COP28: expectations and opportunities

5 min read 5 Dec 23

In this article, we consider the key talking points expected at this year’s COP28 conference, and the potential opportunities for investors in areas such as renewables, energy efficiency and electrification.

Why is COP28 so important?

The ongoing 28th Conference of the Parties (COP28) in Dubai will mark the conclusion of the first ever Global Stocktake, an assessment of the progress towards the 2015 Paris Agreement. This year’s meeting is set against the backdrop of carbon emissions reaching a new high of 57.4 billion tonnes in 2022 – a 1.2% increase from the year before.1 According to the UN Environment Programme, we currently have a 14% chance to limit global warming to 1.5°C, meaning that we are not on track to meet the Paris Agreement target as it stands.2 The urgency for a consensus on climate action plans among all nations at this COP is more important than ever.

What is going to be discussed and likely agreed at COP?

The key issues in discussion include ensuring a just energy transition, advancing climate adaptation, developing early warning signs, securing food systems, scaling up the climate finance system and operationalising the Loss and Damage fund to address the unequal effects of climate change on vulnerable communities. There are two ‘landing zones’ however upon which there already seems to be agreement. These are 1) the tripling of global renewable energy capacity by 2030; and 2) the doubling of energy efficiency by 2030.

How ambitious is the target to triple renewable energy capacity in seven years?

This target is ambitious. It will require significant mobilisation of capital, both public and private, concerted efforts by countries to address bottlenecks and strong international cooperation. To meet new demands, the existing 3.6 terawatts (TW) of installed global renewable energy capacity will need to be increased to 11,000 gigawatts (GW) by 2030.3 This represents an expected acceleration in growth – it took twelve years for renewable energy to triple from 2010, compared to the eight years needed to accomplish this new target.

Countries more advanced in renewables deployment will likely sooner reach this goal than others; some may not even need to triple their current capacity. BloombergNEF expects that the US, the EU, Japan, India and Indonesia will fall short of this whereas China will be one of few countries to meet this target. However, since the EU has been more ambitious in its climate policies, the tripling of renewable energy would place them ahead of what they need to meet their net zero targets.

What are the challenges to renewables deployment?

We are currently not on track to meet this target. BloombergNEF forecasts that current policies, project pipelines and likely infrastructure development will only result in only 9 TW capacity by 2030, falling short by 2 TW.4 Despite renewables being 29-52% cheaper than fossil fuels5, there are many bottlenecks that have delayed the deployment of renewables including permitting, poorly designed auctions and offtake agreements, uncertainty around land ownership, lack of grid investment and grid connection queues. The Energy Transitions Commission estimates that solar and wind project development in Europe takes between four and twelve years, with wind being the longest due to permitting challenges around grid connection, which itself can take up to eight years.6 Governments could address this by taking on pre-bid work to de-risk renewables projects, encouraging private investments in grids, removing milestone criteria for grid connections, streamlining permitting processes and increasing staffing.

How can energy efficiency help?

A twofold increase in energy efficiency will offset the demand for electricity required to decarbonise the energy system. To achieve this, governments must strengthen energy efficiency regulation, support investments in demand management, deploy stringent fuel economy standards and expand finance for building renovation. According to the International Energy Agency, energy efficiency-related investments will increase by 50% to US$840 billion per annum globally by 2030.7 However, this remains only half of what is required to reach net zero targets.

But what of fossil fuels?

The exact language around fossil fuels will be hotly contested given the implications for fossil fuel producers. Commentators believe the phrase agreed on will be “the orderly phase down of unabated fossil fuels”, translated to a slow reduction in fossil fuels, supplemented by carbon capture and storage technologies. It must be noted that the term “phase out” was excluded in favour of “phase down”, as the former implies a future with no fossil fuels rather than less. This will be more likely to garner further support from governments and companies alike.

What are the investment opportunities?


The buildout of renewable energy between now and 2030 is estimated to range between US$1.1 to 1.4 trillion annually.8 9 This is only 31% of the US$30.3 trillion needed in energy supply and storage by 2030 to achieve net zero emissions, according to BloombergNEF.10

Given the progress on solar, this alone could achieve the renewables target in theory. However, this would not be practical due to the different load profiles of solar and wind, taking into account seasonal and intraday changes. Wind investments, both onshore and offshore, are behind that of solar and therefore are expected to make up 68% of renewables investment. Meanwhile, small- and utility-scale solar will represent 29%, with the remaining 3% for hydropower, bioenergy and others.11 BloombergNEF estimates a 1.7 TW capacity shortfall in wind based on current plans, compared to what is needed in their net zero scenario.12

Figure 1: Renewables capacity shortfall/oversupply versus forecast

Source: BloombergNEF, Tripling Global Renewables by 2030, November 2023.

To accommodate the growth in electricity demand and ensure a stable energy system following an increase in renewables, significant investments in the grid and energy storage are also needed. New targets will require power grid investments to be tripled to reach US$777 billion per annum by 2030 while investments into battery storage capacity will need to see a sixteen-fold increase.13

Figure 2: Energy supply investments in a Net Zero scenario (2023-2030)

Source: BloombergNEF, Tripling Global Renewables by 2030, November 2023.

In the first half of 2023, global new investment in renewable energy hit an all-time high within a six-month span, a 22% increase from the year prior.14 Considering the wider breadth of energy transition infrastructure required - including energy efficiency solutions, smart grid technologies, carbon capture and storage, electric vehicles and charging - investment opportunities extend beyond renewables alone. Progress in this space is unfolding in step with major technological developments that have likewise seen major capital injections in 2023.

Financial institutions certainly have a role to play in translating climate commitments into action. As negotiations progress this week at COP28, we highlight our collective responsibility to address current challenges and leverage new opportunities in our shared journey to net zero.

1 United Nations Environment Programme, “Emissions Gap Report 2023”, (unep.org), November 2023.

2 United Nations Environment Programme, “Nations must go further than current Paris pledges or face global warming of 2.5-2.9 °C” , ( * unep.org* ), November 2023.

3 International Renewable Energy Agency, “Tripling renewable power and doubling energy efficiency by 2030: Crucial steps towards 1.5°C”, (irena.org), October 2023.

4 BloombergNEF, “Tripling Global Renewables by 2030”, (bnef.com), November 2023.

5 International Renewable Energy Agency, “Renewable Power Generation Costs in 2022”, (irene.org), August 2022.

6 Energy Transitions Commission, “Streamlining planning and permitting to accelerate wind and solar deployment”, (energy-transitions.org), January 2023.

7 International Energy Agency, “Energy Efficiency 2022”, (iea.org), December 2022.

8 International Energy Agency, “Net Zero Roadmap: A Global Pathway to Keep the 1.5°C Goal in Reach”, (iea.org), September 2023.

9 Network for Greening the Financial System, “The future is uncertain”, (ngfs.net).

10 BloombergNEF, “Tripling Global Renewables by 2030”, (bnef.com), November 2023.

11 BloombergNEF, “Tripling Global Renewables by 2030”, (bnef.com), November 2023.

12 BloombergNEF, “Tripling Global Renewables by 2030”, (bnef.com), November 2023.

13 BloombergNEF, “Tripling Global Renewables by 2030”, (bnef.com), November 2023.

14 BloombergNEF, “Renewable Energy Investment Hits Record-Breaking $358 Billion in 1H 2023”,  (bnef.com), August 2023.

By Lucy Hancock

The value of investments will fluctuate, which will cause prices to fall as well as rise and you may not get back the original amount you invested. Past performance is not a guide to future performance.

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