In the final instalment of our three-part analysis of COP28, we look at what this year’s conference has set up for the year ahead. We will lay out what needs to happen to ensure that COP29 can capitalise on the momentum that is quietly building behind climate action and specifically the clean energy transition.
Measuring COP28: Part 3 – What’s next?
Boost of renewable energy capacity but also efficiency
2024 is going to be a critical year for renewable energy deployments. COP28’s agreement gave us the Global Renewables and Energy Efficiency Pledge, which aims for a total global installed renewable energy generation capacity of 11,000GW. Given that we’re working from an installed base of around 3,400GW in 2022, tripling that level in just eight years (including 2023) is going to require persistence as well as ambition.
If this expansion was to be achieved on a linear yearly basis, the world would collectively need to install 950GW each year to hit the target by 2030. Of course, the “ramping up” effect of renewable deployments suggests that significant acceleration is going to occur throughout the rest of the decade. Final data for 2023 isn’t in yet, but the International Energy Agency (IEA) estimates that around 500GW of new renewable capacity was installed this year.
This is up 73% from the year before, and the IEA believes 2024 could double that achievement, breaking the 1,000GW barrier for added capacity in a single year. If this occurs, then we will be well on our way to hitting a vital global pledge, inspiring governments, industries and everyday people all over the world that the clean energy transition is indeed possible.
Equally important is the “efficiency” part of the equation. The pledge requires us to collectively double the global average annual rate of energy efficiency improvements from around 2% to 4% every year until 2030. This will require even greater collaboration between national governments, renewable energy players and tech providers to find synergies that lead to rapid efficiency gains. Energy storage, transportation, grid connectivity, microgrid solutions – these are all areas where we need to see breakthroughs to ensure that our combined renewable energy mix goes further, rather than just looking bigger.
Climate financing needs to go further and faster
This year’s COP brought in much-needed billions of dollars to a wide range of climate action funds (see Part 2 of our analysis for all the details). However, right at the time when our global climate adaptation efforts need to be speeding up, progress is actually slowing or even stuttering entirely on a number of key fronts.
In its pre- and post-COP28 analysis, the UN has identified that the global climate financing gap is much bigger than previously thought, sitting at between $194-366 billion per year, making it as much as 50% larger than recent estimates. The gap is particularly acute in developing countries, where adaptation finance needs are between 10-18 times as big as international public finance flows.
Analysts within the UN and other leading economic thinkers are pointing towards public debt as a hamstringing factor on climate adaptation. Currently, some developing nations are paying their creditors more than 12 times what they spend on climate measures. Accordingly, getting more money into climate financing efforts must take the currently high levels of public debt into account, facilitating debt write-offs, debt-for-nature deals and other financial vehicles that incentivise the reduction of debt in a manner that doesn’t undermine climate resilience/adaptation efforts.
Equally, and even more bluntly, more money needs to be found for climate efforts. It must be funnelled both into specific climate action funds like the Loss and Damage Fund and the Least Developed Countries Fund (LDCF), and more generally into green bonds and broader ESG-focused mass-market products. Climate financing is the lubricant for actionable measures that will build our sustainable climate future, from clean energy to nature-based solutions and Net Zero smart cities. In 2024, stakeholders in policymaking and in the financial industry have their roles to play in encouraging the “greenifying” of global money flows.
Carbon markets must be fixed
In 2024, with a definite framework needs to be thrashed out ahead of COP29. Formal agreements of carbon market rules is essential for building investor confidence and accelerating the growth of this crucial form of climate financing.
News outlets have noted how leading nations and blocs have been unable to develop a unified strategy on this front, with the EU and US at loggerheads in particular. Currently, there ambiguity on rules for what constitutes viable carbon credits, offsets and proven certificates of clean energy production. With many smaller, nascent carbon markets emerging in a piecemeal fashion across the world, this isn’t inspiring confidence in investors, whose response has remained tepid so far.
Climate action builds momentum, and momentum carries further climate action
COP28 has produced solid, measurable agreements that have set the scene for further acceleration in 2024 and into the middle of the decade.
There was ambition on display at COP28, particularly in terms of adopting more assertive renewable energy capacity building and finding more innovative ways to finance climate adaptation. The plans, pledges and agreements from the recent COP should be seen in the context of building momentum for faster change each year. As such, 2024 will be a crucial year for expanding on the successes delivered in the U.A.E, and the seeking of breakthrough moments on key progress measurements to strengthen the world’s overall climate action efforts.