The 28th Conference of the Parties (COP28) is approaching a critical juncture, with key discussions on industrial transition and innovative climate finance mechanisms taking center stage. Another important highlight of this year’s conference is the Global Stocktake (GST), that final text will be revealed on the last day of COP28 on 12 December.
A draft GST text revealed a nuanced landscape where options for fossil energy-related commitments varied—from an orderly phase-out to an immediate end of unabated coal power. On the same day, which is Energy Day at COP28, a roundtable on the Industrial Transition Accelerator convened key stakeholders from technology, infrastructure, high energy users, policymakers, and financiers. The discussions aimed to address critical challenges in transitioning industries towards sustainable practices.
Financing mechanisms to phase-out from fossil fuels
The spotlight on climate finance intensifies at COP28, with discussions revolving around the gap between climate finance needs and existing offers. The Natural Resources Defense Council (NRDC) meticulously tracks pledges made at the conference, highlighting the importance of financial mechanisms such as the Global Environment Facility, Green Climate Fund, and Adaptation Fund.
Amidst the heightened focus on climate finance at COP28, discussions are not only centering on the gap between climate finance needs and existing offers but also exploring innovative mechanisms to address this disparity.
On Monday, the Monetary Authority of Singapore (MAS), launched the Transition Credits Coalition (TRACTION), introducing two pilot projects to test the use of high-integrity transition credits in transactions for the early retirement of coal-fired power plants (CFPPs). These credits serve as a financing instrument aligned with globally recognized standards. The credibility of such transition credits becomes pivotal in ensuring a just and effective shift toward clean energy.
Putra Adhiguna, Energy Technologies Research Lead at the Institute for Energy Economics and Financial Analysis (IEEFA), emphasizes the need for credible transition credits to facilitate the shift to clean energy. He raises concerns about the oil and gas industry’s path, urging clarity on simultaneous efforts for early retirement and new infrastructure development.
“The credibility of the science-based transition credit concept will continue to be in the spotlight of various parties, because we need to remember the history of carbon credits that have been decades until today are still filled with scandals. This credibility can make the transition credit work or fail from the start if it is co-opted by the interests of the fossil energy sector,” he said.
Andrew Steer, CEO of Bezos Earth Fund, underscores the urgency of reducing coal-generated power from 36% to less than 4% by 2030. He said although “this sounds like a massive and impossible task, but it isn’t,” stressing the importance of collective efforts.
Climate science insights
The “10 New Insights in Climate Science” report presented at COP28 provides policymakers with essential information derived from the latest research. The report warns of the imminent risk of overshooting the Paris Agreement’s 1.5°C target and advocates for a rapid shift from a 1% annual increase in fossil fuel usage to a 5% global decrease per year. However, controversy arises as COP28 President Dr. Sultan Al Jaber initially dismisses the science behind a fossil fuel phase-out, a claim later denied as being ‘misinterpreted.’
Saudi Arabia’s outright rejection of any text aiming for a phase-down on fossil fuels adds complexity to the global discourse on climate action.
COP28 emerges as a critical arena for shaping the trajectory of global climate action. Transition credits, the GST, and climate finance mechanisms collectively navigate the complex terrain of transitioning industries, addressing scientific insights, and bridging financial gaps. As the conference progresses, the world awaits the final texts and commitments that will shape the future of climate resilience and sustainability. (nsh)
Banner photo: BEE THE CHANGE art installation at COP28. ©UN COP28
