Call for faster fossil-fuel phase-out likely at COP28

At COP28 this year, a central issue is likely be countries’ differing perspectives on the pace of fossil-fuel phase outs. Leading businesses have made their perspective known, as a coalition of 131 influential companies, including Nestlé, Unilever, Mahindra Group and Volvo Cars, is calling upon political leaders to establish a clear timeline for the phase-out of fossil fuels at the meeting in late November. With a combined global annual revenue approaching $1tn, these companies emphasise that COP28 participants must commit to achieving 100% decarbonised power systems by 2035 for wealthier economies and extend financial support to developing nations to enable them to transition away from fossil fuels by 2040 at the latest. 

In a joint open letter, entitled “Fossil to Clean”, coordinated by the We Mean Business Coalition, the companies express the urgent need to accelerate the adoption of clean energy while simultaneously reducing fossil fuel use and production. The signatories represent diverse sectors, ranging from multinationals to small and medium-sized enterprises. While many companies are setting their own emissions reduction targets, they acknowledge that meaningful progress depends on governments taking swifter action. 

In its latest report, the International Energy Agency has also underlined the need for governments to phase out fossil fuels, warning that their production remains “far too high” to prevent catastrophic warming. In the latest World Energy Outlook report, the IEA recognises the remarkable growth of clean energy technologies such as solar, wind, electric cars and heat pumps. $1bn a day is now spent on solar development, with the IEA estimating that more than 500GW of renewable capacity will be installed globally this year, with solar leading the way. Global investment across all clean energy technologies in 2023 is on track to be 40% higher than in 2020. 

However, the report underscores that the continued consumption of oil, gas and coal undermines the global transition to renewable energy. The IEA states that current demand for fossil fuels is projected to exceed the levels required to achieve the Paris Agreement's objective of limiting global temperature increases to 1.5C. Inaction could result in global average temperature rises of around 2.4C by the end of the century, significantly exceeding the Paris Agreement's threshold. The report calls for world leaders to thoroughly prepare for an orderly decline in the use of fossil fuels. 

The European parliament's committee on industry, research and energy has taken a significant step towards promoting EU-based manufacturing of low-carbon technologies, by voting in favour of the Net-Zero Industry Act's draft report. The proposed act, originally proposed by the European commission in March, aims to have at least 40% of clean energy technologies, including components for wind turbines, heat pumps, solar panels, renewable hydrogen production, and carbon capture and storage, manufactured in the EU by 2030. By promoting EU-based supply chains for renewables, the bloc is seeking to compete with the US Inflation Reduction Act and reduce its dependence on Chinese imports. 

The Net-Zero Industry Act also outlines plans for cleaner economy investment, streamlined permitting for clean energy and carbon storage projects, enhanced data sharing on key initiatives, and training for 100,000 individuals within three years. While the move has been well-received, there is a call for more ambitious and detailed plans to address key competitive challenges and build a whole-economy strategy. Green industry thought leaders suggest expanding the act to include sectors where the EU is already a leader, such as energy efficiency, materials circularity, and the food industry, with a stronger focus on sustainability targets and metrics.