COP28 set an ambitious course correction for the global energy sector

The 28th Conference of the Parties (COP28) delivered both a vision for creating a net zero energy system and a pledge by almost 200 countries to take actions to achieve it. Long due, it arrived at a time when the world continues to break records for energy-related emissions and global temperatures, as well as records for clean energy investment and deployment. Without the surge of clean energy technologies, emissions growth since the Covid-19 pandemic would have been three times larger. Yet the world is still falling far short of its Paris Agreement goals to limit global warming.

Despite a challenging geopolitical, economic and climate backdrop, countries came together at COP28 and agreed on the “UAE Consensus,” setting ambitious global energy transition goals. These include, among others, reaching global net zero emissions in the energy sector by 2050; transitioning away from fossil fuels in line with net zero emissions by 2050; tripling the global installed capacity of renewable energy by 2030; doubling of the rate of energy efficiency improvement by 2030; and accelerating the deployment of other critical low-emissions technologies.

This report analyses what full implementation of the COP28 goals would mean for the energy system and its emissions, assesses the risks and pitfalls of partial implementation, and discusses how countries can integrate the COP28 outcome into the next round of their targets under the Paris Agreement. These Nationally Determined Contributions, or NDCs, extend until 2035.

The COP28 goals build on growing clean energy momentum and could keep the path to net zero by 2050 open

The tripling renewables and doubling efficiency targets could, on their own, get the world fully two-thirds of the way to a Paris-aligned energy system by 2030. If done correctly, their achievement would reduce the world’s GHG emissions by 10 billion tonnes by the end of the decade compared with what is otherwise expected. If achieved as part of a comprehensive implementation of the COP28 outcome – balanced across countries, sectors and technologies, and with the necessary enabling infrastructure – this would keep open the path to net zero emissions by 2050 and give a chance – albeit still slim and difficult – of holding warming to 1.5 °C. In contrast, if countries only focus on a subset of the COP28 outcomes, fail to translate them into comprehensive plans and policies, or are slow to develop the necessary enabling infrastructure such as storage and grids, then most of the huge positive potential promised at COP28 will remain unrealised.  

Contribution of key elements to reduce energy-related emissions in the COP28 Full Implementation Case, 2023-2035

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Countries need to translate the COP28 goals into domestic energy policies

Country pathways and enabling conditions differ, but all countries can and must strengthen work on contributing to the COP28 goals in national policies and new NDCs due in 2025. Not all goals in the COP28 vision are given equal detail; how they are translated into national plans and policies will be key. Where there is ambiguity, the overarching goal of net zero emissions by 2050 should shape responses. Individual countries’ contributions to achieving the COP28 goals will and should vary. At the same time, the COP28 goals are not a menu from which countries can pick and choose: together they form a high-level, multilateral roadmap the energy sector has long been lacking. 

Energy efficiency should lead, but it is far from achieving its full potential

The goal of doubling the rate of energy efficiency improvements globally could provide larger emissions reductions by 2030 than anything else, but it looks far out of reach under today’s policy settings.  As a result, energy costs for consumers are set to be 8% higher in 2030 under today’s policies than they would be with full implementation of the goal of doubling efficiency, and annual emissions 6.5 gigatonnes (Gt) higher.

Focussing on the doubling of technical efficiency is critical but will not be enough on its own. Stronger efficiency policies for new equipment can boost the global rate of efficiency improvement to 2.4% per year on average to 2030. While better than the improvement rate under today’s policies, it falls short of the 4% needed annually for the doubling goal.

Achieving the doubling goal requires countries to expand the focus of energy efficiency policies. Reaping the efficiency benefits of electrification, reducing the energy footprint of transport and industrial systems through greater use of public transportation and improved material efficiency, and supporting energy-saving among consumers are important everywhere. Different countries will have different starting points and priorities, but in broad terms: 

  • In advanced economies, electrification is the key lever to improve efficiency, with electricity set to power 30% of total consumption by 2030 and 40% by 2035 if the COP28 goals are achieved. The rising use of electric vehicles and heat pumps are at the heart of this: they are two- to five-times more efficient than their fossil fuel equivalents.  Energy efficient retrofits of old buildings are also critical.
  • In emerging markets, strengthening and enforcing efficiency standards for new buildings, factories and appliances is key, with these countries set to add half a billion new air conditioners and 35 billion square metres in floor space for new buildings by 2030. By 2030, achieving COP28 goals in full would reduce the heating and cooling energy consumption of new buildings in emerging markets by 50%.  
  • In countries without full access to clean cooking, particularly in sub-Saharan Africa, achieving full access to clean cooking delivers the largest energy savings. Switching from traditional cookstoves would save more energy annually than the current energy demand of Brazil. Alternatives are well-understood and scalable, and the clean cooking benefits for lives and livelihoods are huge.

Regional levers to achieve the doubling of the global rate of energy efficiency improvements

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Without grids and storage, the tripling of renewables will not succeed

With today’s policy settings and technology trends, the world is on course to achieve more than three-quarters of the growth needed for the goal of tripling global renewables capacity by 2030. Achieving the tripling goal is possible with faster capacity expansion. To reap the economic and emissions benefits of the tripling of renewables, while ensuring reliable and affordable access to electricity, countries need to focus on a range of measures to ensure that the renewables coming online are securely integrated and displace fossil fuel generation.

This requires faster but responsible permitting processes, more than 25 million kilometres of electricity grids to be built or upgraded by 2030, and global energy storage capacity to grow to 1 500 GW by 2030. Slow permitting for new grid expansions, a lack of investment in many (often state-owned) grid companies in emerging market and developing economies, and old and outdated grids in advanced economies are key bottlenecks. Integrating the large increase in variable renewable generation implied by the tripling goal also requires a range of measures, including around 1 500 GW of storage capacity to be installed by 2030, of which 1 200 GW is battery storage – a nearly fifteen-fold increase on today’s level.         

Failure to take the necessary action would result in higher electricity prices, more coal and gas generation, higher curtailment of renewables and higher emissions. Our modelling of a partial implementation of the tripling goal, in which grids and storage lag behind the expansion of capacity, results in almost 40% more coal generation and higher curtailment.

Key benchmarks for energy system transitions aligned with the COP28 outcome

By 2030, to support the full implementation of the COP28 outcome, the world needs to:

  • Achieve a global storage capacity of 1 500 GW and build or modernise 25 million kilometres of grids
  • Achieve a share of electricity in final energy consumption of 30%
  • Achieve the Sustainable Development Goal of universal access to clean cooking
  • Increase the efficiency of new air conditioners sold by 50%

By 2035, to guide energy sector ambitions for the timeframe of the next NDCs:

  • Quintuple renewables capacity, maintain the rate of efficiency improvements at 4%, and build or modernise another 30 million kilometres of grids, bringing the total to 55 million kilometres built or modernised from today
  • Achieve a share of electricity in final consumption of 35% globally
  • Scale up nuclear power capacity by 1.8 times and sustainable low-emissions fuels by 2.8 times, including carbon capture, utilisation and storage (CCUS), low-emissions hydrogen and sustainable bioenergy 

Clean energy policies alone are not enough to drive a secure transition away from fossil fuels

The COP28 outcome broke new ground in highlighting the importance of transitioning away from fossil fuels in a just, orderly and equitable manner, accelerating action in this critical decade, to achieve net zero by 2050. It also included specific fossil fuel-related goals on phasing down unabated coal power, reforming fossil fuel subsidies and reducing methane emissions.

The growth of clean energy is critical to driving down demand for fossil fuels, but a singular focus on clean energy policies alone is not enough. Methane emissions are an example of an area in which additional action is needed. Fossil fuel production is responsible for around 15% of global energy-related greenhouse gas emissions – most of which are methane emissions. Many of the ways to reduce these emissions are well‑known and cost-effective. Full implementation of the COP28 goals would cut emissions from oil and gas supply activities by more than 60% from today’s levels by 2030, led by declines in methane and building on initiatives such as the Global Methane Pledge and the Oil and Gas Decarbonization Charter. Phasing out inefficient fossil fuel subsidies and ensuring the safe and responsible decommissioning or repurposing of fossil fuel infrastructure when it is no longer needed are also crucial.

In a world characterised by uncertainty, clear fossil fuel transition policies are needed alongside robust clean energy policies to accelerate transitions. Such policies can help to set market expectations and ensure that clean energy grows at the pace and scale needed. They might include regulations that set phase-out dates for certain assets or equipment such as coal-fired power plants, measures that bring about the early retirement or repurposing of fossil fuel infrastructure, and national plans to synchronise reductions in investment in fossil fuels with the scaling up in clean energy investment in a way that protects energy security.

Change in oil demand in the COP28 Full Implementation and Partial Implementation cases, 2023-2030

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Change in coal demand in the COP28 Full Implementation and Partial Implementation cases, 2023-2030

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Change in natural gas demand in the COP28 Full Implementation and Partial Implementation cases, 2023-2030

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If unchecked, emissions from existing coal-fired capacity alone would be enough to push the world across the 1.5 °C threshold. A key first step is to end the approval of new unabated coal plants, but the scale of existing coal capacity means that this is not enough alone. Existing plants must also be run much less and more flexibly as clean generation scales up, and a significant number of coal plants must be retired early. Maintaining electricity security will require investment in storage and grids alongside a careful sequencing of retirements.

Achieving a transition away from fossil fuels that is just, orderly and equitable requires dialogue and cooperation among a broad range of stakeholders, including between producer and consumer countries. Inclusive dialogue that includes industry, labour, communities and governments is essential to inform coherent energy investment planning, maximise opportunities for socio-economic development from the transition, and minimise negative impacts on communities, workers, companies and vulnerable social groups. Consumer economies can send important market signals to producers and support their economic diversification and growing role in the clean energy economy through technology collaboration and investment.

Clean energy investment is skewed in two glaring ways

Advanced economies and China account for more than four out of every five dollars invested in clean energy since the Paris Agreement was signed. The scale up of clean energy investment in other regions will require stronger and more stable policies to attract private investment, and more sizable, more targeted and more catalytic international support, spurred by the new global goal for climate finance and the Paris Agreement’s goal to align financial flows with low-emissions development. More must be done in all countries to make sure that consumers, particularly those with low incomes, can access clean energy. At a time when governments are concerned about the social acceptance of transitions, the fact that globally they spend nine times more making fossil fuels cheaper than they do on clean energy subsidies for consumers is a striking discrepancy.

The next round of national emissions targets is critical

If fully implemented, the COP28 goals would set the foundation for achieving ambitious NDCs, reducing global energy-related emissions by over 60% by 2035. NDCs aligned with the COP28 outcome or national net zero pledges would see emissions reductions by 2035 relative to the 2022 level within the following ranges. The higher end of the ranges is aligned with the COP28 call for global net zero emissions by 2050 and pathways to limit warming to 1.5 °C, and the lower end with national net zero pledges. National net zero pledges are less ambitious than the COP28 goals, falling short of a pathway to global net zero emissions by 2050 and limiting warming to 1.5 °C.

  • Advanced economies and other high-income countries reduce emissions by 60% to 80% as a group.
  • Emerging markets, such as those including China with net zero pledges by or before 2060, reduce emissions by 35% to 65%.
  • And developing economies reduce emissions by 5-50%.

Energy sector GHG emissions pathways relative to 2023 consistent with the COP28 Full Implementation Case to 2035

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The next round of NDCs is a critical test for COP28 implementation. These new NDCs must be economy-wide and entail absolute reduction targets, especially for all major economies. All countries should consider in the design of their NDCs how they intend to implement the COP28 goals, not least to send clear signals to investors. 

COP29 and multilateral cooperation must drive implementation

After a high point at COP28, climate action and the energy transition must remain in focus. The upcoming COP29 and related multilateral processes, notably the G20 and G7, have a critical role to play in refining and reinforcing the consensus reached at COP28. Any backsliding will put at grave risk the chances of achieving the objectives of the Paris Agreement. Countries should also use the opportunity provided by the COP29 and G20 summits this autumn to advance the enabling measures necessary to reach the COP28 goals and do even more to set the stage for ambitious NDCs.