Before COP29, more than 100 CEOs jointly issued an open letter...
The reporter learned from the World Economic Forum that as the 29th Conference of the Parties (COP29) to the United Nations Framework Convention on Climate Change is about to be held, 112 CEOs jointly issued an open letter to leaders around the world, calling on governments and enterprises of all countries to strengthen cooperation, jointly respond to the climate crisis, and accelerate the realization of the goals of the Paris Agreement.
Co-sponsors include 48 members of the First Mover Coalition and 27 members of the CEO Regional Climate Group. The open letter emphasizes the commercial value of climate action and encourages all parties to increase investment to promote the global transition to green and low-carbon.
According to the goals of the Paris Agreement, global greenhouse gas emissions should be reduced by 43% by 2030, thereby controlling the global temperature increase within the 1.5 degrees Celsius target; in December 2023, COP28 passed a final agreement and reached a consensus on "fair, orderly and equitable approach to reduce dependence on fossil fuels while improving the climate adaptability of the energy system."
In the open letter, the co-authors expressed their recognition of the above consensus and pointed out that in order to accelerate the large-scale implementation of commitments, governments and companies need to work together to eliminate obstacles, such as complex and inefficient policies, approval and reporting frameworks. "As COP29 approaches, we propose four policy demands to regulatory and decision-making authorities around the world, aiming to better explain the commercial value of climate action and encourage investment from all parties." The co-author said.
The first is to establish nationally determined contribution goals that are ambitious, trustworthy and investable. "We call on all governments to upgrade their nationally determined contribution targets, increase international cooperation, and commit to eliminating gaps with emission reduction targets." According to Global Stocktake statistics, nationally determined contributions only account for about 5% of emission reductions before 2030, far below the required 43%.
The open letter pointed out that the nationally determined contribution goal should include a clear transformation plan, provide transparent information for companies participating in investment, and serve as a "national roadmap" to promote economic growth, enhance competitiveness and create a green labor force in the future. Specifically, incorporating comprehensive emission reduction and adaptation goals into long-term predictable domestic policies to attract long-term investment from the private sector; planning specific industry transformation paths and formulating clear investment goals, financing needs, energy supply and demand, and performance targets.
The second is to significantly increase the scale of climate financing from one billion US dollars to one trillion US dollars to reduce the risks of private sector capital investment. The United Nations Framework Convention on Climate Change estimates that developing countries will face a funding gap of between US$5.8 trillion and US$5.9 trillion if they want to achieve climate mitigation and adaptation goals by 2030. Therefore, the "New Collective Quantitative Target for Climate Financing"(NCQG) must be significantly increased to provide assistance to developing countries severely affected by climate change.
In this process, efficiently raising a large amount of private capital is crucial, but a scientific risk response mechanism still needs to be formulated and implemented. For example, data shows that currently less than 25% of global carbon emissions are included in the pricing mechanism, and the scale of use of the carbon pricing mechanism should be expanded. At the same time, we will phase out fossil fuel subsidies and transform them into green, efficient investments; promote risk avoidance tools and promote their standardization, such as debt linked to climate adaptation. These tools help investors avoid risks, obtain stable capital returns, and achieve a virtuous cycle.
The third is to eliminate obstacles to transformation and fulfill COP28 commitments. The World Energy Investment Report 2023 released by the International Energy Agency shows that currently, the total renewable energy capacity awaiting approval is five times higher than the installed capacity. By 2040, 8000 kilometers of new green power grids need to be built around the world.
The open letter recommends that in order to fulfill the energy commitments of COP28 and avoid investing in the development of new fossil fuels to meet energy needs, local governments should provide corresponding guarantees for enterprises.
For example, eliminate the administrative approval burden faced by qualified projects and make grid readiness, including preparing sufficient storage capacity while maintaining necessary environmental and community safeguards, to increase the supply of renewable and clean energy; improve heating systems, transportation and industry electrification levels, increase the demand for renewable energy, and implement relevant policies to achieve affordable supply. Demand is the key to reducing investment risks, and risk definitions need to include climate externalities; improve energy efficiency by setting intensity targets, providing regulatory guidance and incentives, and supporting energy-saving measures for existing assets.
The fourth is to support the commercialization of breakthrough technologies and supplement cost-competitive solutions. The open letter points out that currently, it is expected that 30% of key mitigation technologies still face significant cost disadvantages, which is particularly evident in high-emission industries such as materials, transportation and agriculture.
For these industries, promoting the use of clean hydrogen energy, hydrogen derivatives and carbon removal technologies is the key to decarbonization. Policies, incentives, streamlined processes and green public procurement goals should be introduced to stimulate market development, promote technology application and reduce green premiums, while continuing to support the development of cost-effective technologies and circular economy solutions such as biogas and biofuels.
"Government action alone is not enough. We call on leading companies to take action, set science-based goals, disclose progress and formulate climate transformation plans, and actively promote the decarbonization of business activities and value chains. At the same time, strengthen cross-industry value chain cooperation, provide support to small and medium-sized enterprises, etc., and help them solve green premium problems and achieve decarbonization of operations through technical assistance, capacity building, knowledge sharing, and incentives and investment in advanced climate technologies." The co-author said.
As COP29 approaches, the open letter provides an important reference framework for governments and businesses to accelerate global climate action.
