COP28 – Progress on linking Climate and Development, but Funding is Lacking

The beginning of the end for fossil fuels should be seen in connection with the decision to triple global renewable energy production by 2030 and double the rate of improvement in energy efficiency during the same period. This sends a crucial signal to world governments, the private sector, cities, and civil society that the transition is inevitable. The new climate plans, which countries are required to submit to the UNFCCC in about a year, must take significant steps in that direction to keep the Paris Agreement's temperature target of 1.5 degrees alive. It will be at COP29 we can assess COP28’s success. 

The causality is clear: a more just reduction effort and a stronger, inclusive green transition result in less need for adaptation and sustainable development loss. The larger-scale, climate- and development-smart intelligent adaptation efforts lead to fewer losses and damage situations for potentially billions of people, primarily in the global south.

However, there are many loopholes in the agreement that could challenge its integrity and the underlying conflict over responsibility between the global south and north. In any case, the agreement is not a sufficient response to the scientific requirement to ensure a 42% reduction in global greenhouse gas emissions by 2030, as emphasized in UNEP's 2023 Emission Gap Report. It also does not convincingly address the massive financing needs associated with climate adaptation and green transition in the global south.

A mixed result for the global south: Positive aspects, but...

Nevertheless, the agreement includes several important new and positive elements regarding the broader development-related co-benefits of climate action. These include the connection to the agricultural sector, nature conservation efforts, the role of cities in climate action, a fair transition, gender equality, and indigenous peoples.

The adoption of an overarching global adaptation goal, which sets both thematic and dimensional targets in the development and implementation of adaptation measures, is also positive. A new two-year work program is established to develop indicators for these goals to measure progress. Rich countries are encouraged to provide financial support for developing countries' efforts to achieve the goals. However, agreement on specific goals for this support was not reached. Instead, there was an agreement to hold a ministerial meeting at the next COP focusing on climate adaptation financing.

Finance remains inadequately addressed

Regarding the financing needs across reduction, adaptation, and loss and damage efforts, as well as in promoting the global adaptation goal, the agreement is wholly inadequate. Costs for climate damages in developing countries are already estimated in the hundreds of billions, and developing countries are expected to accelerate a significant transition towards the expansion of more climate-friendly energy forms. Yet, only a fraction of this financing has been identified, exposing the massive mismatch between needs and available resources.

Negotiations to operationalize the global adaptation goal were challenging, and more concrete goals for the planning and execution phases were not fully defined. The connection to financing needs was omitted. The Loss and Damage fund was operationalized, which was historically positive, but funded with only about $700 million from rich countries. The goals of tripling renewable energy and doubling energy efficiency rates were not supported by financial commitments from the global north.

This should be seen in relation to the fact that the costs of loss and damage alone are expected to reach around $400 billion annually by 2030, adaptation investments are estimated to approach small $400 billion annually by 2030, and up to $4.3 trillion needs to be invested annually in developing countries by 2030, followed by $5 trillion annually to achieve a net-zero world by 2050.

Conversely, there was a significantly increased focus both inside and outside the negotiation rooms on reforming the international financial system and, in general, promoting a manifold increase in investment flows into the global south for both reduction and adaptation efforts from both public and private sources. This will be crucial to realizing integrated climate and development goals. The groundwork has been laid for COP29 as a crucial finance COP in support of new climate plans.

Denmark can do more

In this light, Denmark stood strong at COP28 with its core contribution to the loss and damage fund and initiatives, such as the launch of the APRA initiative for the expansion of renewable energy in Africa, as well as the BFET and IMCA initiatives on mobilizing private capital. In the context of the overall financing needs for the integrated climate and development effort, the ongoing reform and capitalization of IFU are good news, but Denmark should increase its economic support further in a crucial decade – partly in its own long-term interest and partly to ensure the global south's ability to achieve climate and Sustainable Development Goals in time.

Key elements in the upcoming 'Plan for Africa' and development policy strategy must, therefore, include a strengthened integration of climate, nature, and development efforts to harvest synergies and address inevitable dilemmas. There should also be much more scale and speed in mobilizing investments in reduction and adaptation efforts in the global south.