CSE moderated a side event on Trade and Fiscal Space hosted by UNCTAD
Photo: @KAPSARC / X The 28th Conference of Parties (COP28) to the United Nations Framework Convention on Climate Change in Dubai, United Arab Emirates (UAE), began November 30, 2023. Here’s a look at what happened on the ninth day of COP28.
The negotiations on the Global Goal on Adaptation (GGA) were shared with ministerial representatives of countries on December 8. Ministers Jennifer McAllister (Australia) and Maisa Rojas (Chile) have been given the responsibility to coordinate with Parties to streamline the draft text which is quite heavily worded right now. They also have to decide upon political issues around the inclusion of the principle of common but differentiated responsibilities and respective capabilities (CBDR-RC), adaptation finance gap and financial target under the GGA. New texts were expected on December 9 but may now be pushed to December 11.
A new text was released for the Global Stocktake following the announcement of the ministerial pairing of Barbara Creecy of South Africa and Dan Jorgensen of Denmark. The paragraph on fossil fuels has seen changes in all options except the one on coal phaseout, leading to contentions between Parties in the negotiation room.
Like Minded Developing Countries (LMDC) and Bolivia proposed bracketing the entire decision text, while the European Union insisted on a clear definition of a cooperative approach. The discussions revolved around streamlining the text, focusing on essential elements and addressing priorities such as the adoption of the AEF, authorisation processes and sequencing.
Discussions on Article 6.4 saw diverse perspectives, including concerns about removals (Brazil), endorsement for adoption (US), emphasis on scaling up the market (Ukraine), rejection of carbon markets (Bolivia), and recommendations regarding buffers and reversals (India). The LMDCs expressed support for Bolivia’s plea to bracket the entire text.
Countries discussed another iteration of the draft text on the New Collective Quantified Goal (NCQG) on climate finance on day nine of COP 28. The discussion mainly revolved around procedural options for the mode of work on NCQG in the coming year, given that the goal is to be decided at COP29.
There was consensus among countries on continuing work under the ad hoc work programme, with most suggesting the present co-chairs Fiona Gilbert (Director, Climate Finance and Adaptation at Australia’s Department of Climate Change, Energy, the Environment and Water) and Zaheer Fakir (senior advisor (negotiations) for the COP28 Presidency) to continue as the co-chairs.
Discussions on how to best leverage the Technical Expert Dialogue process to make space for negotiations in 2024 were also undertaken. Among others, the text proposed the appointment of two high-level co-facilitators, one from a developing country and one from a developed country by the COP Presidency to advance political engagement next year. Countries are expected to negotiate on substantive elements including timeframes, structure, transparency arrangements and others over the next few days.
A side event was organised by King Abdallah Petroleum Studies and Research Centre (KAPSARC) and Instititute of Energy Economics (IEEJ), Japan on bridging the gap in financing of critical technologies in hard to abate sectors.
The Japanese speaker from IIEJ mentioned about the various initiatives being taken the Japanese government towards industrial decarbonisation. The three areas of their intervention were Energy Efficiency, Hydrogen and Carbon Capture Utilisation and Storage (CCUS).
He also mentioned about the Asia Zero Emission Initiative as part of the vision of the Japanese Prime Minister with Southeast Asian countries and Australia. They also mentioned about a cross border Asia CCUS network they have established.
Fatih Yalmaz from KAPSARC put forward the investments happening in CCUS and Hydrogen across the globe and their potential increase in the coming years. He showed the 84 per cent CCUS projects and 97 per cent green hydrogen projects are still in the stage of early development currently.
He mentioned the current funding is largely public finance in the form of government subsidies but it is not sustainable to use public finance for such gigantic needs. He also mentioned that there should be more cooperative approach between Global North and South and unilateral approaches like Carbon Border Adjustment Mechanism (CBAM) should be avoided.
He also emphasised that multilateral development banks can play a critical role in financing hard to abate sectors. Manish Kumar Srivastava from TERI highlighted the issue of Medium and Small Scale industries in the Global South and the scale of their challenge which is still out of discussions on industrial decarbonisation. He also highlighted that in India even the decarbonisation technology with technology readiness levels of 8 and 9 are unable to get finance. He mentioned the example of Dalmia Cement in India which announced a CCUS project back in 2019 but has not been able get financers on board.
On the question of finance, Yalmaz highlighted the old and traditional way of investors thinking about an issue in attracting finance for industrial decarbonisation. A speaker from industry highlighted the pressure they face of giving their shareholders a rising dividend and how none of the shareholders ever want to see any dip in their divents or investments which constraints them at many levels.
At a side event on Trade and Fiscal Space: The Finance Question, Fadhel Kaboub, from the Global Institute for Sustainable Prosperity said countries have no fiscal policy pace to deal with climate, health and education due to external debt.
This is a symptom of deeper structural issues such as energy, food and manufacturing deficits. He called for a different approach in development, which focuses on food sovereignty while moving away from food security. Kaboub highlighted the need for developing nations forming regional blocs to industrialise.
Avinash Persaud, special envoy to the Prime Minister of Barbados, noted that countries are being crippled by another deficit: safe assets. The system defines what are safe assets. There is no reason why developing countries cannot be producers and exporters of safe assets.
Adriana Erthal Abdenur, Cabinet of the Presidency, Brazil explained that there is an underrepresentation of developing countries in multilateral financial institutions such as the World Bank and the International Monetary Fund.
Peter Liese, Member of the European Parliament, noted in a press conference that the EU Emissions Trading System (ETS) and CBAM are key instruments to generate finances. He defended that CBAM, which could put emerging economies in the Global South at a disadvantage, will ensure that major emitters in the world will have the same climate ambition. “It is not to punish countries, but to motivate them,” he said.
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