What the UAE Consensus – agreed at COP28 in Dubai – means for business
We Mean Business Coalition
The COP28 climate talks in Dubai have concluded with a new deal known as the UAE Consensus. COP28 President Sultan Al Jaber wanted to deliver something historic and unprecedented. Whilst the deal may not deliver on everything progressive business called for, today is a moment to celebrate. Because the seeds planted here in UAE will be seen by future generations as the beginning of the end of the fossil fuel era.
Here are the initial insights for business from our team of experts at We Mean Business Coalition:
Fossil to Clean is unstoppable. Don’t get left holding stranded fossil fuel assets
Once upon a time the world put its climate future in the hands of a petrostate and asked it to phase out fossil fuels. This isn’t the perfect fairytale ending we had hoped for, but for the first time we have a global agreement to accelerate the transition away from all fossil fuels, this decade, in line with the science. We should not be mistaken – this is a historic development and signals the beginning of the end of the era of fossil fuels.
More than 200 businesses, worth over $1.5 trillion, alongside scores of countries, thousands of scientists, health workers, investors, faith leaders and youth activists sent a clear message to negotiators, that moving from fossil fuels to clean solutions is the only way to limit global heating and keep people safe.
Whilst the UAE Consensus doesn’t contain the words “phase out”, the outcome is unprecedented and unequivocal. The need for a just transition is also recognised, as well as achieving net-zero by 2050 through deep, rapid and sustained reductions in greenhouse gas emissions in line with 1.5 °C pathways – including, importantly, accelerating action in this critical decade.
As we called for consistently through the Fossil to Clean campaign, working closely with our friends at the Global Renewables Alliance, and beyond, the COP28 agreement commits nations to tripling renewable energy capacity globally and doubling the global average annual rate of energy efficiency improvements by 2030.
There are inevitably gaps and the devil remains in the detail. The UAE Consensus refers only to phasing out of inefficient fossil fuel subsidies, and the references to vague ‘transitional fuels’ are concerning. Yet the direction of travel is unmistakeable.
Business now has a yardstick to measure which countries are delivering.
The reality is the COP process – while essential for steering collective, global political direction – is only part of a much bigger picture. Leading businesses are taking climate action because it is good for business, and the investment opportunities are unmissable. Thousands of companies around the world are already taking action, and will continue to do so. But only by working together can we bring millions more companies on board and transform our economies at the pace and scale necessary to keep the 1.5°C goal of the Paris Agreement within reach. By raising ambition and implementing climate policies, plans and laws, governments can provide the frameworks and incentives for business action at scale. When the large majority of countries move in this direction, companies can scale their investment, technologies mature, and their deployment leads to economies of scale that lower costs and makes them widely accessible. A global commitment to accelerate the transition away from all fossil fuels makes it so much easier to ensure that transition happens quickly, in a just and managed way.
Our Fossil to Clean campaign also includes a series of policy asks to national governments, on finance, subsidies and carbon pricing. Business will be looking to all governments to reflect these in their NDCs well ahead of COP30 in Brazil and this must now be the priority for the coming two years.
Those countries that lean into the clean energy transition the most, will prosper. Recent WMBC polling found that over half of business leaders are already choosing to prioritise investments in jurisdictions with more stringent energy laws. As nations begin to update their NDCs ahead of COP30, business leaders and investors will be watching closely. Here is where all the momentum now lies and investments and business support will quickly weigh in behind those countries moving fastest to scale clean solutions.
Pledges on forests and food are welcome but gaps remain on nature
H.E Razan Al Mubarak, UN Climate Change High-Level Champion for COP28 UAE said in recent days, “We need to phase out fossil fuels. But it’s also clear that a fossil fuel phase-out on its own will not keep us safe from the impacts of climate change – we need nature just as much.”
The UAE Consensus includes, for the first time, a formal link to the Kunming-Montreal Global Biodiversity Framework, and emphasises the importance of halting and reversing deforestation by 2030.
While this agreement does not do enough to fully recognise how the climate and nature crises are intertwined, it is supported by pledges made a number of parties in parallel to the negotiations. For example, through the COP28 Declaration on Sustainable Agriculture, Resilient Food Systems, and Climate Action, more than 150 countries will consider food in the new climate plans ahead of COP30.
The signal from regulators to business on the need to protect and restore nature is now crystal clear. Nevertheless, the spotlight now turns to the biodiversity COP16, which Colombia has offered to host in 2024, to further cement joint actions on climate and biodiversity.
New initiatives on energy transition, oil and gas and industry
Also outside of the negotiations, COP28 also saw the announcement of new initiatives and pledges related to energy and industry decarbonisation, collectively under the banner of the Global Decarbonization Accelerator (GDA). Key among these is the Industrial Transition Accelerator, aiming to catalyse decarbonisation across heavy-emitting sectors, which will be hosted by WMBC’s partner the Mission Possible Partnership. Other elements of the GDA include the Oil and Gas Decarbonisation Accelerator, a pledge by oil and gas companies to reduce scope 1 and 2 emissions as well as methane, and the Global Renewables and Energy Efficiency pledge, which backs the tripling of renewables and doubling of energy efficiency as also agreed in the main UAE Consensus.
No progress on Article 6 but voluntary carbon markets are reforming anyway
It was disappointing to see no progress made on Article 6, with much-needed agreement to fully operationalise carbon markets under the Paris Agreement again kicked down the road to COP29. However, progress has been made elsewhere in making carbon markets deliver towards achieving the goals of the Paris Agreement. In the last few weeks, new guidelines for buyers to make more transparent and robust claims around carbon credits have been launched by the Voluntary Carbon Market Integrity Initiative (VCMI). Together with the supply-side guidelines set out by the Integrity Council for Voluntary Carbon Markets (ICVCM), these initiatives mark a step-change in defining how carbon markets should be integrated into corporate climate strategies. These leaders in high-integrity carbon markets are working together more closely now than ever. Leading businesses will continue to integrate high-integrity voluntary carbon markets as a part of broader climate action to stay within the Paris Agreement targets.
Baku to the future and onwards to Belem.
With the Azerbaijani capital Baku confirmed as the host of COP29 and the Brazilian city of Belem hosting COP30, many of the key outcomes that business wants to see are now the responsibility of new Presidencies. The “road map to mission 1.5°C,” announced at COP28, and collaboration between the COP28, COP29 and COP30 Presidencies, will hopefully help to coordinate global actions towards implementing the Global Stocktake, ensuring that the NDCs due in 2025 represent the highest level of ambition and are able to fully harness the important contributions from businesses.
On finance, COP29 in Baku has the unenviable task of brokering agreement on a new quantified goal for climate finance. As always, this goes to the heart of how trust is built between countries from the global North and South, and will set the tone for negotiations on all other topics. Dubai took a great step forward in operationalising the fund for Loss and Damage at the very start of COP28, and the UAE Consensus has shown that with a minimum of trust, the multilateral process can still deliver.
On the new quantified finance goal, Dubai has only set the framework but leaves everything to do for its successors, setting up finance for centre stage at COP29. The private sector here too has an important role. By helping to drive investments in developing countries through blended finance programmes and demonstrating other ways that public finance mobilises private capital, we can show that with the right signals from governments, private finance can scale up towards the trillions of total investment required.
As ever, the leading progressive businesses, working with We Mean Business Coalition will be there, committed to working closely with governments and holding them to account on the promises they make. Today we celebrate. Tomorrow the work continues.