Renewable hopes for COP 28

COP28: The world’s biggest climate conference starts Nov. 30, with another push to accelerate carbon transition investments, that may help the sectors derated stocks out of their deep funk. The 28th annual two-week UN climate conference starts in Dubai with low expectations but huge needs. Focus will be on the five-yearly global stocktake (GST) of progress, funding the ‘loss and damage’ fund for emerging markets, and hinge on the stance of China and India. A redoubled effort is crucial with the world running behind most targets, 2023 temperatures the highest ever, and needed climate investment 3-6 times current levels. @RenewableEnergy.

INVESTMENT: The COP focus is to drive the three 2015 Paris agreement goals. 1) Limit global temperature rise to 1.5 °C above pre-industrial levels. 2) Build resilience to climate change. 3) Encourage financial flows to the carbon transition. This 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 need to more than double to $4.3 trillion by 2030 to put on course to reach net zero. By contrast, fossil fuel investments are flatlining at a lower $1.1 trillion and plunging to $0.4 billion by 2030.  

RENEWABLES: The stock market reaction has been the opposite for 3 years (see chart). The Ukraine war drove high oil prices and renewables derated from lofty 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 still rising up the public’s agenda, despite strong competition from recession fears and still-high inflation. 19% globally now see it as the top worry, per IPSOS. Renewables also remain the top retail investor thematic investment focus, despite the recent poor performance.

All data, figures & charts are valid as of 15/11/2023.