Chairman’s Message

COP29 ended with mixed achievements. The return of Donald Trump as President-elect certainly put cold water on the discussions. As countries are now preparing for their next NDCs, I believe that it is an appropriate time to assess where we are on our path towards 1.5℃.

<Main Points>

Mixed achievements at COP29.

Countries are now preparing their next NDCs.

EU and US substantially offtrack from their NDC paths.

China largely on track but reveals an absence of ambition.

Carbon budget disappearing much faster.

Actions necessary: NDC, Implementation Gap, Adaptation and CDR

1. Mixed Achievements at COP29

COP29 held in Baku, Azerbaijan (Nov. 11-22), ended with mixed achievements. The expectation was not particularly high to begin with, as only a few global leaders were planning to attend the meeting. On the one hand, some leaders were facing elections while on the other, some decided to attend the APEC Leaders’ Meeting held in Peru（Nov. 15-16）and/or the G20 Summit held in Brazil (Nov. 18-19). Nevertheless, it was a pity that the participation by global leaders was limited.
　The victory of former President Donald Trump surely did not help to spur the discussions at COP29. As the main objective of this year’s meeting was to make decisions on the next goals for financial mobilization (NCQG: New Collective Quantified Goals) to the developing world, his return as President made for an unlikely prospect of a major commitment by the US. Without a strong US commitment, it is difficult to imagine or expect major commitments from other advanced economies as well as from China, which is not currently part of the commitment.
　Azerbaijan as the chair struggled to develop a consensus language on the NCQG. After a two-day extension of the meeting, a language was finally agreed upon. The mobilization of funds reaching at least $ 300 billion per year by 2035, led by the developed economies, was heavily criticized by many developing countries, while the absence of any commitment from China and other emerging economies was also a major source of frustration for the developed economies.
　The agreement reached on the implementation of Paris Agreement Article 6 was a significant achievement in an otherwise disappointing COP. While some details still need to be worked out, the general agreement on Article 6 is widely viewed as a long-awaited progress after 9 years of endless negotiations since the 2015 Paris Agreement. The cross-border carbon credit mechanism can help expand the transfer of funds from the developed to the developing economies.

2. Countries are preparing for the next NDCs

Based on the COP understanding, countries are expected to submit by February next year their next NDCs targeting the year 2035. It is a big question whether the US would submit its next NDC while, because of the still pending formation of the new European Commission, it is not clear if the EU would be submitting on time its next NDC.
　The UK Prime Minister Keir Starmer, one of the few global leaders attending the meeting, announced he will submit a new NDC. Most other countries are expected to follow, including Japan which is currently preparing its next NDC.
　In the coming months we should closely follow the announcements made by governments on their NDCs. Before examining the new NDCs, however, I believe that it would be an appropriate time to assess where we stand on our path towards limiting the temperature rise within 1.5℃.

3. The EU and the US substantially offtrack from their current NDC for 2030

The EU’s NDC is to reduce GHG emissions by 55% relative to its 1990 level by 2030. Compared to the required path, the EU actual emissions in 2022 were 20% higher. Same story for the US. Its NDC is to reduce GHG emissions from the 2005 level by 50-52% by 2030 while the actual 2022 emissions were 28% above its proposed path.
　It is true that both the EU and the US have introduced major policies to accelerate their energy transition. For the EU, it is the Green New Deal and for the US, it is the IRA. But, notwithstanding the scale of such programs, the EU admits that its GHG emission reduction will fall short of its NDC target by 5% points even after incorporating the policy impacts. The US expects its GHG emissions will be reduced by 33-41% by 2030, far less than its NDC target reduction of 50-52%.
　Despite achieving major emissions reductions, it is clear that both the EU and the US are substantially offtrack from their 2030 NDC targets.

4. China largely on track towards their current NDC for 2030. But not to be applauded.

Although official data are only available for until 2018, China seems to be largely on track towards its 2030 NDC targets. Does China deserve an applause for such an outcome? Not necessarily so.
　China’s NDC target is calculated as a ratio of CO2 emissions to GDP. While China is reducing such ratio, its absolute CO2 emissions from fuel combustion are still increasing. In the three years between 2019 and 2022, its CO2 emission increased by 7 %.
　The results may suggest that the setting of China’s target is not sufficiently ambitious to start with. Global warming is influenced by the absolute amount of emissions and accumulation of GHG and not by such ratios. I believe that it would be time for China to shift from a ratio target setting to an absolute amount of emission reduction in its next NDC.

5. Carbon budget disappearing much faster than expected

In the IPCC AR6, scientists estimated that to stay on track for the 1.5℃ path (despite a limited overshoot) the remaining carbon budget will be of about 500 GtCO2. The carbon neutrality goal for 2050 was designed using this estimate and the developed economies announced their pledges to achieve carbon neutrality by 2050 based on this. Their NDCs for 2030 were largely decided to ensure that they would be on the path to realize carbon neutrality by 2050 so that the temperature rise would stay within the 1.5℃ path.
　But, according to the most recent assessment which was referenced by UNEP, the remaining carbon budget after 2024 is just 200 GtCO2. The difference from IPCC AR6 results from strong CO2 emissions after 2020 and the overestimate of the carbon budget in the original analysis. To stay within this new budget, Carbon Neutrality must be achieved by 2034 not by 2050. This would require a 9.4% annual reduction in CO2 emissions compared to the high 5.7% reduction recorded in 2020 heavily influenced by a much lower level of economic activities due to COVID19. The challenge is frankly overwhelming, almost insurmountable. 　

6. Inconvenient truth: We are clearly offtrack from the 1.5℃ path in two aspects

The EU and the US are substantially offtrack from their NDC path for 2030. China is largely on track to achieve its ratio of emissions per GDP as stated in its 2030 NDC but its absolute amount of CO2 emissions continues to grow.
　The original estimates for carbon neutrality in 2050 and the 2030 NDCs for the developed economies are now being seriously questioned.
　So the world was setting targets based on deficient estimates to stay within the 1.5℃ path. To make matters worse, the world is falling short of even those original insufficient targets. It is an inconvenient truth to realize that we are clearly offtrack from the 1.5℃ path.
　In fact, there were many private conversations among the participants at COP29 that they acknowledge that a path for 1.5℃ would be unreachable.

7. Actions necessary: Appropriate NDCs, Closing Implementation Gap, Adaptation and CDR

Then what should we do?
　One response may be to pursue far more ambitious targets. If we are falling short of the current target for 2030, we might be tempted to be even more ambitious in the next NDCs for 2035. While being ambitious is not wrong in itself, our priority should continue to emphasize narrowing the implementation gap. We should not deceive the public in making them believe that everything is fine, as if still on track, nor should we be setting unrealistic levels to lose their function as the target. Targets should be seen as achievable to concentrate the resources from both the public and private sectors. Being ambitious is important but being credible is just as important. Without being credible, we cannot mobilize private sector investment which is key to achieving the energy transition.
　For China, a different approach would be warranted. Its NDC for 2035 must be more ambitious and meaningful to deal with global warming. I believe that it is time for China to start committing to reducing its absolute level of GHG emissions. As the largest emitter of GHGs, its reduction will have to be more aligned with the necessary global path to reduce emissions.
　While setting appropriate NDCs, it is also crucial to strengthen our efforts to close the Implementation Gap. In particular, energy efficiency improvement is lagging behind the goal set at COP28 to double the energy efficiency improvement. Such goal implied an annual energy intensity improvement of 4% in this decade while the result in 2023 was just 1% and the estimate for 2024 is also just 1%. We must do more!
　As the carbon budget is disappearing much faster than expected, the global temperature will most likely overshoot the 1.5℃ objective. While mitigation measures to reduce GHG emissions are absolutely necessary, we must be investing much more in adaptation measures to minimize the negative impact from rising temperatures. Better forecasting to alert natural disasters is a necessary first step. At COP29, there were several demonstrations of using satellite imaging for better forecasting. Strategic investment to strengthen the infrastructure to enhance resilience against floods, storms and high waves as well as investment to accelerate the development of heat-resistant crops which are needed is important. Since private sector funds are more difficult to expect to support adaptation, the public sector and global institutions should play greater roles.
　As more CO2 is accumulating in the atmosphere, Carbon Dioxide Removal, or CDR, must be more seriously pursued. Innovation is essential to make DACCS and BECCS realities. Measurement and verification methods for various nature based negative emissions must be established. As locations suitable for CDR may be limited, it will be increasingly important to utilize cross border carbon trading to expand investment from regions in need of carbon storage to regions rich in storage potential.
　As global warming is a global problem, it requires a global approach. It was a positive achievement that long-awaited progress was made in the Paris Agreement Article 6 implementation. But more must be done to ensure that we have a global approach to dealing with a global problem.