The COP28 climate conference concluded on Wednesday night, with Parties finally agreeing their response to the first Global Stocktake (GST) under the Paris Agreement. The decision – termed the ‘UAE Consensus’ – notes that despite significant collective progress toward aligning with the temperature goals of the Paris Agreement, global greenhouse gas emission trajectories are not on track. Recognising the findings of the Intergovernmental Panel on Climate Change’s (IPCC’s) most recent assessment report on the impacts of climate change and the need for rapid and sustained emissions reductions, the UAE Consensus calls on Parties to transition away from fossil fuels toward net zero, encourages them to submit economy-wide Nationally Determined Contributions (NDCs), articulates a new specific target to triple renewables and double energy efficiency by 2030, and aims to build momentum towards a new architecture for climate finance.

Importantly, the conference also saw Parties agree on the operationalisation of the global loss and damage fund that will provide financial assistance to vulnerable nations suffering from climate change impacts, as well as the framework for the Global Goal on Adaptation (GGA).

While these developments are significant, other workstreams on Paris Agreement implementation, including Article 6 negotiations, saw much less progress, with a number of issues deferred for further consideration in 2024 (see more information on key priorities for negotiation at COP28 in our article 'The Inclusive COP: What to expect at COP28').

Outside of negotiations, with over 100,000 delegates in attendance, this year’s conference was the largest ever, reflecting a diverse array of interests that intersect with the global conversation on climate mitigation and adaptation. The conference also saw an exceptional number of events and launches of Party declarations and voluntary initiatives across fossil fuel transition, renewable energy and energy efficiency, non-carbon dioxide gases, hydrogen and critical minerals. Nature, agriculture and food system transformation, and health also emerged as key themes.

For Australia, the outcomes of COP28 are important: Parties’ commitment to tripling renewable energy capacity globally and doubling the global average annual rate of energy efficiency improvements by 2030 signals a key opportunity for Australian governments and industry to work together to urgently scale up the renewable energy sector and improve energy efficiency measures. Meanwhile, the need to transition away from fossil fuels is urgent and unequivocal, and ensuring a just and equitable transition in the Australian context – both for workers and broader communities – will present unique challenges for government and industry.

Below, we reflect on the key outcomes of the conference, and what they mean for Australian businesses as we look ahead to a critical year for action in 2024.

Key takeaways

• Global Stocktake: In the final hours of the conference and following much disagreement on draft texts, Parties agreed the outcomes of the first GST. As foreshadowed by the technical assessment that took place earlier this year, collective action falls well short of meeting the goals of the Paris Agreement. The decision text makes multiple references to scientific findings on current impacts of climate change and gaps in mitigation and adaptation responses. The text also demonstrates a commitment to a just and equitable transition away from fossil fuels in energy systems so as to achieve net zero by 2050, and encourages Parties to submit ambitious, economy-wide emission reduction targets in their next NDCs.
• Loss and damage: In one of the early and significant decisions of the conference, Parties agreed to operationalise the Loss and Damage Fund. In relation to the Santiago Network on Loss and Damage, Parties agreed that the United Nations Office for Disaster Risk Reduction (UNDRR) and the United Nations Office for Project Services (UNOPS) will host the Network as a dedicated secretariat.
• Climate adaptation: The Parties adopted a framework for the GGA which will be used to guide global adaptation efforts and enhance support for adaptation in developing countries. The framework includes four 2030 targets concerning climate change risk assessments, planning, implementation, monitoring and learning. Other targets in the framework include, for example, a target to significantly reduce climate-induced water scarcity and enhance climate resilience to water-related hazards.
• Article 6 markets: In a disappointing outcome, Parties failed to adopt texts to progress markets under Articles 6.2 and 6.4 of the Paris Agreement. While the lack of progress on Article 6.2 will not prevent Parties from engaging in bilateral cooperation under Article 6.2 – and indeed a number of Article 6.2 agreements were signed on the sidelines of the conference – it does leave a degree of uncertainty on transparency, reporting and authorisation processes. Meanwhile, the absence of agreement on methodologies for Article 6.4 means that it will be at least another year before the crediting mechanism can operationalise. Outside of negotiations, COP28 saw political and business leaders support carbon markets as a key source of climate finance, and voluntary standards announced collaboration to bolster integrity and accountability in the voluntary market: hopefully, these efforts will help to steady what has been a volatile year for the voluntary carbon market.

Global Stocktake: a transition away from fossil fuels and a commitment to the energy transition

After multiple rounds of draft text and much debate among the Parties, the final hours of the conference saw Parties adopt a decision on the GST, encapsulating the political outputs from the technical assessment of Parties’ progress in respect of their NDCs (for further information on the GST process in general and the findings of the technical assessment, see our article “COP28 Explainer: What is the first Global Stocktake?”). The GST decision is the central outcome of the conference, given that it spans almost every element that was under negotiation, and will inform countries’ approaches to setting their next NDCs in 2025. While announcement of the decision was applauded by many Parties, and badged ‘historic’ by the COP28 Presidency, the US, Germany, Denmark and others, a number of states including the Alliance of Small Island States (AOSIS) expressed dismay that the text was not stronger, noting that ‘the course correction that is needed has not been secured’, and expressing concern about the lack of commitment to ‘phasing out’ fossil fuels. Notably, AOSIS were absent from the plenary room when the GST decision was gavelled through, and their statement on the text will be attached to the final decision.

Collective progress so far

The final GST decision acknowledges that significant collective progress towards the Paris Agreement temperature goal has been made, but notes with concern the findings in the latest synthesis report on NDCs that implementation of current national targets are not aligned with the emissions reductions needed to achieve this goal.

It expresses ‘serious concern’ that 2023 is set to be the warmest year on record and that impacts from climate change are rapidly accelerating, and emphasises the need for urgent action and support to ‘keep the 1.5 °C goal within reach’ and to address the climate crisis in this decade.

Notable comments on current progress include:

• Implementation and adaptation: The decision notes again with ‘alarm and serious concern’, the findings of the IPCC’s most recent assessment report that there are ‘significant adaptation gaps’ that will continue to grow under current approaches. The decision also notes the existence of an ‘implementation gap’ between current NDC commitments and policy implementation, with Parties resolving to take action to urgently address this gap.
• Capacity building: While progress has been made in building Parties’ capacity to adapt to climate change and implement mitigation measures, a capacity gap still persists between developed and developing countries. The text requests the Paris Committee on Capacity Building to identify current activities for enhancing capacity building in developing countries, as well as requesting the Financial Mechanism and Adaptation Fund to provide more support to developing countries on capacity building.
• Loss and damage: The decision notes the need for enhanced action on loss and damage, including through the Warsaw International Mechanism. A significant gap remains in responding to loss and damage, as the scale and frequency of loss and damage increases. The text also calls for global coverage of early warning systems for extreme weather and climate change by 2027.
• Finance: Finance received a great deal of focus in discussions, with the bottom line that a large finance gap exists; climate goals-aligned finance flows need to be augmented and access to those flows simplified. The GST decision notes with concern that the adaptation finance gap is widening, and that current levels of climate finance, technology development and transfer, and capacity-building for adaptation remain insufficient to respond to worsening climate change impacts in developing country Parties. The decision calls for a continued increase in the scale, and effectiveness of, and simplified access to, climate finance, including in the form of grants and other highly concessional forms of finance. It also emphasises the role of governments, central banks, commercial banks, institutional investors and other financial actors with a view to improving the assessment and management of climate-related financial risks, ensuring or enhancing access to climate finance in all geographical regions and sectors, and accelerating the ongoing establishment of new and innovative sources of finance, including taxation, for implementing climate action and thus enabling the scaling down of harmful incentives.

Energy transition and treatment of fossil fuels

The most contentious element of the draft GST texts proved to be the appropriate language around fossil fuel transition, particularly whether the text would include language calling for a ‘phase out’ or ‘down’ of fossil fuels. Draft texts released earlier last week were met with dissatisfaction from all Parties, but in particular from high ambition countries who noted that the drafts were not aligned with the 1.5°C degree target in the Paris Agreement and contained weak language on fossil fuels.

The final decision ‘recognizes the need for deep, rapid and sustained reductions in greenhouse gas emissions in line with 1.5°C pathways’. It calls on Parties to contribute to a range of global efforts, in a nationally determined manner, taking into account the Paris Agreement and their different national circumstances, pathways and approaches. Among others, these efforts include:

• tripling renewable energy capacity globally and doubling the global average annual rate of energy efficiency improvements by 2030;
• accelerating efforts towards the phase-down of unabated coal power;
• transitioning away from fossil fuels in energy systems, in a just, orderly and equitable manner, accelerating action in this critical decade, so as to achieve net zero by 2050 in keeping with the science;
• accelerating zero- and low-emission technologies, including, inter alia, renewables, nuclear, abatement and removal technologies such as carbon capture and utilisation and storage, particularly in hard-to-abate sectors, and low-carbon hydrogen production;
• accelerating and substantially reducing non-carbon-dioxide emissions globally, including in particular methane emissions by 2030; and
• phasing out inefficient fossil fuel subsidies that do not address energy poverty or just transitions, as soon as possible.

In this way, the final text highlights the importance of efforts to accelerate the energy transition, including through building renewable energy capacity, improving energy efficiency and developing low carbon fuels.

As to fossil fuels, the decision opts for language that focuses on accelerating efforts towards the phase-down of unabated coal power, transitioning away from fossil fuels in energy systems, in a just, orderly and equitable manner and phasing out inefficient fossil fuel subsidies.

The specific references to fossil fuels in a COP final decision for the first time is undoubtedly an important milestone in global climate negotiations, signalling a collective agreement on the need to move away from fossil fuel use and transition to new energy sources. UN Climate Change Executive Secretary Simon Stiell highlighted the significance of the agreement as signalling the “beginning of the end” of the fossil fuel era.

Key themes

Beyond discussion of current progress and the future of fossil fuels, the GST decision includes important language on themes that emerged as critical throughout the conference:

• Science: The multiple references in the decision to findings in the IPCC’s sixth assessment report are significant. The decision notes with ‘alarm and serious concern’ the IPCC’s finding that human activities have ‘unequivocally’ caused global warming of about 1.1 °C and that climate impacts are already being felt in every region across the globe and disproportionally affecting those who have contributed least to these impacts. The decision also notes the IPCC’s finding that feasible and effective mitigation options are already available in all sectors to keep 1.5 °C within reach with the necessary cooperation on technologies and support.
• Equity: The importance of equity between Parties, as well as the principle of common but differentiated responsibilities and respective capacities, were reiterated frequently throughout discussions on the GST, culminating in multiple references to these concepts throughout the final decision text.
• Nature: A key theme throughout the conference were the critical links between achieving emission reductions and protecting biodiversity. This is reflected in the decision text, which contains language emphasising the importance of conserving, protecting and restoring nature and ecosystems towards achieving the Paris Agreement temperature goal, and noting the importance of ensuring the integrity of all ecosystems and protection of biodiversity. A reference to enhanced efforts towards halting and reversing deforestation and forest degradation by 2030 was also included in the final text. 
• Technology and AI: The GST decision underlines the fundamental role of technology development and transfer, endogenous technologies and innovation in facilitating urgent adaptation and mitigation action. Interestingly, it highlighted the role of the Technology Mechanism Initiative on Artificial Intelligence for Climate Action, which explores the role of AI in providing climate adaptation and mitigation solutions. In this regard, it is worth noting that outside negotiations, COP28 saw the launch of the AI Innovation Grand Challenge to develop AI solutions for climate action in developing countries, with a focus on least developed countries and Small Island Developing States. The GST decision also records Parties’ agreement to establish a ‘technology implementation programme’ to strengthen support for the implementation of technology priorities identified by developing countries.
• International cooperation: Broadly, the final decision notes the importance of continued cooperation between Parties as well as placing Parties’ actions within the context of achieving the Sustainable Development Goals.

What does the decision mean for the next round of NDCs and second GST?

Importantly, Parties’ next round of NDCs will need to be informed by the outcomes of the GST, and it remains to be seen the extent to which the findings of the GST trigger increased ambition by Parties when they submit their next NDCs in 2025.

To this end, the Parties have decided to launch a ‘Road Map to Mission 1.5°C’ to enhance international cooperation and the international enabling environment to stimulate ambition in the next round of NDCs, with a view to enhancing action and implementation and keeping 1.5°C within reach.

Next year, the subsidiary bodies will consider ways to refine the procedural and logistical elements of future GST processes, based on experiences from the first GST. Parties have been invited to submit their inputs on lessons learned from the first GST by 1 March next year, with the secretariat to then prepare a synthesis report on this information. Looking ahead, information collection and review for the second GST will commence at the 8th meeting of the Conference of the Parties serving as the meeting to the Paris Agreement (CMA) in 2026, with outputs to be considered at the 10th meeting of the CMA in 2028.

Loss and Damage Fund

At COP28, Parties agreed to operationalise the Loss and Damage Fund. This is considered a significant milestone in the negotiations, as the Loss and Damage Fund will provide much needed financial assistance to developing nations suffering from adverse climate change impacts.

The Parties have invited the World Bank to operationalise the Loss and Damage Fund as a World Bank-hosted Financial Intermediary Fund for an interim period of four years. The Parties have agreed that Parties are only invited to make financial contributions to the Loss and Damage Fund, and there is no set requirement to do so, even for developed countries. The Parties also approved the Governing Instrument of the Fund, which provides that, amongst other things:

• the scope of issues that can be addressed by funding from the Loss and Damage Fund will include economic and non-economic loss and damage associated with the adverse effects of climate change;
• the Board of the Loss and Damage Fund will have an equitable and balanced representation of all Parties within a transparent system of governance;
• developing countries that are particularly vulnerable to the adverse effects of climate change will be eligible to receive resources from the Loss and Damage Fund;
• the Loss and Damage Fund will seek to promote and strengthen national responses for addressing loss and damage through pursuing country-led approaches;
• the Loss and Damage Fund will be able to receive contributions from a wide variety of sources of funding, including grants and concessional loans from private, public and innovative sources; and
• the Loss and Damage Fund will provide financing in the form of grants and highly concessional lending.

The Loss and Damage Fund quickly secured significant funding: by the end of the conference, pledges to the fund exceeded US $700 million, including €100 million pledges by France and Italy; USD $100 million pledges by UAE and Germany, and GBP£40 million pledged by the UK.

Australia, however, is yet to pledge any contribution to the Loss and Damage Fund despite calls to do so. Speaking at a press conference during the conference, Minister for Climate Change and Energy, Chris Bowen, did not rule out the possibility of Australia making a contribution to the Loss and Damage Fund in the future. Minister Bowen also explained that in relation to the Loss and Damage Fund, Australia is currently focusing on the agreed minimum allocation of the Loss and Damage Fund for Small Island Developing States and the least developed countries, which is yet to be decided.

Separately, the Parties also agreed that the UNDRR and the UNOPS will host the Santiago Network on Loss and Damage as a dedicated secretariat. This will involve UNDRR and UNOPS making regional and subregional UNDRR offices in all United Nations geographical regions available, as appropriate, to provide services and support for catalysing timely and effective technical assistance in developing countries that are particularly vulnerable to the adverse impacts of climate change.

Global Goal on Adaptation

Given that at the midway of COP28 there were fears that Parties would fail to reach agreement on the GGA, the fact that the Parties ultimately managed to agree on the framework for the GGA was significant.

The framework urges Parties and non-Party stakeholders to enhance adaptation action and support towards the achievement of the following targets by 2030, and progressively beyond:

• significantly reducing climate-induced water scarcity and enhancing climate resilience to water-related hazards;
• attaining climate-resilient food and agricultural production and supply and distribution of food;
• attaining resilience against climate change-related health impacts;
• reducing climate impacts on ecosystems and accelerating the use of ecosystem based adaptation and nature-based solutions;
• increasing the resilience of infrastructure and human settlements to climate change impacts to ensure basic and continuous essential services for all;
• substantially reducing the adverse impacts of climate change on poverty eradication and livelihoods; and
• protecting cultural heritage from the impacts of climate-related risks.

The framework also includes the following four targets in relation to the dimensions of the iterative adaptation cycle:

• Impact, vulnerability and risk assessment: by 2030, all Parties have conducted up to-date assessments of climate hazards, climate change impacts and exposure to risks and vulnerabilities and have used the outcomes of these assessments to inform their formulation of national adaptation plans, policy instruments, and planning processes and/or strategies and by 2027, all Parties have established multi-hazard early warning systems, climate information services for risk reduction and systematic observation to support improved climate-related data, information and services;
• Planning: by 2030, all Parties have in place country-driven, gender-responsive, participatory and fully transparent national adaptation plans, policy instruments, and planning processes and/or strategies, covering, as appropriate, ecosystems, sectors, people and vulnerable communities, and have mainstreamed adaptation in all relevant strategies and plans;
• Implementation: by 2030, all Parties have progressed in implementing their national adaptation plans, policies and strategies and, as a result, have reduced social and economic impacts of key climate hazards identified in their assessments referred above; and
• Monitoring, evaluation and learning: by 2030 all Parties have designed, established and operationalised a system for monitoring, evaluation and learning for their national adaptation efforts and have built the required institutional capacity to fully implement the system.

The framework recognises the leadership of Indigenous Peoples and local communities as stewards of nature and encourages equitable and ethical engagement with Indigenous Peoples and local communities. It also encourages the application of traditional knowledge, the knowledge, wisdom and values of Indigenous Peoples, and local knowledge systems in implementing the framework.

The framework also notes with concern that the adaptation finance gap is widening. It seeks to close this gap and recognises that the means of implementation for adaptation, such as finance, capacity-building and technology transfer, are crucial to the implementation of the framework.

To measure progress, the Parties have decided to launch a two year work programme on indicators for measuring progress with a view to identifying and, as needed, developing, indicators and quantified elements for targets.

Just Transition

Just transition proved a focal point at the conference, culminating in multiple references to the concept in the final GST decision text, with Parties called on to contribute to transitioning away from fossil fuels in energy systems, in a ‘just, orderly and equitable manner’. The GST decision also provides that taking into account different national circumstances and contexts, countries should implement just transition of the workforce and the creation of decent work and quality jobs, and economic diversification are key to maximising the positive and minimising the negative impacts of response measures and that strategies related to just transition and economic diversification. The decision also underlines that just transitions can support more robust and equitable mitigation outcomes.

Negotiations on the Work Programme on Just Transition Pathways saw the scope of the program emerge as a key point of contention, reflecting the reality that a just transition means different things to different groups. Some developed and developing countries advocated for a broad scope that included consideration of human rights, gender equality, and the rights of Indigenous Peoples. Others considered that the concept of just transition under the work programme should be limited to its traditional conception, which essentially centres around the labour rights of fossil fuel dependent work forces as the world transitions to a low carbon economy.

The final decision on the elements of the work program takes account of both views: it specifies that elements of the programme shall include (among others) a ‘just and equitable transition, which encompasses pathways that include energy, socioeconomic, workforce and other dimensions’; as well as a ‘just transition of the workforce and the creation of decent work and quality jobs’, in accordance with nationally defined development priorities.

Implementation of the work program will commence immediately, with a view to the programme informing the second GST and other processes. Given the broad range of elements covered by the program, we expect there to be significant activity under the program over the coming year. 

Outside of negotiating rooms, the UNEP Finance Initiative and International Labour Organisation released a report on just transition finance, to provide a roadmap for the financial sector to promote a just transition to low-carbon, resource-efficient and resilient economies.

Article 6 carbon markets

By contrast, in an unfortunate outcome, Parties could not agree decisions on either Article 6.2 or 6.4.

On Article 6.2, Parties could not agree on authorisation processes (including whether it should be possible to revoke an authorisation). Disagreements also arose as to whether and how to define ‘cooperative approaches’. Meanwhile with respect to Article 6.4, Parties failed to adopt recommendations from the Supervisory Body in respect to guidance on methodologies and removal activities. The lack of agreement on methodologies indicates that operationalising Article 6.4 will be delayed by at least another year, given that methodologies are a critical requirement for operation.

Some commentators have expressed ‘deep regret’ about the failure to progress on Article 6 at this year’s COP, noting that it creates uncertainty for countries and project developers alike. Others have suggested that ‘no deal is better than a bad deal’ and highlighted that the delay on Article 6 carbon markets makes work in non-Article 6 voluntary markets even more important.

Importantly, the lack of progress does not disturb previous COP decisions and has not deterred countries from continuing to engage in Article 6.2 cooperative approaches. COP28 saw a number of other notable developments on Article 6 cooperation, with Switzerland signing Article 6 agreements with Chile and Tunisia, and Singapore signing agreements with Papua New Guinea (after signing a Memorandum of Understanding during COP27 last year), and a Memorandum of Understanding with Costa Rica. Another interesting development was Sweden and Switzerland announcing their intention to pilot removal activities (e.g. capturing and storing carbon dioxide from biofuel combustion) under Article 6.2. Meanwhile, the Asian Development Bank’s (ADB) ‘Climate Action Catalyst Fund’ (CACF) – a trust fund designed to support Article 6 activities that will become operational in 2024 –  signed the Swedish Energy Agency as its first contributor. Further, the Global Green Growth Institute (GGGI) launched a series of guides to help governments and private sector engage in Article 6 transactions going forward.

Alongside these movements on Article 6 cooperation, voluntary carbon market standards and initiatives had a strong presence at the conference. As we discussed in our COP28 update article, early in the conference, six of the world’s major independent crediting standards including Gold Standard and Verra’s ‘Verified Carbon Standard’ announced their intent to collaborate on promoting market integrity throughout 2024, including by applying for independent assessment against the Core Carbon Principles released this year by the Integrity Council for the Voluntary Carbon Market (ICVCM). Among other things, the standards also committed to seeking alignment on common principles for quantification and accounting; ensure robust benefit sharing and safeguards; and enabling financial flows to developing countries.

These developments can be expected to help bolster integrity and transparency in voluntary markets going into 2024, which may in turn help overcome barriers to organisations using high quality credits as part of ambitious decarbonisation strategies.

Beyond the negotiating rooms: critical themes

Outside of the formal negotiations, COP28 saw significant developments in a range of areas, from energy transition, cutting methane reductions and developing critical minerals, to protecting nature and health. We note some highlights below.   

Energy transition

Discussions on the energy transition was a core focus at COP28. Outside of the GST decision, several announcements were made signalling an understanding of the important role of the energy transition in meeting the temperature goals of the Paris Agreement, including:

• COP28 President, Sultan Al Jaber, launched the Global Decarbonisation Accelerator which is based on three pillars: “rapidly scaling the energy system of tomorrow, decarbonising the energy system of today; and targeting methane and other non-CO2 greenhouse gases”.
• Over 60 countries signed the Global Cooling Pledge, a joint initiative between the UAE and the UN Environment Programme-led Cool Coalition. The Pledge aims to reduce emissions from cooling equipment by 68% by 2050 as well as increase access to sustainable cooling by 2030. The Global Cooling Pledge was launched just after the Cool Coalition published its Global Cooling Watch Report which predicted that emissions from the cooling sector will more than double by 2050 and sets out sustainable cooling measures in three areas: “passive cooling, higher-energy efficiency standards, and a faster phase down of climate-warming refrigerants”.

Methane and oil and gas industry decarbonisation

Importantly, the final GST decision calls on Parties to contribute to efforts to accelerate and substantially reduce non-carbon-dioxide emissions globally, including in particular methane emissions by 2030. This reflects the dominance of discussions around combatting methane throughout the conference.

The COP28 Global Methane Pledge Ministerial saw Ministers welcome a number of national actions and grant funding initiatives aimed at delivering on the Global Methane Pledge goal of cutting methane emissions by at least 30% by 2030 relative to 2020 levels. Kazakhstan, Kenya, Turkmenistan, Romania, and Angola joined the Global Methane Pledge, bringing total participation in the pledge to 155 governments.

Additionally, the COP28 Presidency and Kingdom of Saudi Arabia launched the ‘Oil and Gas Decarbonisation Charter’, which calls on the oil and gas sector to increase their climate action. So far, the Charter has garnered the support of at least 50 oil and gas corporations from across the globe. Signatories to the Charter commit to net-zero operations by 2050 at the latest, ending routine flaring by 2030, and achieving ‘near-zero’ upstream methane emissions. Among other things, signatories also agree to:

• invest in renewables, low-carbon fuels and negative emissions technologies;
• increase transparency with respect to reporting on their greenhouse gas emissions and progress in reducing emissions;
• increase their alignment with broader industry best practices to accelerate decarbonisation of operations, aspiring to implement current best practices by 2030 to collectively reduce emission intensity; and
• provide secure and affordable energy to support the development of all economies.

It remains to be seen whether the Charter will gain strong uptake among Australian oil and gas businesses.

Hydrogen

The final GST decision calls on Parties to contribute to global efforts on accelerating zero- and low-emission technologies, including low-carbon hydrogen production. Outside of formal decisions, the conference saw the launch of multiple initiatives to support scaling up of hydrogen production:

• The Intergovernmental Declaration of Intent on Mutual Recognition of Certification Schemes for Hydrogen and Hydrogen Derivatives, with participants including Australia, Canada, Germany, France and Japan. This is particularly significant for Australia given it considers hydrogen a potential export product, including to countries such as Germany and Japan. The participants to the declaration aim to accelerate the development of technological solutions to enable mutual certification scheme recognition through cooperation with the International Partnership for Hydrogen and Fuel Cells in the Economy (IPHE) and the Hydrogen Technology Cooperation Programme (Hydrogen TCP). Participants will nominate government experts to work with IPHE and Hydrogen TCP to develop solutions for mutual recognition in the context of renewable and low-carbon hydrogen as well as hydrogen derivatives. The development of such solutions may set benchmarks for standards of hydrogen certification, particularly around how “green” the hydrogen must be. This could have flow-on impacts for Australia’s proposed Guarantee of Origin scheme.
• Publication of an ISO methodology (Technical Specification, TS 19870), which provides a global benchmark for assessing greenhouse gas emissions of hydrogen pathways on a life-cycle basis, namely from well to consumption gate, including every delivery gate. However, the ISO methodology has been criticised for lacking any threshold to determine whether the hydrogen is actually clean and green, including considering emissions generated in producing the hydrogen (e.g. from the electricity grid) as well as leakage in the generation of blue hydrogen (being hydrogen produced from gas).
• A Public-Private Action Statement on “cross-border trade corridors in hydrogen and derivatives” in partnership with the International Hydrogen Trade Forum and the Hydrogen Council, which provides for public-private partnerships to accelerate clean energy deployment. Participants include Australia, Germany, Canada, France, Singapore, the United Kingdom and the United States.
• A Joint Agreement on the responsible deployment of renewables-based hydrogen, which seeks to align hydrogen deployment with an equitable, nature-positive and net zero future. The agreement noted six broad themes that should inform responsible deployment.

Critical Minerals

There was also recognition at COP28 around the central role of critical minerals in achieving the Paris Agreement climate goals through enabling the development of clean energy projects and technologies. UN Secretary-General António Guterres announced a panel would be set up that aims to ensure the shift from fossil fuels to renewable energy is just, sustainable and equitable. Referred to as the “Panel on Critical Energy Transition Minerals”, it will bring together governments, international organisations, industry and civil society to develop common and voluntary principles for guiding extractive industries, in order to achieve a just and sustainable transition.

The focus on critical minerals is particularly important given the consensus at COP28 on tripling global renewable energy capacity by 2030, which will significantly increase demand for critical minerals. This will put strain on countries with extractive industries to ensure that those industries operate in ways that are aligned with the Paris Agreement and other international initiatives, such as the Kunming-Montreal Global Biodiversity Framework and the Sustainable Development Goals, as well as placing cost pressures on importing countries, particularly developing countries.

Food, Agriculture and Water

Transformation of agriculture and food systems emerged as a key discussion point throughout the conference.

Perhaps most significantly, over 150 countries, including Australia, endorsed the Declaration on Agriculture, Food Systems and Climate Action. Signatories to this Declaration agree to strengthen their shared and respective efforts to accelerate and scale science and evidence-based innovations - including local and indigenous knowledge - which increase sustainable productivity and production of agriculture as well as to integrate agriculture and food systems into National Adaptation Plans, NDCs, and other related strategies before COP30 convenes in 2025.

Food, Agriculture and Water Day at COP28 saw several other major announcements, demonstrating the increasing recognition of the impacts of climate change on our food systems as well as the impact of industrial agriculture on the environment. Some of the key announcements included:

• The UN High Level Champion for COP28, H.E Razan Al Mubarak, announced that over 200 non-State actors, including farmers, cities, businesses, and financial institutions, have signed the Call to Action for Transforming Food Systems for People, Nature, and Climate whereby signatories have committed to take ten priority actions to deliver the shared vision that by 2030, ‘food systems deliver significant, measurable progress for people, nature and climate’.
• The COP28 Presidency, together with the Food and Agricultural Organisation (FAO), the World Bank, CGIAR and the International Fund for Agricultural Development announced the Agrifood Sharm-El Sheikh Support Program. This is a three-year program which aims to enable countries and regions unlock finance and support for farmers, food producers, small agribusinesses and local communities.
• The COP28 Food-Agri-Climate National Action Toolkit was launched to provide a resource for national policy makers and decision-makers to accelerate efforts on climate action and agriculture system transformation.

Health

COP28 was the first COP to have a thematic day focused on health, recognising the negative impacts of climate change on health. The prominence given to health at this year’s conference has been welcomed by many, including the World Health Organisation.

In a landmark development, Australia, along with 122 other countries, signed the UAE Climate and Health Declaration, which includes commitments to pursue eight common objectives such as “promoting steps to curb emissions and reduce waste in the health sector, such as by assessing the greenhouse gas emissions of health systems, and developing action plans, nationally determined decarbonisation targets, and procurement standards for national health systems, including supply chains.”

In parallel, the Guiding Principles for Financing Climate and Health Solutions (Guiding Principles) were published. The key pillars of the Guiding Principles include improving the efficiency and equity of financing for health and for climate as well as accelerating climate and health solution to save and improve lives both for present and future generations.

Closer to home, Australia launched its first National Health and Climate Strategy, setting out Australia’s approach for addressing the impacts of climate change on our health and wellbeing. The Strategy is organised around four objectives including establishing regular reporting of greenhouse gas emissions in the health system, and working in partnership with First Nations stakeholders to address the impacts that climate change has on the health of First Nations people.

Climate Finance

At COP28, Parties continued discussions on setting a new collective quantified goal on climate finance (NCQG) which will build on the goal of developed country Parties to mobilise USD 100 billion per year by 2020. While a number of Parties claim that the USD 100 billion per year target has not yet been met, an agreement was reached to advance the development of a draft negotiating text for consideration by the Parties at COP29, including at least three technical expert dialogues in 2024 to allow for in-depth technical discussions on the elements of the NCQG.  

Outside of the negotiating rooms, a number of efforts were made to progress climate finance. Some of the key announcements included:

• Thirteen national governments endorsed the UAE Leaders’ Declaration on a Global Climate Finance Framework which includes 10 articles over the four themes of making finance available, accessible and affordable, collective action, opportunity for all and delivering at scale.  
• The UAE, with launch partners BlackRock, Brookfield, and TPG, announced the launch of ALTÉRRA, an investment platform which aims to facilitate private capital towards climate investments, focusing on emerging markets and developing economies.
• Closer to home, the Australian Government announced that it will provide $100 million to the Pacific Resilience Facility, which will provide grants for climate adaptation, disaster preparedness and nature based solutions. It also announced that it will both re-join and contribute $50 million to the Green Climate Fund (GCF). The Department of Climate Change, Energy, the Environment and Water (DCCEEW) has stated that by re-joining the GCF, Australia will be better positioned to advocate for the funding to meet the needs of the Pacific.

Nature

The importance of nature, and recognition that countries need to coordinate and simultaneously implement strategies that address both climate change and biodiversity loss, was a central theme at the conference.

The UAE COP28 Presidency and the Presidency to the 15th Conference of the Parties under the Convention on Biological Diversity released a joint statement recognising that there is no pathway to fully achieve the temperature goals of the Paris Agreement without “urgently addressing climate change, biodiversity loss and land degradation together in a coherent, synergistic and holistic manner”.

Nature, Land use and Oceans Day in the second week of the conference saw a focus on scaling solutions to protect, restore and effectively manage natural ecosystems, with key events and announcements including:

• A high-level ministerial event, ‘From Agreement to Action: Harnessing 30x30 to Tackle Climate Change’, was held which showcased that the global biodiversity target to protect at least 30 percent of the planet’s land and ocean by 2030, is also a critical way to help achieve the world’s climate goals.
• Twenty-one countries, including Australia, formally endorsed the Mangrove Breakthrough, a science-led initiative that aims to restore and protect 15 million hectares of mangroves by 2030.
• Papua New Guinea and international partners, including Australia, announced a $100 million initiative with the aim to protect 30% of Papua New Guinea’s land and marine areas by 2030.

Nature finance was also a particular focus at COP28, with over $186 million of new financing for nature-based solutions announced. UNEP released its ‘State of Finance for Nature 2023’ report which found that nearly $7 trillion of public and private finance is invested in activities that directly harm nature (some 30 times the amount spent on nature-based solutions annually). Meanwhile, the Inter-American Development Bank (IDB) and other multi-lateral development banks (MDBs) published the Common Principles to Track Nature-Related Finance, a set of principles to track nature-positive finance, aimed at making it easier for MDBs to implement screening and tracking systems that quantify the volume of finance going to nature-positive activities from direct and indirect activities. 

Multi-level action, urbanisation, built environment and transport

The GST text calls on Parties to contribute to accelerating the reduction of emissions from road transport including through development of infrastructure and rapid deployment of zero and low-emission vehicles.

Multiple initiatives and announcements were made at COP28 to facilitate low-carbon transportation, as well as built environments and infrastructure. These included:

• The UAE Ministry of Climate Change and Environment, Abu Dhabi Waste Management Company, Tadweer, and Roland Berger, launched the Waste to Zero Initiative, which will host worldwide workshops and discussions which will focus on resource and waste management, the circular economy and emission reduction technologies.
• Led by France and Morocco, the Buildings Breakthrough was launched, which has the target to make near-zero emissions and climate resilient buildings ‘the new normal by 2030’.
• The UAE and Canada also launched the Cement and Concrete Breakthrough which will support new innovative technologies such as carbon capture utilisation and storage to help accelerate the decarbonisation of the cement and concrete industry.  

Closer to home, the Australian Government is currently seeking feedback on the opportunities and challenges for decarbonising the transport and transport infrastructure sector in Australia. The feedback received will held draft the transport sectoral plan as part of Australia’s broader Net Zero Plan.

Inclusivity, youth and gender equality

Inclusivity was one of the four cross-cutting themes at COP28 with a thematic day focusing on youth, children, education and skills as well as gender equality, the just transition and the role of indigenous peoples in climate action also featuring in the COP28 thematic program.

Some of the key announcements in this regard included:

• COP28 and YOUNGO (the Children and Youth Constituency of the UN Framework Convention on Climate Change) launched the first ever Youth Stocktake, an analysis of the involvement and inclusion of youth in the UNFCCC and climate diplomacy as well as offering strategies for enhancing youth participation.
• The COP28 Presidency launched a new COP28 Gender-Responsive Just Transition and Climate Action Partnership which was endorsed by Australia and 67 other countries. Signatories to this Partnership have committed to strengthen efforts to fully incorporate the human rights of women and girls in just transition efforts as well as to encourage gender-responsive strategies on mitigation and adaptation, among others.
• The International Union for Conservation of Nature, International Indigenous Forum on Biodiversity (IIFB), and IUCN Indigenous Peoples Organisations (IPO) members launched the Podong Indigenous Peoples Initiative which will increase funding and capacity-building for indigenous peoples and organisations.
• In collaboration with the SME Climate Hub, the COP28 Presidency launched the COP28 & SME Climate Hub for MENA which will provide free resources to assist small and medium enterprises (SMEs) across the Middle East and North Africa make a climate commitment, as well as to measure, report and reduce emissions.

In Australia’s National Statement to COP28, Minister Chris Bowen, reaffirmed the Australian Government’s commitment to the inclusion of First Nations people in Australia’s response to climate change and clean energy future. The Australian Government, through CSIRO, has also developed the Next Generation Climate Projections for the Western Tropical Pacific which will produce Pacific communities with the best available climate science and will assist with energy transition planning, among others.

Where to next? Takeaways from COP28 for business

The outcomes of COP28, in combination with the plethora of declarations and initiatives across an array of sectors that we have seen over the past weeks, will give rise to a number of challenges and opportunities for Australian businesses as we look ahead to 2024. While it will take time to digest the details of the decisions and declaration, we see key takeaways for business as including:

Emissions intensive industries and a just transition

Regardless of nuances in the GST decision text, the transition away from fossil fuels in Australia is critical. For businesses in emissions intensive sectors, building the concept of just transition into their decarbonisation strategies is important, and the decision on the just transition work program indicates the breadth of the considerations that firms should take into account when considering how they will support the transition not only of workers but also of communities in fossil-fuel dependent regions.

Providing adequate and innovative financing and incentives to support the transition will pose challenges for Government. Meanwhile, we expect the newly established Net Zero Authority will have plenty of work to do in supporting just transition.

For industries with material methane emissions, this conference saw a ramp up in global efforts to combat methane emissions, and Australian businesses should be considering how to better measure, account for and manage methane and other short-lived greenhouse gases in their decarbonisation strategies.

Meanwhile, the Oil and Gas Decarbonisation Charter may offer opportunities for industries to collaborate and demonstrate initiative to achieving net-zero, ending routine flaring by 2030, and achieving ‘near-zero’ upstream methane emissions.

Carbon and biodiversity project developers

While Article 6 negotiations stagnated at COP28, we saw much work to bolster integrity of international voluntary carbon markets and support demand for high integrity units. It remains to be seen whether a more successful outcome on Article 6 can be achieved by next year’s conference, to provide much needed certainty for the future of these markets – particularly of Article 6.4.

The recognition at the conference that there is no pathway to fully achieve the temperature goals of the Paris Agreement without addressing climate change, biodiversity loss and land degradation together in a coherent, synergistic and holistic manner can be expected to see momentum for biodiversity protection initiatives grow, and we expect to see the Federal Government to continue to progress its Nature Positive agenda as we head into 2024.

With the recent passing of Australia’s Nature Repair Bill 2023, which creates a national framework for a voluntary national biodiversity market, and the release by the Biodiversity Credit Alliance during COP of a potential sources of voluntary and compliance demand for biodiversity credits, we expect to see strong discussion on biodiversity crediting frameworks into 2024.

Corporates

Importantly, COP28 saw the official end of the work of the Task Force on Climate-related Financial Disclosures (TCFD). The ISSB’s new standards on climate disclosure reflect the culmination of the work of the TCFD, and are set to be the global best practice benchmark going forward, and are set to soon form the basis of a mandatory climate reporting regime in Australia (as we noted in our article "ISSB launches global sustainability and climate disclosure standards").

Meanwhile, the release of the Voluntary Carbon Markets Integrity Initiative’s supporting materials for its claims code of practice just ahead of COP provides a useful framework for corporates to consider their approaches to decarbonisation strategies and carbon credit procurement.

Renewables, low carbon technologies and critical minerals

Australia’s commitment to support the global renewable and energy efficiency pledge, backed by recent decisions to expand the Capacity Investment Scheme (CIS) and achieve 82% renewables by 2030 offer particular opportunities for investment and innovation, and for renewable energy firms to capitalise on a need for increased production. This should also translate into opportunities for businesses in the critical minerals sectors, who provide inputs for renewable energy technology. Meanwhile, industries with energy efficiency needs can expect to see opportunities to work with government to improve efficiency.

As well as the clear role for renewables, the GST decision indicates the roles of low carbon hydrogen production and technologies such as nuclear and carbon capture, utilisation and storage. While it remains to be seen the roles that these types of technologies will play in Australia’s energy landscape going forward, we can expect that the Federal Government’s recent strong focus on scaling up domestic low carbon hydrogen production through programs such as Hydrogen Headstart will continue.

Food and agriculture sector

In light of the Declaration on Agriculture, Food Systems and Climate Action, we expect to see the Government make particular efforts to work with the agriculture sector to reduce emissions and support practices that ensure long-term agricultural productivity and food and fibre security.

Health sector

The launch of Australia’s National Health and Climate Strategy as discussed above will have critical implications for decarbonisation in the health sector, which so far, has not been a focus for national climate policy.

We look forward to tracking how developments at this year’s conference translate into national actions and opportunities for the private sector over coming months, as Australia and the global community work towards making meaningful progress ahead of COP29 in Baku, Azerbaijan.