COP28: predictions for the global stocktake

This year’s Conference of the Parties (COP) climate summit will see the conclusion of the first global stocktake. It’s an inventory of progress made since the Paris Agreement was established at COP21 – and an opportunity to correct our course.

So, as we look ahead to COP28, what can we expect from the global stocktake? Where have gains been made – and what needs to be done to set the world onto a 1.5 ˚C pathway?

I’ve drawn on our own energy transition outlook (ETO), an independent assessment, to outline our view. For a closer look at the ETO, and our energy transition scenarios, fill in the form on this page for a complimentary copy of the executive summary.

What is the global stocktake and why is it so important?

The global stocktake (GST) is a reality check on global efforts to reach net zero by 2050. It will occur every five years and takes around two years to gather and process information. For the first GST that process started in 2022. Key findings were released in October 2023 and the full report, negotiations and next steps will conclude at COP28.

This stocktake will deliver a comprehensive assessment of progress since the 2015 Paris Agreement. But it’s not just an inventory – it will identify gaps and opportunities to bridge them.

It’s a timely opportunity to chart a new course. Individual countries laid out their Nationally Determined Contributions (NDC) in 2020 and are encouraged to raise their ambitions every five years. With the next round of NDCs scheduled for submission in 2025, the conclusions of the global stocktake could push countries to set targets over and above existing commitments.

Is the world on track to meet Paris Agreement decarbonisation goals?

The detailed analysis in our energy transition outlook (ETO) suggests the world is not set to meet the goals of the Paris Agreement. Our view is that we are not on course to limit global warming to 1.5 ˚C , or even 2 ˚C. Interim GST findings, released in October, reached a similar conclusion.

Why? A net zero pathway scenario was never going to be easy. And the war in Ukraine has underlined the extent to which the global economy still depends on fossil fuels for energy security. Oil, gas and coal still supply 80% of primary energy demand. Supply of low-carbon energy has grown by a third since 2015, but the world’s energy demand has grown much faster.

As a result, energy-related emissions have continued to increase since 2015. Despite a 7% year-on-year drop in 2020 due to the global pandemic, we expect emissions to return to 2019 levels in 2023.

Our scenario modelling, detailed in the ETO, shows that energy-related carbon emissions are likely to peak around 2027. No major country is currently on track for 2030 emissions reduction goals.

Our ETO maps three different routes through the energy transition with increasing levels of ambition – but also difficulty and investment. Fill in the form at the top of the page for a complimentary copy of the executive summary. 

Have significant decarbonisation gains been made since the Paris Agreement?

We may not be on a 1.5 ˚C pathway, but some progress has been made. The Paris Agreement galvanised countries into setting ambitious policy goals to promote and adopt low-carbon energy technologies. We estimate 90% of global annual emissions are now covered by net zero goals, and 30% of global annual emissions are covered by a carbon price regime. That’s a significant achievement since 2015.

What’s more, policy is widening to support the build-out of the domestic supply chains for low-carbon technologies, with the goal of reducing dependence on China. The US Inflation Reduction Act and Europe’s REPowerEU have announced direct incentives and targeted policies to promote new technologies. Japan, South Korea, China, Canada and India are following suit.

Other notable developments include:

• Solar, wind and battery costs have fallen by more than 50% in the last decade, driving adoption of rapid electrification and renewables. Solar and wind capacity has increased four-fold since 2015 and electric vehicles are expected to contribute to 25% of new car sales in 2023. Annual energy storage installations have increased 100-fold since 2015.
• Hydrogen and CCUS have each seen announcements of 1,000 new projects since 2019. Addressing scope 1 and 2 emissions has become an industry standard. Hard-to-abate industries such as refining, steel and cement plants are signing offtake agreements to secure supply of low-carbon hydrogen and CCUS to tackle scope 3.
• Nuclear is back in play, with 13 GW of small modular reactor projects proposed in North America and Europe.

So, is a major decarbonisation course correction required – and is it achievable?

Achieving a 1.5 ˚C outcome in the current geopolitical situation is extremely challenging. It is possible – but much depends on actions taken this decade. COP28 can help to build the consensus and shape the outcome.

Our analysis shows that low-carbon power supply and infrastructure must scale up twice as fast as in the past decade. On average, 165 GW of solar and wind capacity has been added annually since 2015. This needs to increase to 400 GW a year this decade, and to 600 GW in the 2030s and 2040s. Power transmission infrastructure must expand alongside renewables. And supply of vital energy transition metals – copper, aluminium, nickel, lithium, cobalt and manganese – must also be developed quickly.

Low-carbon hydrogen and CCUS need to reach 0.5 Btpa and 7 Btpa, respectively, by 2050 in a 1.5 ˚C scenario. Our Technology Leaderboard takes a fresh look over 230 technology use cases that can accelerate the energy transition.

The average global carbon price in 2023 is estimated to be US$25/t CO2. We forecast the price needs to rise to US$105/t by 2030 and US$165/t by 2050 to incentivise development and adoption of new technologies enough to meet Paris Agreement goals.

What are the biggest changes needed to deliver on Paris Agreement goals?

Based on our analysis, four big themes stand out:

1. Investment into clean energy infrastructure must double from US$300 billion currently to above US$600 billion annually for several years. Average annual capex into new supply needs to increase from US$1.8 trillion a year today to US$2.7 trillion until 2050.
2. New financing mechanisms must be designed to help transition emerging economies in Asia and Africa. The World Bank, the IMF and other multi-lateral banking institutions have significant latent financing capacity that must be unlocked to provide low-cost capital to targeted sectors, markets and technologies. Private capital will follow suit.
3. Oil and gas companies must be part of the solution. They contribute to over half of global primary energy supply and carbon emissions. While some are consolidating their portfolios in the oil and gas sector, the Majors have invested in 182 start-up companies focused on the energy transition. Their project execution skills, experience and the deep pockets can integrate new technologies and help decarbonise the current energy system.
4. Global cooperation needs to step up markedly. The US/Europe and China need to set aside their differences and show climate leadership. Cooperation will be crucial to set common standards and rules to scale new technologies as well as establish transparent and high integrity voluntary and compliance carbon markets. COP28 has a huge opportunity to use global stocktake findings to motivate all members to take more decisive action towards a more sustainable future.

Our energy transition outlook maps out our independent assessment of what it would take to deliver on countries’ existing net zero pledges, and what it takes to get onto a net zero by 2050 pathway.

Fill in the form at the top of the page for a complimentary copy of the executive summary.