Six takeaways from 2023’s climate change news

As another year of record emissions draws to an end, it’s worth looking back on what’s been achieved.

Like every year, the quick answer is more than nothing but less than enough. To dissect that in more detail, here are our six takeaways from the year in climate.

1. Oil and gas felt the heat

Phasing out or down fossil fuels? Abated or unabated? Scaling up renewables, carbon capture and storage (CCS) and techno solutions. Energy dilemmas, and their buzzwords animated international talks in 2023.

The headline breakthrough came at the end. The Cop28 agreement included for the first time a goal to move away from all fossil fuels in energy systems.

It was the centrepiece of a bigger package that included a call for the tripling of renewables and doubling energy efficiency by 2030.

But it also gave a platform to “transitional fuels” (read gas) and CCS, which some politicians and campaigners regard as “dangerous loopholes” for continued fossil fuel use.

Cop hosts the UAE and most developed countries welcomed the deal as “historic”. For small island states and other vulnerable nations it did not go far enough.

Like most Cop agreements, it was the result of a hard-won compromise struck in overtime – after Saudi-led opposition threatened to leave oil and gas out of the text altogether.

The road to Dubai had been equally bumpy. The G7 saw fights over gas and coal with hosts Japan attempting to push controversial strategies like ammonia co-firing.

The G20 in Delhi offered a dress rehearsal of what was to expect at Cop with broad agreement over renewables and bitter disputes over fossil fuels.

In the background, Sultan Al Jaber, oil executive turned Cop president, garnered constant curiosity and scrutiny. He was initially adamant that the focus should be on emissions and not on the fuels themselves, raising more than an eyebrow. But, amid a series of controversies and apparent slip-ups, his position gradually shifted.

Al Jaber contended the Dubai deal would be enough to keep the 1.5C goal in sight. A day later he told the Guardian that Adnoc, the oil firm he runs, would press ahead with a massive oil and gas expansion.

Other rich nations, like the US, keep him company on that front. Such chasms between words and actions will continue to be closely watched.

2. Slow progress on climate cash

The other side of the coin from the fossil fuels debate is finance. When rich countries ask their developing counterparts to sign on to ambitious energy transition plans, many reply: ‘who is going to be paying for that?’

When governments wrangled over targets for adapting to climate change, similar questions were asked.

A clear answer was never forthcoming. We might get more clarity in 2024, with governments set to discuss, and hopefully agree on, a new collective goal at Cop29 in Baku in November.

But a lack of trust has taken root. Rich countries have so far not respected the previous commitment to provide $100 billion a year in climate finance to vulnerable countries.

That was “likely” met in 2022, two years after the original deadline, according to the OECD. We will be looking out for the receipts for confirmation.

Countries were also invited to refill the coffers of the Green Climate Fund. The four-yearly replenishment round got off to a decent start, but an underwhelming pledging summit in October put ambition at risk.

Then the US landed in Dubai in December with a $3 billion funding promise. It brought total pledges to $12.8 billion – setting the GCF on course for a “middling” level of ambition.

But that comes with a gigantic caveat. To deliver the dollars, the Biden administration will have to persuade Republicans in Congress or take control of it by winning elections. Both are tall orders.

Money talked outside UN diplomacy too. Lots of attention centred on the much-touted reforms of multilateral development banks inspired by the Bridgetown Agenda.

Progress has been slower than many were hoping for. The World Bank lowered its equity-to-loan ratio, freeing up $4 billion a year.

It also installed a new more climate-aware president, officially changed its mission statement and promised pauses in debt repayments for disaster-hit countries. Encouraging steps, but far short of the trillions of dollars developing countries have been calling for.

3.US-China climate talks thawed

Formal diplomatic relations between the world’s biggest polluters suffered an ice-age-like deep freeze in the latter part of 2022 after US Congressional leader Nancy Pelosi visited Taiwan. Climate talks were collateral damage.

But 2023 saw a slow but steady thawing. It culminated in a momentous bilateral meeting held in Califonia’s Sunnylands resort a few weeks before Cop28.

The countries’ respective climate envoys, John Kerry and Xie Zhenhua, agreed to revive a climate working group and sketched out the outline of a potential alignment in the upcoming negotiations.

It proved decisive. In particular, their joint support to “accelerate the substitution for coal, oil and gas generation” helped find the right formula to unstick the thorny energy language in Dubai.

The special personal relationship between Kerry and Xie was a big factor in these improved relations.

When formal diplomacy was on hold, the two kept talking. Xie even brought his grandson to Dubai because the 8-year-old wanted to say “happy birthday to my good friend Mr. Kerry”, who turned 80 during the summit.

But Cop28 was most likely their last hurrah together. Xie is set to retire soon ending a 16-years on-and-off stint. He is likely to be replaced by Liu Zhenmin, a former vice foreign minister.

Kerry has been vague about his future with US elections looming large on the horizon. He recently told Reuters that he would “continue as long as God gives me the breath and work on it [climate] one way or the other”.

4. Carbon credits terrible year

To say 2023 won’t be remembered as carbon credits’ finest year is an understatement. It began with a now-infamous report pouring cold water on forestry-based offsets and ended with talks over Article 6 falling apart spectacularly in Dubai.

In between, scandal after scandal dented the reputation of carbon markets. From the collapse of the world’s second largest project to the suspension of dozens of schemes over exaggerated claims or alleged human rights violations. The blowback prompted even some of the most enthusiastic corporate credits buyers to cool on the idea.

Many carbon market supporters had pinned hopes on Cop28 for a spot of good news. Ahead of the talks, it looked like governments could finally fire the starting gun on the creation of a long-awaited global carbon market under the Paris Agreement.

But those hopes were misplaced. Negotiations ended without an outcome following a bitter disagreement over integrity rules between the US and the EU.

Leaping on the string of failures, some critics have been pushing for the whole concept of carbon offsetting to be chucked into the dustbin of history.

But others claim carbon markets provide an essential source of finance for developing nations, love it or loathe it. They are trying to build them back up from the nadir with more stringent climate provisions and better social safeguards.

5. Coal-to-clean deals reality check

As  promises turned into proper plans, Just energy transition partnerships (Jetp) hit the cold wall of reality in 2023. The three initial deals – with South Africa, Indonesia and Vietnam – have all been beset by issues.

The type of money put on the table by rich nations has been a source of common grievance. Grants make up a very small percentage of the funding packages, fuelling fears over debt. As a result, recipient countries revised climate targets downwards.

Indonesia has watered down coal retirement plans. It now aims to start shutting down on-grid plants before their scheduled closure no earlier than 2035 – five years later than originally planned.

So-called captive plants, that power specific industries, have also caused a massive headache. Wrong assumptions meant a much lower number of them were baked in the original modelling. Struggling to find a way out, the Indonesian government has so far excluded them – and their emissions – wholesale from the Jetp blueprint.

Vietnam’s investment plan, unveiled during Cop28, has no timeline at all for retiring coal. It expects instead to operate plants “flexibly” and to rely on the controversial co-firing of biomass and ammonia with coal.

The authoritarian Vietnamese government has also all but buried the ‘just’ aspect of the partnership. It has jailed five environmentalists on tax evasion charges, which human rights groups say are trumped-up accusations.

In South Africa, the transition is meant to be reasonably easier as its Apartheid-era coal plants are nearing retirement. But crippling blackouts prompted President Cyril Ramaphosa to say the timetable “must be relooked at” earlier this year.

The plan is also facing fierce opposition from the powerful coal lobby. Our investigation with Oxpeckers discovered the sector partnered with politicians and even managed to water down or delay key policies in a bid to sink the scheme.

6. Loss and damage fund’s good start

As the Cop27 president gavelled the landmark decision on a loss and damage fund in Sharm-el-Sheik, a question loomed large: will countries manage to agree on how it should work within the following 12 months?

‘Yes, definitely’ was the answer.

Governments adopted the decision on operationalising the fund on the very first day of Cop28. It gave the summit’s president Al Jaber an early win and prevented loss and damage from being used as a bargaining chip in the ensuing negotiations.

The success is down to the painstaking work of a 24-member transitional committee that hashed out the details over five gruelling meetings. At the outset, developed and developing countries were at odds on just about everything: who should benefit from the fund, who is expected to pay into it, where it’s meant to be hosted.

Distances gradually narrowed and a compromise deal was eventually struck a month before the climate summit. The World Bank will initially host the fund for four years, despite strong resistance to its involvement from developing nations.

All developing countries “particularly vulnerable” to the effects of climate change will be eligible to benefit from the mechanism. However, the definition of vulnerability – one of the thorniest issues – has not yet been defined.

The decision “urges” developed countries to provide financial resources to the fund, while other nations are only “encouraged” to do so “on a voluntary basis”. Rich nations have been strongly pushing to broaden the donor pool and will likely keep up their efforts.

Pledges from a slew of countries should inject over $700 million for the start-up of the fund. The UAE won plaudits by committing $100 million. The US was lambasted for offering a paltry $17.5m, despite being the world’s largest economy and biggest historical emitter.