CoP-28 is beset with problems even before it has begun

In a letter to all parties, the UAE’s special envoy for climate change and CoP-28 president-designate, Sultan Ahmed Al Jabar, has requested CoP-28 to focus on four paradigm shifts: fast-tracking the energy transition and slashing emissions by 2030; setting a new climate finance template by delivering on old promises while developing a new financing framework; putting nature, people, lives and livelihoods at the heart of climate action; and mobilizing the most inclusive CoP ever.

So, will CoP-28 be any different from its predecessors? If the recently concluded G20 Leaders’ Declaration, outcome documents from the energy ministers’ meeting in Goa and environment ministers’ meeting in Chennai can be considered early pointers, it is unlikely that CoP-28 will leave any lasting footprints on the UAE sands. Two recent developments and two policy knots also give rise to this sense of foreboding.

The first was UK Prime Minister Rishi Sunak walking back on his government’s climate commitments and emission cutting deadlines. He has pushed the deadline for abolishing petrol and diesel cars from 2030 to 2035 against 2030 earlier, inconveniencing manufacturers already invested in electric car production facilities. He has also postponed the deadline for replacement of gas-boilers with electric heat pumps in British households. These moves have been roundly criticized because they not only dilute the UK’s 2050 net zero vows, but also seem to have been designed with next year’s British general elections in mind.

The second development relates to the new EU trade barrier in the form of its carbon border adjustment mechanism (CBAM), under which tariffs will be levied on imports of certain carbon-intensive products—such as, steel, cement and fertilizers—into the EU. The ostensible objective is to level the playing field between European manufacturers, which have to buy carbon credit certificates to offset their emissions, and producers from other jurisdictions free of such restrictions. The EU has so far successfully avoided owning up to its historical role in global warming and climate change; it now wants somebody else (mostly developing nations) to bear the costs of greening its economy.

This also brings into focus the first of the policy tangles: the carbon credit offset market under which manufacturers can compensate for their emissions of carbon dioxide (or its equivalent in greenhouse gases) by investing in projects that are supposed to reduce carbon emissions. A recent joint analysis by non-profit Corporate Accountability and The Guardian newspaper has found that in many cases, the projects that are supposed to offset emissions are junk or have exaggerated their environmental benefits. The conclusion (rb.gy/8v2ja) is based on a study of the world’s top 50 emission offset projects that have sold the most carbon credits. The report says, “Overall, $1.16 billion of carbon credits have been traded so far from the projects classified by the investigation as likely junk or worthless; a further $400 million of credits bought and sold were potentially junk."

The carbon credit market has been under a cloud for a while now, allowing polluters to game the system and providing administrators space to shift the burden elsewhere. In this context, the EU’s attempts to impose its CBAM—which rests on the shaky foundation of a compromised carbon offset market—on importers from developing nations seems a perversion of climate justice.

The second policy tangle lies in the financing required for transitioning to non-polluting energy sources. The CoP-28 president-designate’s letter to all parties says, “Climate finance must be affordable, available, and accessible to developing countries. We know that the current international financial architecture is fragmented and offers insufficient solutions. If we are to achieve the goals of the Paris Agreement, emerging and developing countries need in excess of $2.4 trillion of annual investment in climate action till 2030."

The bill—roughly $17 trillion—is indeed exorbitant. Advanced nations have already reneged on financing promises. Multilateral development banks and development financial institutions do not have the resources to provide the scale of funds required. Logically, private capital has emerged as the overwhelming consensus candidate to fill the gap. But the growing chorus of support for private capital (somewhat resonant of the pre-2008 clamour for mortgage-related derivatives) seems to ignore its intrinsic limitations, or fails to even entertain the thought that it cannot completely replace public finance and will be effective only as part of blended finance. Hopefully, the CoP-28 leadership will provide a reality check.