What to expect at the COP30 climate summit?

Talking Heads with Thibaut Clisson

Daniel Morris: Hello and welcome to the BNP Paribas Asset Management Talking Heads podcast. Every week, Talking Heads will bring you in-depth insights and analysis through the lens of sustainability on the topics that really matter to investors. In this episode, we’ll be discussing the COP30 Climate Summit. I’m Daniel Morris, Chief Market Strategist, and I’m joined today by Thibaud Clisson, Climate Change Lead. Welcome Thibaud, and thanks for joining me.

Thibaud Clisson: Hi Daniel. It’s a pleasure to be here.

DM: Thibaud, the COP30 Climate Summit is taking place in Brazil in November. This Conference of the Parties, or COP, is attended by countries that signed the United Nations Framework Convention on Climate Change, an agreement made in 1992 when countries agreed that they would avoid any behaviours that could lead to dangerous climate change. It is one of the biggest climate change events of the year and is attended by world leaders, environmental campaigners, and asset managers. To start off, can you remind us what the COPs are and why they are needed?

TC: The COP, or Conference of the Parties, is the main decision-making body of the United Nations Framework Convention on Climate Change, which is usually called the U-N-F-C-C-C.

Each year, representative of nearly every country in the world gather to assess the progress in dealing with climate change, negotiating new commitments, and coordinate global actions. COPs play a crucial role in setting international climate policy, fostering cooperation and holding countries accountable for their climate pledges.

The ultimate goal is to drive collective efforts to limit global warming and address the impact of climate change. Last year, the COP was in Baku, in Azerbaijan, and this year, it’ll happen in Brazil, in Belem.

DM: Thank you. That was very helpful. Can you give us some context for the next COP meeting?

Thibaut: The 30th COP meeting will take place from November 10 to 21 and it will mark the 10th anniversary of the Paris Agreements reaching in 2015, during COP 21. After the wave of enthusiasm that came with the Paris Agreement, we can only notice that the numbers do not look so good. Greenhouse gas emissions have never been so high. They’re still growing. The United States will once again withdraw from the agreement just one month after COP30. There have been some jurisdictions around around the world which have introduced tweaks to the previous climate commitments and regulations. So, there is a kind of de-prioritisation of climate change fighting.

Normally, all the signatories should have submitted their pledges for the 2035 reduction targets. By the date of the deadline, 95% of the countries have missed this deadline. This signals the lack of commitment on climate from global leaders. More and more stakeholders are asking themselves if 1.5 degrees is still achievable. In June, usually there is a meeting in Bonn in Germany, which is supposed to set the tone for the COP. There was limited progress on all the hot topics which has raised a lot of concern on the ability of COP30 to reach concrete outcomes. This COP will take place in a rich oil-producing country. This was the case last year and the year before. But in the same time, Brazil is working hard to make it a success. We need to recognize that the energy transition has accelerated. In Europe, the power system has decarbonised a lot. Solar and wind are now the cheapest options. Despite all the controversies around the previous COP, it’s fair to say the fact that COPs still exist is a positive signal. It means that multilateralism is not completely dead. There has been a deal on nuclear, a deal on rules for international carbon trading and better collaboration between North and South on nature conservation and climate change mitigations. Developed countries will allocate more than $300 billion per year in climate finances to help developing countries to face the impact of climate change. So, there is still a lot of positive signals.

DM: From your point of view, what are the hot topics for this COP? What are the priorities?

TC: In terms of topics, I mentioned developed countries have committed to deliver $300 billion annually by 2035 to finance climate change mitigation and adaptation measures in developing countries. A great signal because it was three times higher than the previous number, but developing countries were expecting it to be much higher. Brazil work on what is called the from Baku to Belem roadmap, whose goal is to bring the 300 billion commitment to $1.3 trillion per year. So, climate finance flows towards developing countries will definitely remain one of the hottest topics. Given the turbulent geopolitics with a refocus on defense, with budget constraints, with biggest greenhouse gas emitters stepping back and with a reduced focus on climate from policymakers around the world, we have some doubts on the outcome on that topic.

The other big topic as mentioned at the beginning: members of the U-N-F-G-C were supposed to come in February with their 2035 reduction target. We are still missing a lot of them. Only 26 countries have sent their 2035 indices. The US was among those, which is quite ironic, knowing that they will get rid of the Paris Agreement just one month after the COP. Europe has not yet officially submitted their reduction target. This is not a good signal.

Another topic which will be quite big will be deforestation. Obviously, this COP is happening in the middle of the Amazon, so there is a symbolic dimension. Brazil really wants deforestation to be high on the agenda. They would like to develop what is called a tropical forest forever facility which is a $125 billion conservation fund.

There will be discussions around setting up a global carbon pricing framework, trying to make sure that carbon credits deliver real emissions cuts.

One of the other topics is adaptation. At the previous COP, they announced what is called the global goal on adaptation which aims to address the gap in financing. We expect that during this COP, maybe there will be improvement on that front. On adaptation, we don’t have metrics, no concrete and measurable indicators to track what countries are doing to adapt to a warming climate. So, a lot of work needs to happen on adaptation. One of the big challenge for adaptation is the fact that most of the financial support comes from developed countries to support adaptation in developing countries.

The other topic that could be addressed will be around Just Transition. Who will pay for countries who are suffering from the effect of climate change?

DM: Thibaud, you explained to us that the COP30 will mark the 10th anniversary of the Paris Agreement. You acknowledge the challenges faced by climate change initiatives right now. But you noted that energy transition nonetheless has accelerated over the last 10 years. You pointed to how hard Brazil is working to make this COP a success. You see still a lot of positive signals and if anything, potential for positive surprises. In terms of priorities you highlighted climate financing for emerging markets. Well, Thibaud, thank you very much for joining me.

TC: Thank you, Daniel. It was great to be here today.

Daniel: That’s it for this week’s episode of Talking Heads. If you would like more information about sustainability matters, please reach out to your BNP Paribas Asset Management contact or check out Viewpoint, our website for investment insights at viewpoint dot BNP Paribas dot com. Just before we go, I’d like to mention that the Talking Heads podcast is available on Spotify and on YouTube. For YouTube, visit youtube.com/bnp/playlist, click on Talking Heads. You’ve been listening to the BNP Paribas Asset Management Talking Heads podcast with me, Daniel Morris, and Thibaud Clisson, Climate Change Lead. Please do join me next week. Until then, take care.