Australia: COP28: Taking Stock Of Progress

Introduction

The first week of COP28 saw some key outcomes, in particular financial commitments to the Loss and Damage Fund, and an emerging consensus around a pledge to triple renewable energy and increase energy efficiency. However, negotiations relating to the "phase out" or "phase down" of fossil fuels remain contentious and there is still significant work required to finalise the text on the Global Stocktake.

Taking Stock

Global Stocktake

COP28 marks a critical turning point for climate action, marking the first Global Stocktake under the Paris Agreement, which is intended to inform adjustments to states' nationally determined contributions (NDCs) by 2025. The Global Stocktake, colloquially referred to as the 'ratchet mechanism', requires countries to submit new NDCs every 5 years. The Global Stocktake is a critical opportunity to assess collective progress in achieving the goals of the Paris Agreement, including keeping global temperature well below 1.5°C. It is designed to spur action among Paris Agreement signatories and non-party stakeholders to decarbonise all sectors of the economy.

In September 2023, the United Nations Framework Convention on Climate Change (UNFCCC) released the 'Technical dialogue of the first global stocktake' report (Report), which found that more action is required "on all fronts".¹ The Report found that a "radical decarbonization of all sectors of the economy" is needed.

Draft 'textual building blocks'

On 1 December, the co-chairs of the Subsidiary Body for Scientific and Technological Advice (SBSTA) and the Subsidiary Body for Implementation (SBI) released a draft set of 'textual building blocks' to guide the decision on the Global Stocktake.²

The preliminary text recognised that countries are not on track to slow global warming to 1.5°C. It calls upon parties to accelerate the transition 'towards low-emission energy systems, including by rapidly scaling the deployment of clean power generation and energy efficiency measures, including accelerating efforts towards the phasedown of unabated coal power and phase-out of inefficient fossil fuel subsidies'. It also emphasises providing tailored support to the most vulnerable to support a just transition to renewable energy.

A critical aspect of COP28 this year will be how fossil fuels are dealt with. The current draft text lists a variety of options for the language on fossil fuels,³ including:

1. a phase-out of fossil fuels in line with best available science;
2. phasing out of fossil fuels in line with best available science, the Intergovernmental Panel on Climate Change's 1.5ºC pathways and the principles and provisions of the Paris Agreement;
3. a phase-out of unabated fossil fuels recognising the need for a peak in their consumption in this decade and underlining the importance for the energy sector to be predominantly free of fossil fuels well ahead of 2050;
4. phasing out unabated fossil fuels and rapidly reducing their use so as to achieve net-zero CO2 in energy systems by or around 2050; and
5. no text.

The difficulty of reaching agreement on this particular issue is evident in public statements so far, with some countries unwilling to commit to a phase down of fossil fuels.Notably, at a press conference with Samoa's natural environment minister, Cedric Schuster, the Australian Minister for Climate Change and Energy, Chris Bowen, stated that the Australian government wanted to see "a big step forward on the language on phasing out of fossil fuels", noting Australia's position in relation to 'phasing out' as an "important symbol" which goes "hand-in-glove" with the government's ambitious target of 82% renewable energy by 2030.⁴

Annual Climate Change Statement

Alongside the global developments at COP28, by means of a domestic stocktake, Minister Bowen tabled the Australian Government's second Annual Climate Change Statement (Statement) in Parliament on 30 November 2023.⁵ The Emissions Projections 2023 report,⁶and National Greenhouse Gas Inventory Quarterly Update of June 2023,⁷ were also tabled with the Statement and provide a comprehensive picture of Australia's emissions.

A key development in 2023 were reforms to the Safeguard Mechanism, a mechanism which is projected to be the biggest driver of emission reductions after the renewable energy transition. The reforms to the Safeguard Mechanism seek to ensure that heavy industry contributes to, and remains competitive in, global decarbonisation. The reforms increase the capability of significant emitters in the mining, manufacturing, transport, oil, gas and waste sectors to achieve net zero by 2050, promoting on-site decarbonisation and enabling facilities to generate Safeguard Mechanism Credits, thereby creating an incentive to reduce emissions below their baseline. Read more about those reforms in our previous legal update.

In the Statement, the Australian Government expressed agreement with the Climate Change Authority's proposal that emissions must decrease more rapidly to meet Australia's 2030 target. Australia's Emissions Projections report shows that emissions are projected to be 42% below 2005 levels by 2030 (which is just under the formal target of 43%). The projections take into account implementation of policies such as increasing renewable energy to 82% by 2030 and implementing further Electric Vehicle Strategy measures. The projections for 2030 and 2035 illuminate the need to broaden the application of the Safeguard Mechanism and support the development and implementation of policies in other sectors, such as transport and agriculture.

Renewable energy generation

Increasing renewable energy is a priority at COP28 this year. Australia has joined over 100 countries in pledging to triple the world's renewable energy generation capacity by 2030. In relation to the pledge, Minister Bowen noted that Australia is uniquely placed to spark the transition to renewable energy, having "the resources and the smarts to help supply the world with clean energy technologies to drive down those emissions, while spurring new Australian industry."

Australia's support for renewable energy at COP28 reflects the evolving policy landscape domestically, which aims to incentivise domestic and international investment in renewables. In particular, the recent expansion of the Capacity Investment Scheme (CIS) and National Energy Transformation Partnership seek to deliver 32GW of capacity nationally, supporting the Australian energy system to reach 82% renewables by 2030.⁸

Climate Club

The Albanese government has also expressed its support for the Climate Club, which formally launched at COP28 as a high-ambition intergovernmental forum for exchange on accelerating climate action and decarbonisation. The initiative was first proposed by Germany, following a spate of unilateral measures including the subsidy-splurging Inflation Reduction Act in the US and the carbon border tax in the EU.

The Climate Club comprises 36 members, including Australia, with the objective of supporting the effective implementation of the Paris Agreement. The Climate Club will initially focus on the emission-intensive sectors, such as steel and cement, with the aim to normalise decarbonised industrial production. The initiative will fall under the guidance of the Organisation for Economic Co-operation and Development, headed by former Australian finance minister, Mathias Cormann. In recognition of the importance of engaging private sector actors, the Climate Club seeks to mobilise private sector finance and improve capacity for industry decarbonisation.

Where to from here?

The optimism and euphoria which fuelled the start of COP28, as seen by the adoption of the Loss and Damage Fund on day one (read more about this fund in our previous legal update), has now moved to a recognition of the work still required to reach agreement on the main Global Stocktake text.

Our Norton Rose Fulbright team is currently at COP28 monitoring the negotiation process. We will report on outcomes from the Conference, including those in relation to Article 6, on our COP28 portal. Register here to receive COP28 updates and to remain informed on key developments.

Footnotes

1. United Nations Framework Convention on Climate Change, 'Technical dialogue of the first global stocktake', 8 September 2023 https://unfccc.int/documents/631600.

2. United Nations, Draft 'Textual Building Blocks', https://unfccc.int/sites/default/files/resource/DT.DD_.SBI59.i8_SBSTA59.i5.1.pdf.

3. William James and Elizabeth Piper, 'Latest COP28 draft text sets new options on fossil fuel phase out', Reuters, 9 December 2023, https://www.reuters.com/sustainability/climate-energy/un-publishes-new-draft-text-with-range-options-fossil-fuel-phase-out-2023-12-08/.

4. Adam Morton and Katharine Murphy, 'Australia backs Cop28 promise to triple renewables but not nuclear capacity pledge', The Guardian, 3 December 2023, https://www.theguardian.com/australia-news/2023/dec/03/australia-backs-cop28-renewables-pledge-as-chris-bowen-calls-for-international-emissions-reduction-push.

5. Department of Climate Change, Energy, the Environment, and Water, 'Annual Climate Change Statement 2023', https://www.dcceew.gov.au/about/news/australias-second-annual-climate-change-statement.

6. Department of Climate Change, Energy, the Environment, and Water, 'Australia's Emissions Projections 2023', https://www.dcceew.gov.au/climate-change/publications/australias-emissions-projections-2023.

7. Department of Climate Change, Energy, the Environment, and Water, 'National Greenhouse Gas Inventory Quarterly Update: June 2023', https://www.dcceew.gov.au/climate-change/publications/national-greenhouse-gas-inventory-quarterly-update-june-2023.

8. Department of Climate Change, Energy, the Environment, and Water, Joint media release: Capacity Investment Scheme supports NSW to deliver 1GW of cleaner, cheaper, more reliable energy for NSW, 22 November 2023, https://www.bing.com/search?q=capital+invetsment+scheme+minister+bowen+anouncment&cvid=a059423348ac4f0fbf7750465eeaf5a4&gs_lcrp=EgZjaHJvbWUy
BggAEEUYOTIHCAEQRRj8VdIBCDc2NjNqMGo0qAIAsAIA&FORM=ANAB01&PC=U531.

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