The two-week summit in Belém highlighted deep divisions between countries that push for rapid electrification and those that rely on oil and gas. Brazil, which hosted the talks, sought a commitment to a “just and orderly” transition away from fossil fuels. Instead, the final text only repeated earlier language from COP28 on “transitioning away from fossil fuels.”
Brazil and 86 countries, including the EU and major exporters such as Norway and Australia, announced plans to develop fossil fuel transition roadmaps outside formal negotiations.
“This fragmented approach leaves transition risks high but also creates opportunities in clean energy and transition finance,” says Gregor Vulturius, a senior advisor on climate and sustainable finance in SEB.
Read a more extensive comment by Gregor Vulturius (SEB Research)
Climate finance was a key focus
Brazil presented a roadmap to meet the New Collective Quantified Goal agreed last year: mobilising 300 billion dollars annually in concessional finance and 1.3 trillion dollars in total climate funding by 2035. A new blended finance platform for tropical forest protection, the Tropical Forest Forever Facility, was launched with 25 billion dollars in first-loss capital aimed at attracting 100 billion dollars from private investors.
Carbon market talks under Article 6 made limited progress. (Article 6 is the section of the Paris Agreement that governs international carbon markets.) Countries were urged to improve transparency in bilateral carbon trading agreements. The EU’s target to cut emissions by 90 per cent by 2040 will partly rely on international carbon credits, creating long-term demand.
Despite a political headwind, clean energy investments continue to gain momentum. Global clean energy spending is expected to reach 2.2 trillion dollars in 2025 – six times 2015 levels and double of the fossil fuel investment this year. According to the International Energy Agency, aggressive decarbonisation could lower household energy costs in advanced economies over the next decade.
“However, the failure to agree on a phase-out of fossil fuels signals a disorderly transition,” says Gregor Vulturius.
He notes that global warming is now projected to reach 2.6 degrees Celsius under current policies, increasing the risks of severe climate impacts and making adaptation measures, such as water management and heat resilience, critical for competitiveness.
Read a more extensive comment by Gregor Vulturius (SEB Research)