Measuring COP28: Part 2 – Monetary Plans and Pledges

In Part 1 of our post-COP28 analysis series we highlighted the stand-out agreements and their potential impact on humanity’s transition to a clean energy future. In Part 2, we’re looking at the detail of the monetary commitments made during the conference. While plans and roadmaps are essential precursors to climate action, money talks, and the amount of cash committed as part of each COP speaks volumes regarding the likely pace of progress for the following year.

COP28 saw a number of headline monetary pledges across a wide range of climate action points. From bolstering the Green Climate Fund (GCF) to record commitments on building new renewable energy capacity and novel climate financing approaches. While overall levels of funding are still way below the predicted minimum levels expert economists say are necessary to stave off the worst effects of climate change, they may still represent a viable baseline to build upon.

COP28’s key monetary pledges at a glance:

  • Over $85 billion committed to climate action across all COP28 initiatives and pledges.
  • $6.8 billion earmarked for clean energy investments.
  • An extra $3.5 billion for the Green Climate Fund (Current total $13.5 billion).
  • $792 million pledged to the new Climate Loss and Damage Fund.
  • $187.8 million for the Climate Adaptation Fund.
  • $144.4 million pledged to the Least Developed Countries Fund (LDCF).
  • $34.9 million for the Special Climate Change Fund (SCCF).

New clean energy capacity investments promise wave of deployments in 2024 onwards

COP28 saw attending countries publicly commit a total of $6.8 billion towards the development of new clean energy capacity going into next year. Naturally, this does not represent the full picture of what nations around the world will actually invest in clean energy in 2024 and beyond. China, for example, invested $39.25 billion in solar energy development in 2022 alone.

However, COP-based investments can be a useful gauge of countries’ appetite for clean energy investments. One major benefit of announcing them at COP is that it sends a strong message to financial markets that the government in question is eager to support the clean energy transition. Since “money follows money”, such announcements are crucial for galvanising further investment in clean energy markets and even private sector participation in new projects.

To highlight the interconnected nature of this kind of commitment, as part of the global pledge to triple renewable energy capacity to 11,000GW by 2030, the European Union announced it would invest a further €2.3 billion ($2.5 billion) to support the energy transition in neighbouring countries and across the globe.

Topping up the Green Climate Fund (GCF) is a force multiplier

The GCF is the world’s largest dedicated multilateral climate fund. After receiving another $3.5 billion at COP28, it now has a $13.5 billion portfolio that extends to projects across 120 countries. Its focus has always been to deliver projects that will help developing countries shift to low-emission, climate resilient economic setups.

Adding funds at this level will allow the GCF to expand its global reach and ambitions. Given that so many of its projects tackle energy poverty in developing countries with targeted renewable/clean energy deployments, these are vital stimulants for the wider global clean energy transition.

The pledges made to the Green Climate Fund at COP28 are as follows: Australia – AUD 50 million; Estonia – €1 million; Italy – €300 million; Portugal – €4 million; Switzerland – CHF 135 million; United States of America – USD$3 billion.

Loss and Damage Fund recognises need for fairer share of climate burden

As mentioned in Part 1, getting the Loss and Damage Fund off the ground was a big success as it formally acknowledges the injustice that often the world’s least polluting nations are the ones paying the heaviest price in terms of climate-based devastation.

$792 million is less than the amount proposed at COP27, but it is a tangible start. From here, further contributions may ramp up now that the new status quo has been established regarding a more communal approach to supporting at-risk communities worldwide.

In terms of specific donors, The UAE pledged $100 million, matched by Germany. Italy and France each pledged $108.9 million, while the United Kingdom gave $50.8 million. Norway and Denmark added around $25 million each. The US and China, despite being the world’s largest carbon emitters, only pledged $17.5 million and $10 million respectively. In the case of the US, however, this rather token gesture may be due more to the fact that it focused much more intently on the GCF this year, with its $3 billion making it by far the biggest donor.

More funds for targeted climate financing

The Adaptation Fund, the Least Developed Countries Fund (LDCF). and Special Climate Change Fund (SCCF) all represent specialised vehicles for helping developing nations get the direct financing they need for pivotal climate adaptation projects. As the name suggests, LDCF supports the poorest countries in the world with their ongoing struggle to stay ahead of climate change in everything from clean energy capacity building to sustainable agriculture tech deployments. 

In each case, the pledges at this year’s COP build on existing funding rounds begun back in 2001. The Adaptation Fund has over $1.3 billion at its disposal now, and that money goes farther than it might appear at first glance, since it galvanises climate financing by spearheading initiatives designed to kickstart adaptation efforts wherever they are most needed. These targeted projects aim for rapid development and equally swift progress, making sound case studies that can attract further investment.

Financing our Green Future – Speed and Scalability are both key

The Paris-based International Energy Agency (IEA) believes that the world must invest $4.3 trillion in clean energy every year until 2030 if we are to hit the global “Net Zero by 2050” target.

However, each year’s COP is not the sum of the world’s clean energy transition efforts and investments. It must be seen as a signaller for further action, an indicator of what national governments and their various partners plan to do in the coming year. In this context, the ramp up of climate financing across a wide range of new and existing vehicles is significant; it strengthens the efforts of initiatives already in place while spreading the philosophy of green funding to underserved parts of the world.

Overall, the emphasis of so many monetary pledges at COP28 was on the need to cooperate and collaborate more widely. The best example of this is the expansion of the GCF, which has genuinely global reach and scalability. While the US made the headline $3 billion donation here, the growing range of smaller donations coming from emerging or developing economies also tells a story of how more countries and governments are stepping up to the challenge of combating climate change.

There’s still a lot of work to be done in preparation for the following COPs in Azerbaijan and Brazil, but COP28 provided plenty of encouragement in terms of its cooperative messaging and more diverse monetary commitments.

Look out for the final instalment of our three-part analysis on COP28. Part 3 looks at what’s next and what needs to happen to build on the current momentum to deliver optimal outcomes at COP29.