts to green the global economy if it is backed up with deeper shifts in national rules, business leaders said.
But some executives said that by giving the clearest signal yet that the end of the oil age is nigh, the U.N. summit accord should now allow governments to take those bolder steps.
“The certainty and stability they (businesses) were seeking in order to tether their investment and innovation plans, will still need to be delivered through national plans,” said Maria Mendiluce, CEO of the We Mean Business Coalition which represented 131 companies, including Volvo and Bayer.
The International Energy Agency has said the world will need to invest nearly $4.5 trillion a year to transition to cleaner energy from 2030, highlighting the scale of the challenge.
Although representatives from nearly 200 countries agreed for the first time to “transition” away from fossil fuels, some in business and finance said the deal struck at the end of the two-week summit in Dubai left too many loopholes.
They also warned further delays in establishing a carbon trading market and a failure to unlock more cash for developing countries would continue to hamper global climate efforts.
The COP28 deal followed a series of pledges including plans to triple renewables production, double efficiency measures by 2030, boost nuclear power and speed up the pace of change in energy-hungry sectors such as cement, steel and aviation.
Eliot Whittington, Executive Director at the Cambridge Institute for Sustainability Leadership, said the final deal “could and should have been stronger”, and should act as a floor for climate ambition.
“The negotiations continue to deliver progress and action, which is limited and slow compared to the scale of what is needed but which represents probably the most active and inclusive global process in the world,” Whittington said.
CARBON PROGRESS
Among the biggest concerns raised by executives is that countries again failed to seal a deal on new rules which would allow the launch of a central system for trading the offsets, kicking the decision to COP29 next year in Baku.
That means that eight years after the Paris Agreement provided for governments and companies to offset some of their emissions by paying for emissions-cutting projects elsewhere, trading has yet to begin.
“Achieving Paris Goals requires all flows of capital to be mobilized. The lack of agreement… makes this much harder,” said Mark Kenber, Executive Director of the Voluntary Carbon Markets Initiative.
The COP28 talks also showed only marginal progress in helping countries adapt to the impacts of floods, fires and storms, prompting Bank of America sustainable finance chief Karen Fang to say that more creative financing would be needed.
“There are potential cashflows to finance given prevention/adaptation is proven to be less costly than cure/post disaster relief. An area needing more creative financing considerations for sure,” Fang said in a LinkedIn post.
Nevertheless, the overall effect of the COP28 deals will be felt far beyond the corridors of power, executives said.
“A strong agreement at U.N. level trickles down to better government policies to accelerate the transition and therefore more investments into the climate solutions,” Torbjorn Caesar, senior partner at private equity firm Actis, told Reuters.
Similar effects are likely to be felt in finance.
Veronica Chau, partner at consultants Boston Consulting Group, said the deal provided the “clarity that financial institutions need to align their financing with pathways that limit global warming to 1.5 degrees”.
(Editing by Alexander Smith)
