TODAY: Historic draft COP28 text side steps fossil fuel phaseout

Good morning, nice people. It’s (supposedly) the final day of COP28, but we very much doubt that will be the case. We have a draft agreement, but there’s a whole lot of unhappy and unsatisfied people in Dubai this morning. What to expect? A heavy day of negotiations and heated debate today, possibly stretching into the next day.

A BRIEF LOOK AT COPLAND- We have a draft agreement — with no phase out: Only hours after UN head António Guterres called on world leaders to “end the fossil fuel age and deliver climate justice,” a draft plan — the first to propose a shift away from fossil fuels — has dodged any references to the phaseout of fossil fuels, the Financial Times reports. Instead it includes language pertaining to the reduction in “consumption and production of fossil fuels, in a just, orderly and equitable manner so as to achieve net zero [carbon emissions] by, before, or around 2050 in keeping with the science.” We have a full breakdown of the draft text in the news well below.

What comes next? The document will be picked apart, discussed, negotiated and then a revised draft will need to be agreed upon by almost 200 countries at the summit in Dubai.

AL JABER’S “TAKE IT AND GO”- “We have made progress, but we still have a lot to do. I want you to deliver the highest ambition on all agenda items, including on fossil fuels language,” COP28 president Sultan Al-Jaber said. “This text reflects those ambitions and is a huge step forward. Now it is in the hands of the parties, who we trust to do what is best for humanity and the planet,” he added.

THE EU IS NOT IMPRESSED- Some parts are “fully unacceptable” and “not consistent”: The EU’s climate commissioner Wopke Hoekstra and Spain’s environment minister Teresa Ribera said the draft agreement is the starting point for a negotiation process that could last days, the Guardian reports. “We think there are elements in the text that are fully unacceptable. We want to have 1.5C being the safe space. We are going to fight for 1.5C. The current text provides some reference to the science, some reference to 1.5C, but it is not consistent with dealing with energy. We need to get into deeper discussions with many other partners, and of course with the president,” Ribera said.

VERY STRONG WORDS FROM THE ISLANDS- “The Republic of the Marshall Islands did not come here to sign our death warrant. We came here to fight for 1.5C and for the only way to achieve that: a fossil fuel phase-out. What we have seen today is unacceptable. We will not go silently to our watery graves,” head of delegation for the Republic of the Marshall Islands John Silk said.

AND OF COURSE AL IS AT THE PULPIT… AND RHYMING- “COP28 is now on the verge of complete failure … this obsequious draft reads as if OPEC dictated it word for word … In order to prevent COP28 from being the most embarrassing and dismal failure in 28 years of international climate negotiations, the final text must include clear language on phasing out fossil fuels. Anything else is a massive step backwards from where the world needs to be to truly address the climate crisis and make sure the 1.5°C goal doesn’t die in Dubai,” former US Vice President and climate activist Al Gore said.

WATCH THIS SPACE #1- Banking giants want a piece of the carbon market action: With the voluntary carbon market (VCM) expected to be valued at USD 1 tn, banking giants including Goldman Sachs, Citigroup, JPMorgan, and Barclays are eyeing the emerging carbon offset market, Bloomberg reports. The banks are seeking to fund carbon sequestration projects, trade in voluntary carbon credits, and advise clients on buying them in efforts to bridge the funding gap for climate and carbon projects, particularly in emerging markets where “a lot of project developers don’t have huge balance sheets and have difficulty raising money,” Citi’s global head of carbon offsets trading Sonia Battikh told Bloomberg.

The market is fraught with controversy: Scientists have criticized the reliance on carbon offsets, saying that companies often buy offsets that “don’t represent any climate benefit” global carbon markets lead at Carbon Market Watch told Bloomberg. Apple was amongst the companies recently accused of greenwashing over its latest “carbon-neutral” products. Last month, the CEO of South Pole — the world’s biggest carbon offsets seller — Renat Heuberger stepped down on the back of greenwashing allegations in its Kariba REDD+ carbon offset projects in Zimbabwe.

But faith in carbon credits persists: The VCM has been hailed as “an important tool in bringing carbon dioxide solutions to scale,” carbon management firm Carbon Direct said in its annual report.Despite the controversies and demand for carbon credits falling 6% over the first six months of 2023 for the first time in seven years, some bankers are confident that the nascent market is yet to grow. “It would be a shame if the criticism, though well-meaning, undermines money flows to these projects,” Kiru Rajasingam, head of European power, gas and emissions trading at Citi, argued.

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