What’s happened?

COP28, the annual UN climate change conference, concluded on December 13th, one day later than scheduled. The conclusion was delayed over disagreements on the text of the final agreement among the participants. The final agreement was a source of significant contention, and highlighted the growing international divide on addressing climate change.

Why does it matter?

A key goal of COP28 was responding to the “global stocktake” produced by the UN, which outlined the progress of action against climate change. The stocktake estimates that the world is currently on track to reach 2.5°C‑2.9°C of warming by 2100 and emissions must fall 43% by 2030 to keep warming to 1.5°C. Advocates for stronger action hoped to leverage this towards an international commitment to phase out all fossil fuels, but this was opposed by fast-growing industrial economies and hydrocarbons producers, most notably Saudi Arabia.

An initial draft text removed any reference to a phase-out, prompting an extra day of frantic negotiations. The final agreement highlighted the need to “transition away from fossil fuels”. The language includes numerous caveats, and is widely considered weaker than calling for a total phase-out, but represents the first time a COP decision explicitly advocated moving away from fossil fuels.

COP28 saw slow progress on other goals, particularly financing. The conference confirmed the establishment of a “loss and damage” fund to provide financial support for poor countries facing economic losses from climate change. However, the fund only received US$700m, a tiny fraction of the estimated US$400bn annually that is needed. In addition, finalising international rules for a global carbon trading market, a goal of several previous COPs, has been delayed again.

As the actions necessary to tackle climate change become more pressing, we expect the COP process to grow more contentious. Countries already implementing decarbonisation policies, and small island countries acutely vulnerable to climate change (who were already critical of the COP28 agreement) will be increasingly reluctant to sign future agreements that do not call for faster global action. Meanwhile, countries more dependent on fossil fuels will remain resistant to specific targets, particularly without increased international financing. This will make finding consensus more difficult, raising the risk that future COPs will fail to make progress, or break down altogether.

What next?

Azerbaijan will host COP29. This was agreed to only during COP28, owing to disagreements among east European countries on a suitable host. The short lead time and Azerbaijan’s reliance on hydrocarbons makes it unlikely to produce any major breakthroughs. COP30 in Brazil in 2025 is more likely to produce a more consequential agreement; countries have committed to producing updated, more ambitious climate pledges for that COP.

The analysis and forecasts featured in this piece can be found in EIU’s Country Analysis service. This integrated solution provides unmatched global insights covering the political and economic outlook for nearly 200 countries, enabling organisations to identify prospective opportunities and potential risks.