COP28’s ‘historic package’: Writing on the wall that spells end of fossil fuel era or new opportunity for gas and LNG players?

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Torn between the battle for the survival of fossil fuels and calls demanding a phase-out of coal, oil, and gas, negotiators at COP28 run into overtime with language on fossil fuels representing a bone of contention between the participants. However, shuttle diplomacy came to their aid and worked its magic, as arm-twisting behind closed doors led to a (un)expected agreement to drop the previous hardline stance, bringing to life a landmark commitment to transition away from all fossil fuels.

Despite pushing the green agenda to a historic level, closer scrutiny of the outcome sparks concerns that the text keeps the doors wide open for more natural gas and LNG. Fears also abound that the final text will spur additional litigation, making things more complicated for the oil and gas industry. Finding common ground on stronger fossil fuel language has been one of the greatest stumbling blocks for COP28 negotiators and the main reason behind the hold-up, which led to overtime, with shuttle diplomacy in full swing to try to secure an agreement between the parties.

Bearing in mind that things were coming to a head at COP28 UAE and the amount of strife over the future of fossil fuels, Offshore Energy Today (also known as Offshore Energy – Fossil Energy) conducted a poll on LinkedIn – asking participants: With COP28 close to crossing the finish line, what should the final decision text entail when it comes to unabated and abated fossil fuels? – to see what the views on this issue are.

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The poll results show that only 8% would like the final text to entail a phase-out of all fossil fuels, 10% want to see only the phase-out of unabated fossil fuels, 25% are keen on a phase-down of fossil fuels while the overwhelming majority or 57% are not interested in seeing any of these options in the COP28 outcome text. As the two weeks of intensive talks at the COP28 climate summit in Dubai, UAE, have come to an end, the outcome is a mixed bag of actions and steps that will enable all participants to celebrate certain wins while frowning upon and resigning themselves to the losses in regards to concessions that were needed to secure those wins in the first place.  

In a speech delivered at the closing of COP28, Simon Stiell, UN Climate Change Executive Secretary, explained: “We needed this COP to send crystal clear signals on several fronts. We needed a global green light signaling it is all systems go on renewables, climate justice, and resilience. On this front, COP28 delivered some genuine strides forward. Tripling renewables and doubling energy efficiency. A framework for the global goal on adaptation. Operationalizing the loss and damage fund and making an initial down payment. At every stage, climate action must stride forward side-by-side with human development, dignity and opportunity.

“There will be reams of analysis of all the initiatives announced here in Dubai. They are a climate-action lifeline, not a finish line. Now all governments and businesses need to turn these pledges into real-economy outcomes, without delay. COP28 also needed to signal a hard stop to humanity’s core climate problem – fossil fuels and their planet-burning pollution. Whilst we didn’t turn the page on the fossil fuel era in Dubai, this outcome is the beginning of the end. These climate conferences are of course a consensus-based process, meaning all parties must agree on every word, every comma, every full stop. This is not easy. It’s not easy at all.”

After the outrage over the first draft which left out the phase-out of fossil fuels but came with a list of actions countries “could” take to combat the climate crisis, the final text version takes a stronger stance on fossil fuel language. This text presents eight steps for countries to follow in the energy transition journey, taking into account different pathways and recognizing that limiting global warming to 1.5 °C “with no or limited overshoot” requires “deep, rapid and sustained” cuts in global greenhouse gas emissions of 43% by 2030 and 60% by 2035 relative to the 2019 level and reaching net zero carbon dioxide emissions by 2050. The steps entail:

• Tripling global renewable energy capacity and doubling average energy efficiency annual improvement rate by 2030;
• Stepping up the phase-down of unabated coal;
• Scaling up global efforts towards net zero emission energy systems, utilizing zero- and low-carbon fuels well before or by around 2050;
• Transitioning away from fossil fuels in energy systems, in “a just, orderly and equitable manner, accelerating action in this critical decade, so as to achieve net zero by 2050 in keeping with the science;”
• Boosting zero- and low-emission technologies, such as renewables, nuclear, abatement and removal technologies like carbon capture and utilization and storage (CCUS), “particularly in hard-to-abate sectors,” and low-carbon hydrogen;
• Upping the ante on substantially curbing global non-carbon-dioxide emissions, including in particular methane emissions by 2030;
• Accelerating the reduction of emissions from road transport on a range of pathways, including through the development of infrastructure and rapid deployment of zero low-emission vehicles;
• Phasing out inefficient fossil fuel subsidies that “do not address energy poverty or just transitions, as soon as possible.”

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“We must get on with the job of putting the Paris Agreement to full work. In early 2025, countries must deliver new Nationally Determined Contributions. Every single commitment – on finance, adaptation, and mitigation – must bring us in line with a 1.5-degree world. Countries must prepare and submit their first-ever biennial transparency reports by the end of next year. At UN Climate Change, we will keep working to improve the process and help parties go further, faster and fairer,” added Stiell.

Many observers, analysts, and climate campaigners see the absence of a fossil fuel phase-out in the text as a Pyrrhic victory for Big Oil, fossil fuel-producing countries, and exporters, which is not worth winning because so much is lost to achieve it, as it is expected to put the Paris Agreement targets in peril. Some argue that the reference to ‘energy systems’ in the context of transitioning away from fossil fuels is designed to enable the use of coal, oil, and gas outside of the power sector, such as in steel production and petrochemical fertilizers.

Dr. Delta Merner, lead scientist at the Science Hub for Climate Litigation, Union of Concerned Scientists, outlined: “Amidst the lobbying by over 2,400 oil and gas lobbyists, negotiators and civil society made their voices heard at COP28, advocating to end the era of fossil fuels to meet our climate goals. The talks reflected a growing consensus that it is time to transition away from fossil fuels.

“The negotiations progressed towards an agreement that could become a turning point for our planet, outlining the guardrails for a transition away from fossil fuel. Significant work is still needed to secure adequate financing to ensure an equitable transition. This is a decisive step toward addressing the climate crisis, despite persistent industry interference.” 

As impressive as the outcome of COP28 undoubtedly is, some have already found grounds to complain. Looking at the part about the phase-down of coal, this section has been somewhat watered down as it no longer mentions putting limitations on permitting new and unabated coal power generation. The part about ‘reducing both consumption and production’ of fossil fuels has now been firmly replaced with ‘transitioning away.’ This omission does not come as a surprise as it is part and parcel of the trade-off for taking away the countries’ ability to look at these actions as an optional menu.

Gaia Fevre, International Policy Manager, CAN-France, underlined: “The agreement adopted at COP28 contains a political signal to ‘transition away’ from fossil fuels. But it doesn’t go far enough: not least because the financial resources are not in place to support the countries that need it most. But also because there are a number of very worrying mentions: gas as a transitional energy, carbon capture and storage and nuclear power. The decision does not live up to its ambitious promises.”

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The part that is all about the recognition that “transitional fuels can play a role in facilitating the energy transition while ensuring energy security” is the one that has resulted in many warnings from climate campaigners. This point, which got its place in the text thanks to the insistence of Russia and Iran during COP28 negotiations, is perceived to be a reference to natural gas and LNG, which will provide a lifeline, together with CCUS, for the fossil fuel industry and encourage a further dash for gas.

Gilles Dufrasne, Policy Lead on Global Carbon Markets, Carbon Market Watch, underscored: “The absence of a deal on Article 6 avoids replicating the errors of the voluntary carbon market and sending the wrong signal to companies and countries seeking to sidestep their climate responsibilities. Trading carbon credits requires strong environmental and human rights guardrails, as has been shown by the numerous scandals related to the voluntary carbon market that broke out over the past 12 months. The text on the table just didn’t provide this. It would have risked reproducing the mistakes of voluntary carbon markets, and by rejecting it, negotiators made the best out of a bad situation.”

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Within the finance section on means of implementation, there is an acknowledgment of the obligation the developed countries have in leading climate finance, which must represent “a progression beyond previous efforts.” The role of the private sector in bridging finance gaps has not been forgotten either. The text emphasizes the need to ratchet up additional, grant-based, highly concessional finance to support the just transition in developing countries. As anticipated, the loss and damage fund has its place within the final text and developed countries are being called upon to continue taking the lead on funding it.

Even though some argue that COP28’s outcome is insufficient to close the emissions gap by 2030, these climate talks still deliver the ramp-up of the NDC process to 2025, with a check-up slated for the end of 2024, requiring alignment of countries’ new commitments with the Paris Agreement by COP30. In spite of the opposition to the final text, this is the first-ever COP to mention transitioning away from all fossil fuels, which makes it “an enhanced, balanced — but make no mistake — historic package to accelerate climate action,” according to Sultan Ahmed Al-Jaber, UAE’s Minister of Industry and Advanced Technology, head of ADNOC, chairman of Masdar, and COP28 President.

Commenting on the outcome of COP28, Ursula von der Leyen, President of the European Commission, highlighted: “It is good news for the whole world that we now have a multilateral agreement to accelerate emission reductions towards net zero by 2050, with urgent action in this critical decade. This includes an agreement by all parties to transition away from fossil fuels. We have agreed on reducing global emissions by 43% by 2030, in line with the best available science, to keep 1.5 Celsius within reach. This will keep us on track with the goals of the Paris Agreement, and speed up the transition to a cleaner and healthier economy.”

While noting that tripling renewable energy capacity and doubling the rate of energy efficiency improvements by 2030 gives “powerful momentum” to the transition away from fossil fuels, von der Leyen stresses the importance of the agreement to tackle methane emissions and other non-CO2 emissions in this decade along with the need to do much more to meet the goals of the Paris Agreement.

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Mohamed Adow, Director of Power Shift Africa, said: “For the first time in three decades of climate negotiations the words fossil fuels have ever made it into a COP outcome. We are finally naming the elephant in the room. The genie is never going back into the bottle and future COPs will only turn the screws even more on dirty energy. Although we’re sending a strong signal with one hand, there’s still too many loopholes on unproven and expensive technologies like carbon capture and storage to keep dirty energy on life support. The transition may be fast, the text calls for a transition away from fossil fuels in this critical decade.

“But the transition is not funded or fair. We’re still missing enough finance to help developing countries decarbonize and there needs to be greater expectation on rich fossil fuel producers to phase out first. Some people may have had their expectations for this meeting raised too high, but this result would have been unheard of two years ago, especially at a COP meeting in a petrostate. It shows that even oil and gas producers can see we’re heading for a fossil-free world.”

Climate Action Network (CAN) and environmental activists are convinced that the final COP28 text represents “an important signal on the end of fossil fuels,” despite what they deem to be loopholes and the lack of finance, which in their view have marred the new path to transition away from coal, oil, and gas. As a result, they are convinced that the latest climate talks leave more questions than answers on the ways to ensure “a fair and funded transition” based on science and equity.

Alex Rafalowicz, Executive Director of the Fossil Fuel Non-Proliferation Treaty, said: “Having the words ‘fossil fuels’ in the text is an important political signal, but it’s a far cry from the ‘historic’ outcome we were all calling for – it is the weakest we could have gotten, it has all the intentionally vague words planted to deceive us, and it is still very reliant on all the unproven technologies we must avoid. Those most responsible for the climate crisis did not bring finance, technology, or actions to start phasing out fossil fuels, instead they brought hollow hypocrisy that poisoned the talks just as they are poisoning life on Earth.

“The vested interests of a few did everything they could to drown out the voices of people and science. OPEC said this would be an irreversible tipping point, and it will be. The record number of fossil fuel lobbyists at this COP was proof that the industry is desperate to defend their interests at the expense of life. They’re merchants of death, but their days are numbered – and they know it.”

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After reviewing the final text, Climate Action Network warned that the lack of finance and the loopholes for so-called transitional fuels and solutions cannot be a backdoor to the fossil fuel industry that would obstruct the full transition away from coal, oil, and gas.

Tasneem Essop, Executive Director, Climate Action Network International, remarked: “In the hottest year on record, our collective power as people across the world resulted in the first-ever signal that the world needs to transition away from fossil fuels, the major cause of the climate crisis. However, vulnerable peoples and countries cannot be left with the burden to fund this transition to address a crisis they did not cause.

“The polluting countries and companies must deliver the funding to achieve a just and equitable transition away from fossil fuels. The COP outcome opened the road for a fossil fuel-free world, but this road is full of potholes, dangerous distractions and if allowed, could lead to a dead end. We are determined to fight for securing international support from the rich nations for the developing world as a key enabler for more ambitious commitments and a just and equitable transition to a fossil-free future.”

Even though CAN acknowledges the climate benefits this COP will bring to the fore, it also claims that the energy transition road is paved with uncertainty and endangered from the get-go, as “there is no agreement on how this energy transition will be funded and how historical polluters will take responsibility for ensuring that justice and equity is delivered for the vulnerable peoples and countries in the global South.”

Teresa Anderson, Global lead on climate justice, ActionAid International, stated: “COP28 has spotlighted that while the world’s appetite for climate action has moved significantly forward, its willingness to pay lags behind. The mission to move to a fossil-free future does not yet have the finance components needed to make this goal workable for lower-income countries. If rich countries had been willing to put real finance and fair timelines on the table, the outcome could have been much stronger.

“Finding ways forward on climate finance, and how we can cover the costs for the world we want to build together, must now be part of every climate conversation moving forward. At COP29 in Baku, all eyes will be on the negotiations for the New Collective Quantified Goal on finance. Civil society can be incredibly proud of the momentum built to get us to this point. COP28 has resulted in an outcome that should discourage institutions from investing in assets that will soon be stranded. But there is still much more to do to ensure that we can really fund our future.” 

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Laura Young, Tearfund Ambassador and Climate Scientist, pointed out: “The final outcome of the UN climate talks has shifted the dial though it falls short of the landmark energy agreement that would have hailed the end of the fossil fuel era. The result is a mixed bag of transitioning away from fossil fuels whilst opening the door to dangerous distractions and weakening of past commitments. We should applaud that countries have pledged to triple renewables and double energy efficiency by 2030, but unless coal, oil and gas are phased out at the same time, we’ll continue to fuel climate disaster.

“Despite this mixed outcome, we’ve seen unprecedented support for the clean energy transition. The science is clear, the solutions exist and the momentum is growing. Leaders and negotiators also publicly recognized, with greater honesty and clarity than ever before, the vital need to end the fossil fuel era. The scales are starting to tip, but the hour is late. The longer we delay decisive action the greater the cost of our inaction will be for all of us and people living in poverty most of all.”

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Divisions between different fractions during the UN climate talks made it hard to reach a consensus on stronger fossil fuel language, with the battle resembling a David against Goliath fight at times. The COP28 outcome comes against the backdrop of rising geopolitical challenges, global inflation, and energy security woes. Bearing in mind all the positive signals, options, and actions COP28 has put on the table, this is one of the most significant UN climate talks since 2015, when the Paris Agreement was agreed.

Regardless of how much of a climate win the final text will turn out to be in the future, it has the potential to bring turbulent times for the fossil fuel industry, with very little smooth sailing ahead due to the explicitly mentioned and implied green actions and decarbonization moves, which will likely spur a new wave of legal challenges for oil, gas, and LNG projects. On the bright side, COP28 does propel the world closer to a sustainable energy future.

The countries at COP28 greenlighted Azerbaijan as the host of COP29 from November 11-22, 2024, and Brazil as the COP30 host from November 10-21, 2025. The global energy sails are set for further green agenda inroads during the upcoming climate talks.

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