The Road to COP28: Key Developments from the UNFCCC Climate Change Conference

Representatives from over 100 countries that have signed the Paris Agreement gathered in Bonn, Germany from 5 June 2023 to 15 June 2023 for the Bonn Climate Change Conference (SB58). This was the 58th session of the Subsidiary Body for Scientific and Technological Advice (SBSTA) and the Subsidiary Body for Implementation (SBI) under the United Nations Framework Convention on Climate Change (UNFCCC). This year’s conference was built on the mandates that emerged from COP27 in Egypt last year and is seen as a precursor to COP28.

Steffi Olickal spoke with members of the WRI India Climate team, Ashwini Hingne, Saransh Bajpai and Subrata Chakrabarty, who participated in the SB58 conference. They share their perspectives on what transpired at Bonn and discuss the way forward as we draw closer to COP28.

Steffi: The opening plenary usually adopts the agenda so that countries can develop draft texts for the upcoming COP. But this year, it was not adopted till the penultimate day. What were the contentious items on the agenda and what was the outcome?

Ashwini: One of the reasons for this delay was the inclusion of the Mitigation Ambition and Implementation Work Program (MWP) as an agenda item. This addition was agreed upon by all countries at COP27 and implementation of the MWP was supposed to commence immediately. As part of the work program, it was agreed that at least two global discussions focusing on investment would be held every year until 2026. The first dialogue took place in conjunction with SB58.

While the European Union (EU) wanted the inclusion of the MWP, the G77 and China group wanted the inclusion of the National Adaptation Plans. They could not reach a consensus and the agenda was not adopted on the first day of the conference.

The situation was further complicated when the Like-Minded Developing Countries (LMDCs) group proposed the inclusion of an additional agenda item ─ “urgent scaling up of financial support from developed countries” ─ referring to Article 4.5 of the Paris Agreement. LMDC and other supporting blocks did not accept the inclusion of the MWP without this discussion on financial support. On the other hand, the EU and developed countries opposed this proposal, asserting that the MWP provides space to discuss finance and makes an additional track on finance unnecessary. This led to an impasse.

Ultimately, the final agenda that was adopted by the Parties did not include MWP or the additional finance track; instead, it added a clause stating that work done under the MWP would be captured through an informal note released by the subsidiary body chairs.

Steffi: COP27 led to the establishment of a Loss and Damage Fund to compensate the most vulnerable countries for damages from climate-linked disasters. It was also decided that the Santiago Network would be operationalized. Given that loss and damage was one of the agenda items at the Bonn Climate Change Conference, what were some of the key developments and what does the road ahead look like?

Saransh: The Santiago Network for Loss and Damage (SNLD) was established at COP25 held in Madrid in 2019. During COP26 in Glasgow, Parties agreed to six functions for the Santiago Network. These included identifying and communicating technical assistance needs and priorities as well as actively facilitating connections between those seeking technical assistance and the most suitable organizations, bodies, networks and experts.

A significant outcome on loss and damage at COP27 was the establishment of institutional arrangements for the Santiago Network to enable its full operationalization. Additionally, it was decided that the Santiago Network would have a Secretariat to facilitate its work, an advisory board to provide guidance and a network of member organizations, bodies and experts to contribute to the overall objectives.

In 2022, the UNFCCC secretariat invited proposals to serve as the host agency for the Santiago Network. Two organizations responded— the Caribbean Development Bank (CDB) and a United Nations consortium composed of the UN Office for Disaster Risk Reduction (UNDRR) and the UN Office for Project Services (UNOPS). A panel was established to assess these proposals and its report was circulated just before SB58. The Subsidiary Bodies (SBs) were assigned the responsibility of preparing a draft decision for COP28, to approve the selection of the host agency. However, the inability to select a host agency resulted in the SB58 issuing procedural conclusions that noted that the Parties had addressed the issue and agreed to continue discussing the issue at SB59; subsequent endorsements are anticipated at COP28 in Dubai. This failure to select a host agency at SB58 indicates a further delay of at least one and a half years in the operationalization of the SNLD.

Steffi: 2023 is an important year because the first global stocktake will take place at COP28 in Dubai. Could you please explain what the global stocktake is, what has happened on this front since the Paris Agreement, and discuss some of the contentious issues regarding its overall framework?

Subrata: The global stocktake is a process to evaluate the progress made by countries in mitigating greenhouse emissions, building resilience to climate impacts, and securing the finance and support needed to address climate risks. Several studies have already shown that current actions are insufficient to limit global warming to 1.5°C. The success of COP28 will hinge on its ability to agree to course correction and increase ambition to meet the ultimate objective of the Paris Agreement.

So far, there have been three global dialogues on the global stocktake. At SB58, the draft framework for the global stocktake was published, consisting of five sections: preamble, context and cross-cutting sections, achieving the purpose and long-term goals of the Paris Agreement, enhancing international cooperation and the way forward.

The third part, which focuses on the collective purpose and long-term goals of the Paris Agreement was the most contentious because it included subsections on financial flows and means of implementation. Ultimately, the historic responsibility of the developed Parties formed the basis of disagreements. To address this, the co-chairs proposed a compromise; the final text now includes all the options suggested by the Parties regarding financial flows and means of implementation. The summary note on the third global stocktake technical dialogue was released on 15 August 2023 and a synthesis report will be produced before COP28.

Steffi: Another significant outcome from COP27 was the establishment of a Just Transition Work Programme (JTWP) and negotiators at Bonn were tasked with fleshing out its scope. Take us through what happened and the stance of developed and developing nations on the issues.

Ashwini: COP27 established a Just Transition Work Programme to achieve the goals of the Paris Agreement in a just and equitable manner. It was also decided that annual high-level ministerial roundtables on just transition would be held, with the first one scheduled to take place at COP28.

The focus of the discussions at Bonn was to reach an agreement for a draft decision on the objective, scope, institutional arrangements, modalities, linkages, inputs and outcomes for this work program.

Clear divergences were immediately observed. Developed countries, including the US, the UK and the EU advocated for a work program with a narrow focus on transitioning the workforce in the energy sector and did not look beyond "sharing experiences and best practices" and reporting on them. On the other hand, developing countries, including G77 plus China, pushed for a broader scope. They emphasized the need to focus on the economy-wide impacts of a low-carbon transition that extends beyond the energy sector and encompasses not only the workforce but also goes beyond knowledge sharing — to create avenues for ensuring sustainable development, tech transfer and finance support for just energy transitions and enhanced energy access.

The second key disagreement arose regarding the objective of this work program. While some developed countries clearly expressed that it should catalyze stronger climate ambition, developing economies that are projected to grow, rejected its possible use to push them to higher mitigation targets or to prescribe how they should fulfil their mitigation commitments. According to developing countries, the objective of the work program should be to support a low-carbon transition in a way that does not exacerbate the inequities within and between countries, while also safeguarding the pursuit of economic aspirations and sustainable development of developing countries. This approach should refrain from being prescriptive or punitive. They demanded a long-term program that would deliver annual decisions. In contrast, developed nations wanted a program that ended in three years.

The informal note generated at the end of the negotiations attempted to incorporate the inputs received. Discussions are expected to continue, as indicated in the draft decision. As a next step, the Secretariat will organize a workshop to provide further information on the Just Transition Work Programme, leading up to COP28, and will ensure broader participation of Parties and Observers in the workshop.

Steffi: Climate finance seems to be a big point of contention in climate politics. In 2015, a New Collective Quantified Goal (NCQG) was mandated by the Paris Agreement. Last year, there was no concrete outcome on climate finance at COP27. Did you think the Bonn conference helped advance this discussion and will this topic resurface at COP28?

Subrata: To understand this, we need to know what is happening within and outside the UNFCCC process.

Within the UNFCCC process, technical dialogue on the New Collective Quantified Goal (NCQG) on Climate Finance is ongoing, with the UNFCCC Executive Secretary calling for bold and creative thoughts to unlock the necessary finance that is required to meet the objectives of the Paris Agreement.

Discussions on finance intensified during the second week across various work streams with a conflict evident between finance as mentioned in Article 2.1c of the Paris Agreement and Article 9 of the Agreement. While Article 2.1c requires Parties to align all financial flows with a pathway towards low greenhouse gas emissions and climate-resilient development, Article 9 of the Paris Agreement highlights the responsibility of developed countries to provide the required finance to developing countries.

The emphasis of developed countries on Article 2.1c is viewed by developing countries as an excuse to obscure the obligation of their financial commitments. Moreover, certain developing countries, whose economies rely heavily on the fossil fuel industry, prefer to keep the focus on Article 9. This is because aligning financial flows with a low-carbon economy implies a gradual phasing out of fossil fuels.

Therefore, the outcomes of COP28 will be crucial in determining the decisions on climate finance across various agenda items related to mitigation, just transition, and loss and damage.

Outside the UNFCCC process, a notable event was the New Global Financing Pact Summit 2023, held in Paris in June 2023. The summit resulted in concrete but mixed measures that were agreed upon. For example, it was acknowledged that around 52 countries are experiencing debt distress due to the combined impacts of COVID-19 and climate disasters. As a response, the World Bank agreed to pause debt repayments for countries struggling with climate disasters; however, this applies only to new loans.

In a joint effort, the UK, France, the US, Spain, Barbados, the World Bank Group and the Inter-American Development Bank launched a call to action urging bilateral, multilateral and private-sector creditors to include climate-resilient debt clauses by the end of 2025, with a group of early movers offering the clause by COP28. Furthermore, Japan, the UK and France have pledged varying proportions of their Special Drawing Rights (SDRs) to poor countries to the tune of US$80 billion. An additional amount of US$21 billion could come from the United States, taking the total to just over US$100 billion.

Cote d’Ivoire and France agreed to a debt reduction and development contract. This implies that €1.14 billion of Ivorian bilateral debt will be converted into grants to finance various development projects. A just energy transition partnership was established between Senegal and G7 countries to support Senegal as it transitions 40% of its generation mix to renewable energy by 2030. To this end, Senegal secured US$2.5 billion from bilateral donors, multilateral development banks and the private sector.

The World Bank initiated the launch of a process to enhance the integration of climate finance impacts in new projects related to adaptation and mitigation efforts. It also launched a Private Sector Investment Lab to facilitate private sector investments in renewable energy and energy infrastructure in emerging economies.

Furthermore, it was agreed to establish a monitoring mechanism to track the progress of the decisions taken at this finance summit every six months. A global stocktake of progress and achievements will be conducted in 2025.

Steffi: What were the key areas of negotiation with respect to adaptation at Bonn and what progress was made by the Parties?

Saransh: Discussions on the Nairobi Work Programme, Adaptation Committee and National Adaptation Plans (NAPs) focused on their review and way forward. The chair expressed concern, noting that as of June 2023, only 45 of the 154 developing countries had prepared and submitted their NAPs or sectoral adaptation plans, since the establishment of this process in 2010. Developing countries reiterated the gaps in accessing financial support and technology. They emphasized the responsibility of developed countries to fulfil the commitments made during COP26 in Glasgow, including the doubling of adaptation finance. Developing countries also highlighted the need for regional balance in the UN4NAPs program as well as workshops, NAP Expos, and trainings organized by the Adaptation Committee and Least Developed Countries Expert Group (LEG). So that the least developed countries, small island developing states and other developing countries can continuously communicate their needs for technical assistance.

Major negotiations focused on the framework for the Glasgow–Sharm el-Sheikh work program on the Global Goal on Adaptation (GGA). Established at COP26, this is a two-year program designed to develop a clear framework for the GGA ahead of COP28. Over the last year, the program has held seven workshops, with the latest one taking place from 31 July to 02 August 2023 in Buenos Aires, Argentina. This focused on the development and use of targets, indicators and metrics, global adaptation priorities and modalities for increasing international cooperation. Informal consultations were conducted over the two weeks, where divisions arose between the global north and south.

Suriname on behalf of G77, China on behalf of the LMDC, and India called for the inclusion of targets as part of the framework. Developed countries opposed the inclusion of targets, arguing that there have been limited discussions on the topic of targets during the workshops and it would be too early to include them in the text.

By the end of Week 1, parties were presented with three options for draft conclusions. The first option — popular with the global south — was the most substantive and included elements for the development of a framework and a detailed bucket list of targets and indicators. The other two options provided a great level of flexibility as they included only the possible elements of the framework without mentioning targets and indicators; these were more popular with the global north. As Parties held differing opinions, discussions extended until the final day of the Bonn conference. The SBI Chair requested Parties to find a compromise that would send a larger message to the global community. Ultimately, the third option that focused on the structure of the GGA was adopted. It was also agreed that the remaining two workshops should focus on the development and use of targets, indicators and metrics.

Steffi: Article 6 of the Paris Agreement allows countries to voluntarily cooperate with each other to achieve their emission reduction targets. What were the main developments related to Article 6 and what can we expect at COP28?

Subrata: Discussions around Article 6 have moved from the political to the technical. Due to its complexity, many Parties at SB58 highlighted the need for rapid capacity building to actively contribute to the technical discussions on the Agreed Electronic Format (AEF) for Article 6.2 (i.e. emission trading between countries). Parties also agreed to develop a manual with illustrative examples.

Another significant issue was authorization, specifically, the authorization of carbon credits known as internationally transferred mitigation outcomes (ITMOs). The timing of authorization was a contentious issue, vigorously debated by both developed and developing countries. The final text requested the UNFCCC Secretariat to prepare a technical paper on the process of authorization, the draft version of the AEF, and processes pertaining to inconsistencies identified in the review and data on ITMOs.

Furthermore, the Secretariat will conduct a hybrid session before COP28 to consider the technical paper and its recommendations. The Secretariat will also need to provide a rough estimate of the costs associated with Article 6.2’s international registry and its technical specifications.

Regarding Article 6.4 (i.e. project-based emission trading), a key issue was the inclusion of Avoidance and Conservation Enhancement activities. The decision to include or exclude emission avoidance will be addressed at COP28. Meanwhile, the Supervisory Body of Article 6.4 mechanism sought additional inputs regarding removal activities through a public consultation process.

Several countries underscored the importance of connecting the Article 6.4 registry with the Article 6.2 international registry to ensure that information is centralized. A technical expert dialogue will be held before COP28 and its outcome will be considered at COP28 by the SBSTA.

Certain developments outside the UN negotiations are also significant. At the Summit for a New Global Financing Pact, a call-to-action for Paris-aligned Carbon Markets was launched, supported by 31 countries. Key objectives included: 1. expanding and deepening domestic carbon pricing instruments in line with the Paris goals; 2. fully implementing the agreed rulebook for international compliance markets; and 3. ensuring high integrity in voluntary carbon markets.

France and the UK initiated a process to steer a global roadmap on bio credits, i.e., biodiversity-positive carbon credits and biodiversity certificates. The aim is to increase private sector investment in natural capital.

With developments advancing both within and outside the UNFCCC process, the carbon market space will become increasingly active leading up to COP28.

All views expressed by the authors are personal.