COP 28, the world’s biggest climate conference starts November 30th, with another push to accelerate carbon transition investments, which may help move the sectors’ derated stocks out of their deep funk. At this edition Romania president, Klaus Iohannis will have a speech on December 4th, writes eToro analyst for Romania, Bogdan Maioreanu.
The Dubai conference, taking place amid heightened global tensions, starts with low expectations but huge needs for clear results. Focus will be on the five-yearly global stocktake (GST) of progress. The global stocktake is a process for countries and stakeholders to see where they’re collectively making progress towards meeting the goals of the Paris Climate Change Agreement – and where they’re not.
The meeting will also discuss funding the ‘loss and damage’ fund for emerging markets, and address the equivocal stances of China and India – first and third contributors in global greenhouse gas emissions. A redoubled effort is crucial with the world running behind most targets, with 2023 temperatures the highest ever recorded, and needed climate investment 3-6 times current levels.
The COP focus is to drive the three 2015 Paris agreement goals: limit global temperature rise to 1.5 °C above pre-industrial levels, build resilience to climate change and encourage financial flows to the carbon transition.
Despite the clear signs of accelerating climate risks and impacts worldwide, the adaptation finance gap is widening and now stands at between US$194 billion and US$366 billion per year. Adaptation finance needs are 10–18 times as great as current international public adaptation finance flows – at least 50 per cent higher than previously estimated, it is mentioned in the UN adaptation gap report 2023.
That is why we could see COP 28 significantly raise their solar and wind adoption targets and double the annual energy efficiency improvement goal. Clean energy investments globally total $1.8 trillion this year, up 40% the past two years. But they need to more than double to $4.3 trillion by 2030 to put the world on course to reach net zero. By contrast, fossil fuel investments are flatlining at a lower $1.1 trillion and are forecast to plunge to $0.4 billion by 2030.
The stock market reaction to renewables has been the opposite for the past 3 years. The Ukraine war drove high oil prices and renewables decreased from high valuations. This reset is hopefully near complete. Global renewables valuations are down 70% from peak, now cheaper than the market, as interest rates peak and the long-term growth outlook builds. Climate concerns are one of the biggest worries in their country for one in five (19%) respondents and it ranks seventh out of 18 worries in a recent IPSOS survey.
Renewables also remain the top retail investor thematic investment focus, despite the recent poor performance of the sector on the financial markets. More than 40% of Romanian investors are considering “clean technology”, including EV, batteries, renewables as part of their long term investment portfolios, according to the latest eToro Retail Investor Beat survey.
