At the end of 2023, Dubai hosted the historic 28th Conference of the Parties to the UN Framework Convention on Climate Change. As the first conference of its kind to take place in a major oil producing region – the Middle East – there was much speculation as to how it would be possible to gain an agreement to reduce fossil fuels. As specialists in sustainable investing, RA-ESG, has taken a keen interest in the conference and the final agreements.
Main objectives
The purpose of the convention was essentially two-fold: Firstly, to assess how far each country has progressed with the implementation of the 2015 Paris Agreement. Secondly, to agree a course of action that would reduce the amount of greenhouse gas emissions, whilst protecting the most vulnerable who currently rely on fossil fuels.
Agreement to phase out fossil fuels
The most eagerly anticipated topic on the agenda was the very real need to pivot away from fossil fuels and a recognition that these are main culprits in the climate change crisis. As a result, an historic agreement was made between 200 parties to ‘phase down’ fossil fuels (not ‘phased out’ as originally suggested). A commitment was made by all countries to ‘transition’ from fossil fuel energy in order to achieve the 2050 goal of net-zero emissions. A further agreement was reached to triple global renewable energy capacity by 2030 and to increase investment in new green technologies.
The concerns about the venue and the vested interests of the oil exporting nations were realised, when the CEO of Adnoc (the UAE state-owned oil producer) Sultan Al Jaber, disputed the science behind the Paris Agreement and the need to ‘phase out’ fossil fuels in order to reduce global warming, before capitulating and agreeing that it would need to happen eventually. India, China and Russia did not submit new data or Nationally Determined Contribution pledges, as required under the Paris Agreement.
Financial support for developing countries
An agreement was reached within the opening few days of the conference to create a fund to help poorer nations. Developing countries are at the pointed end of the global warming crisis. They are already feeling the negative effects of climate change, yet they cannot afford to implement, let alone invest in sustainable energy and technology. Many of these poorer countries rely solely on fossil fuel energy to survive. According to the International Renewable Energy Agency (IRENA), heating and cooling accounts for half of the world’s energy consumption which equates around 40 per cent of global carbon emissions.
The annual cost of damage to these nations is expected to be in the region of between 100 billion to 580 billion US dollars. So far, the amount pledged for the fund stands at 700 million US dollars, which is substantially lower than the amount required to offset cost of damage.
$30 billion Climate capital fund
Another initiative to be agreed is the creation of a 30 billion US private market climate capital fund to motivate ESG investingin the private sector. The capital fund and expertise provided by the World Bank, World Economic Forum and International Finance Corporation are intended to encourage renewable energy investment by the private sector in projects that will reduce carbon emissions and benefit developing countries tackling climate change. If you would like to know more about RA-ESG.com’s ESG investing opportunities and investment bonds, visit www.ra-esg.com or email info@raesg.x-co.dev.
