The BGA Energy, Climate and Resources (ECR) team, led by Senior Director Bradford Simmons, wrote an update to clients on the recent United Nations Climate Change Conference (COP28) summit.

Context

  • The language has been hailed as a substantial breakthrough, ushering in a post-fossil fuel era for the global economy.
  • The summit saw a surge in new global commitments, including pledges to eliminate methane emissions in the oil and gas sector to near zero, tripling renewable energy capacity and doubling the average yearly rate of energy efficiency improvements by 2030.

Significance

  • The first day of COP28 saw the adoption of a $770 million loss and damage fund underpinned by large financial commitments from the United Arab Emirates, the European Union, France, Italy and Germany. Roughly 15 percent of the pledges contributing to the fund will be devoted to its establishment and administration.
  • Parties failed to agree to implementation guidelines for carbon trading mechanisms under Article 6.2 and 6.4 of the Paris Agreement. The absence of implementing guidelines will stymie progress for another year on carbon credit issuance and trading that are backed by an operational central mechanism under the Paris Agreement.

Implications

  • The commonality across entities with diametrically opposed viewpoints on how to approach climate change reflects the conditioned language for fossil fuel transition. Negotiations focused heavily on whether to commit to a phaseout of unabated fossil fuels.
  • Companies should note that the global transition away from fossil fuels in energy systems is indisputably already underway. Solar is the cheapest form of greenfield power generation in nearly all markets, sales of internal combustion engine vehicles have peaked and insurance and financial markets are pricing in the risks associated with climate change.

We will continue to monitor climate- and energy-related developments as they occur. If you have any questions or comments, please contact BGA Energy, Climate and Resources (ECR) Senior Director Bradford Simmons at bsimmons@bowergroupasia.com.

Best regards,

BGA ECR Team

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Senior Director

Brad manages BGA client relationships and engagements across the Indo-Pacific in the energy, climate and resource sectors. He brings over a decade of energy and climate public policy experience to BGA and is an expert in regional energy markets, supply chains and geopolitics.  Prior to joining BGA, Brad served in the civil service at the U.S. departments of State and Energy. As a director in the Department of Energy’s Office of International Market Development, Brad was responsible for integrating the department’s international commercial and energy policymaking agendas. In this role, he led the development and execution of the department’s international ... Read More