Time for Governments and Business to Double Down on Climate Action

Governments and the private sector need to enhance collaboration to deliver on the Paris Agreement goals, closing the ~600 Gt emissions reduction ambition gap by 2050 to limit global warming to 1.5°C. The Alliance of CEO Climate Leaders – representing a combined $4 trillion in revenue, 12 million employees and 12 industries – is committed to accelerating corporate climate action at the pace and scale needed and has delivered collectively ~10% emissions reduction from 2019 to 2022, outperforming major economies.

We welcome COP28 pledges on renewable energy and energy efficiency and consensus on transitioning away from fossil fuels in a just, orderly and equitable manner while strengthening adaptation and the nexus with nature, food and health. To move from pledges to impact and accelerate action at scale, governments and businesses need to combine efforts and address obstacles, such as complex and inefficient policy, permitting and reporting frameworks.

Ahead of COP29, 112 CEOs, including 48 First Movers Coalition and 27 regional CEO climate group members, are making the following policy asks to regulators and policy-makers to improve the business case for climate action and spur investment:

1. Develop ambitious, credible and investable Nationally Determined Contributions (NDCs)

We call on governments to upgrade their NDCs and international collaboration to close the ambition gap: the Global Stocktake shows that NDCs only provide for ~5% emissions reductions by 2030, far short of the 43% needed. NDCs should offer clear transition plans that provide the transparency businesses need for investment, transforming them into national roadmaps for growth, competitiveness and the future green workforce by:

• Integrating multisectoral and multistakeholder input, including from the private sector.
• De-risking and attracting long-term private investment by providing long-term visibility with comprehensive abatement and adaptation targets, embedded in predictable domestic policy.
• Designing sector-specific transition pathways equipped with quantified investment targets, financing needs, energy supply, demand and performance targets, as well as public procurement objectives.
• Detailing the long-term technological and human capabilities required, so businesses can help close the gaps without leaving anyone behind.
• Unlocking climate and nature synergies that reinforce National Biodiversity Strategies and Action Plans to halt and reverse ecosystem degradation, including through natural climate solutions.

2. Scale up climate finance from billions to trillions and de-risk private capital flows

The developing world needs $5.8-5.9 trillion for climate finance, covering both mitigation and adaptation, by 2030. The New Collective Quantified Goal must be raised significantly to aid developing countries disproportionally affected by climate change. Efficiently mobilizing private capital at scale is critical but it needs the right de-risking mechanisms to:

• Expand the use of carbon pricing, as only <25% of global emissions are priced.
• Support high-integrity voluntary carbon markets consistent with the climate mitigation hierarchy and advance international carbon markets via Article 6 negotiations, coupled with high-integrity standards, scientific monitoring and validation, clear buy-side processes and recognition.
• Phase out fossil-fuel subsidies in a just, orderly and equitable manner, redirecting them into green and efficient investments.
• Reduce cost-of-capital in low- and -middle-income countries where investment risk premiums are disproportionately high, including by substantially increasing concessional and blended finance, catalysed by more fit-for-purpose multilateral development banks.
• Scale and standardize de-risking tools, such as adaptation-linked debt, which enhance collaborative finance and create a virtuous cycle of de-risking, to ensure stable capital remuneration.

3. Remove transition obstacles to deliver on COP28 pledges

Currently, the total capacity of renewables awaiting permits is five times higher than installed capacity. 80 million kilometers of additional green grid will be needed by 2040, even before accounting for new energy-intensive usages like artificial intelligence. To meet COP28 energy pledges and ensure that energy demand growth is not met by new carbon-emitting fossil fuel investments, businesses will need local authorities to facilitate:

• Increased renewable and clean energy supply by eliminating permitting burdens on eligible projects and building grid readiness, including storage capacity, without eliminating essential environmental and community safeguards.
• Higher renewable demand through increased electrification of heat, transport and industry, with policies to drive price parity; demand is key to reducing investment risks, supported by a risk definition that integrates climate externalities.
• Improved energy efficiency by setting intensity targets, providing regulatory guidelines and incentives (e.g. tax relief on efficiency investments), and supporting existing solutions and efficiency in current assets.

4. Support breakthrough technologies to reach commercial scale and complement cost-competitive solutions

An estimated 30% of key mitigation technologies still face significant cost disadvantages, particularly in such heavy-emitting sectors as materials, transport and agriculture. Scaling these technologies, including clean hydrogen, hydrogen derivatives and carbon removals, is crucial to achieving industrial decarbonization.

We need supportive policies, incentives, streamlined processes and green public procurement targets to spur the market, facilitate uptake and reduce green premiums while maintaining support for cost-effective technologies (e.g. biogases, biofuels) as well as circularity solutions.

Governments cannot act alone: we call on fellow business leaders to commit strategically and financially to net zero

We urge our peers to demonstrate leadership and accountability in decarbonizing their operations and value chains by setting science-based targets, disclosing progress and developing climate transition plans, consistent with evolving frameworks and standards.

Business leaders should strengthen cross-sector value chain collaboration by supporting their suppliers, including small and medium-sized enterprises, to decarbonize through technical assistance, capability building, knowledge sharing, and financial mechanisms such as incentives and investments in advanced climate technologies, to address the green premiums.

The climate crisis is just one of many challenges facing us – from biodiversity and poverty to food systems and global health. What unites these issues is the need for urgent collaborative action to ensure a just and equitable transition and avert systemic shocks. We stand ready to collaborate with governments and peers to build on COP28 momentum at COP29 and beyond. By working together and taking the actions outlined in this letter, we can drive more action on climate and avoid every fraction of a degree of warming.

Source:norvanreports.com