Cop28 is done and dusted. There were plenty of headline-grabbing moments this year. After everything has settled, was it successful? This article explores the biggest outcomes from COP28 and analyses how it affects Australian businesses.
Australia’s presence at the conference
Australia’s Climate Change Minister, Chris Bowen, played an active role in the negotiations, emphasizing the global shift towards clean energy. The challenges for Australia will be both in its domestic energy transition and in its massive fossil fuel exports. Australia faces growing pressure to detail how it will transition from being a major coal and gas exporter to promoting clean energy. Australia will also be expected to increase its climate finance contributions to assist developing nations.
The summit highlighted the need for countries to update their emissions reduction targets by 2025, with a global aim of a 60% reduction by 2035. For Australia, this translates to a 67% cut from 2019 levels, presenting significant challenges. The upcoming 18 months will be crucial, revealing Australia’s commitment to the 1.5C target, especially with influential resources states like Western Australia posing potential obstacles.
The Fossil Fuel conundrum
UN Secretary-General António Guterres’ stark message resonated deeply. His plea to halt fossil fuel consumption was backed by unassailable scientific consensus: it’s the only route to stay within the1.5-degree ceiling. His appeal was twofold: governments must foster an environment conducive to this shift, and fossil fuel behemoths must change their business models.
Amidst these calls for change, a divide has emerged. Notably, India and China, both pivotal players in the global landscape, did not commit to the renewable energy triple pledge by 2030. Their refusal to commit to global targets raises concerns and underscores the complexities of international climate negotiations.
Industry-specific commitments
- Oil and Gas Decarbonization: The OGDC is a landmark agreement within the oil and gas industry that seeks signatories to be carbon neutral by 2050. While its roster boasts industry giants like ExxonMobil and Shell, significant absentees and concerns about the initiative’s depth linger. Observers suggest that many commitments mirror existing promises, casting shadows over the charter’s transformative potential.
- Methane Emissions: Methane, a potent greenhouse gas, garnered attention. The US unveiled stringent regulations and many countries announced more than $1.48 billion* in new grant funding to help reduce methane. The World Bank’s $370 million trust fund to tackle methane and the EU’s $283 million commitment highlight the multifaceted approach needed to address this challenge comprehensively.
Diverse energy pathway:
The landscape of the energy transition is complex and is often widely debated during COP.
- Countries like the US and Norway underscored their commitment to coal phase-out, while the resurgence of nuclear energy emerged as an alternative narrative. Nuclear poses a clean alternative energy source. However, many in the energy industry see the focus on nuclear as a delay tactic by fossil fuel groups, due to its expensive building and maintenance costs, unproven technologies, and environmental harms.
- 118 countries committed to tripling renewable energies by 2030 and the EU’s $3.73 billion investment to catalyse this shift signifies a collective push towards a sustainable energy mix. Notably, India and China did not join this initiative.
How will this impact Australian business?
Chris Bowens’ language marked a significant shift in how Australia is approaching climate-related targets going into the future. He sent a clear message to all Australians, stating:
“… our future is in clean energy and the age of fossil fuels will end. This is the first time that fossil fuels have ever been mentioned in a COP decision. And that COP decision is that we will transition away from fossil fuels. That is no small thing. It sends a signal to the world’s markets, investors and businesses that this is the direction of travel for countries right around the world”.
Bowen also looked beyond Australia’s own interests, raising issues important to neighbouring island nations who will be greatly affected by rising sea levels. Australia will contribute a foundational $100 million to the Pacific Resilience Facility (PRF) and will rejoin and contribute $50 million to the Green Climate Fund (GCF). This is the first time Australia has taken a leading position on climate related issues for the “Pacific family”, using its power to advocate for its neighbours. This was received well by delegates at COP28.
Domestically, this could start shifting the priorities of State and Federal governments. Areas to look out for are:
- Increased capital into the renewable energy transition.
- Swift and significant policy change and funding for mitigation and adaptation.
- Further pressure on the fossil fuel industry to wind down gas and coal exports.
- Increased exports of green alternatives in steel, cement, and hydrogen manufacturing.
Navigating future challenges
COP28 stands as a testament to humanity’s collective resolve. It underscores the intricate interplay of politics, economics, and science in forging a sustainable path forward. As COP28 concluded, there was a general feeling that the economic transition towards climate-friendly markets is gaining momentum. The quest for a balanced transition to a greener world is delicate, with divergent national interests at play. The shared enthusiasm could see a shift through Australian businesses over the coming years.
*All figures are in AUD.
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