A showdown is brewing over money, oil and carbon. Here’s what’s at stake at the COP28 climate summit

Policymakers and business leaders from across the globe are set to arrive in Dubai in the United Arab Emirates for the world’s biggest and most important annual climate conference.

The COP28 summit, which starts on Thursday and is scheduled to run through to Dec. 12, will provide a critical forum for government officials, business leaders and campaign groups to accelerate action to tackle the climate crisis.

The pressure to deliver is immense. Global temperatures and greenhouse gas emissions continue to break records, with no continent left untouched by more frequent and intense extreme weather events.

Here’s a look at what’s at stake at COP28.

Climate finance is always a hotly debated talking point at the U.N. summit and COP28 promises to be no different. It refers to the financing needed to support efforts to both significantly reduce emissions and adjust to the effects of climate change.

Talks in Bonn, Germany earlier in the year became gridlocked over this issue of finance and support, with some low-income countries refusing to talk about slashing emissions unless there was an equal focus on how wealthy nations would provide cash to them.

It laid the groundwork for what one environmental group expects to be a “huge fight” between high-income and low-income nations at COP28.

Data published by the Organization for Economic Cooperation and Development in mid-November, however, showed that rich countries had finally fulfilled their promise to provide $100 billion a year to low-income countries — albeit two years after the deadline. It is hoped that this could go some way to fostering goodwill at the summit.

“COP28 has a massive role to play in setting the political direction for a transformational shift in climate ambition. But without finance and economic confidence, countries won’t be able to act at the pace and scale needed,” said Alex Scott, program lead at E3G, an independent climate think tank.

Another major financial issue will be to operationalize the so-called “loss and damage” fund, arguably the main legacy of last year’s COP27 summit in Egypt.

Rich countries, despite accounting for the bulk of historical greenhouse gas emissions, have long opposed the creation of a fund to compensate low-income countries for the loss and damage they’ve caused.

Advocates argue, however, that it is required to account for climate impacts — including hurricanes, floods and wildfires or slow-onset impacts such as rising sea levels — that countries cannot defend against because the risks are unavoidable, or the countries cannot afford it.

The establishment of the loss and damage fund at COP27 was seen as a historic breakthrough and potential turning point in the climate crisis, although many key details were left unresolved — such as who should pay into the fund, how large should it be and who should administer the money.

Countries reached a consensus on how to approach loss and damage payments during tense discissions that ran into overtime earlier this month. Yet it remains to be seen whether this fragile agreement can hold for countries to successfully operationalize the fund in the UAE.

“Billions of people, lives and livelihoods who are vulnerable to the effects of climate change depend upon the adoption of this recommended approach at COP28,” Sultan al-Jaber, president-designate of COP28, said in a statement on Nov. 5.

Al-Jaber was seen as a controversial choice to lead COP28 discussions in Dubai given that he also works as the head of the state-run Abu Dhabi National Oil Company.

Climate activists criticized his appointment saying his position as an oil executive reflects a clear conflict of interest — akin to “putting the fox in charge of the henhouse.” His office has said he will play a pivotal role in the intergovernmental discussions to build consensus at the event.

Melanie Robinson, global climate program director at the World Resources Institute, said COP28 will be the biggest accountability moment for climate action in history — and fossil fuels will be at the heart of the talks.

She anticipated three main debates around the use of oil, gas and coal — the burning of which is the chief driver of the climate crisis.

“So, one is this ‘phase out’ or ‘phase down’ [of fossil fuels]. Actually, for us at WRI, since neither of those has got a timeline, the most important thing for us is that whatever language they agree to, it needs to send a really strong signal that the world is rapidly shifting away from fossil fuels and it will do so equitably,” Robinson told CNBC via telephone.

“The second, but perhaps slightly linked, issue is whether it is ‘abated’ or ‘unabated.’ There’s a whole debate about the role of carbon capture technology abating emissions and there are certainly some oil companies and producer countries who would try to have us believe that with CCS [carbon capture and storage] we can continue to burn fossil fuels and still achieve our climate goals,” she continued.

“We think the science suggests that is simply not true. There is no credible scenario where CCS will allow continued use of fossil fuels, let alone expanding oil and gas. So, for us, it is important that COP28 acknowledges the limited role CCS will play.”

Abated fossil fuels refer to the process in which emissions are captured and stored with carbon capture and storage technologies. The definition of unabated fossil fuels lacks clarity, despite the term cropping up in several climate commitments, but it is said to refer to fossil fuels produced and used without interventions to substantially reduce the amount of emitted greenhouse gases.

Robinson said the third talking point on fossil fuels was that there is a risk Dubai “could become a platform celebrating pledges from the oil and gas industry that fail to curb the emissions of their products.”

She warned that any net zero pledge from the oil and gas industry that doesn’t involve so-called Scope 3 emissions would not be significant. Scope 3 emissions refer to the emissions produced from across a company’s entire value chain, and often account for the lion’s share of a firm’s carbon footprint.

“For us, it’s a bit like a cigarette company saying that whatever happens to cigarettes after they leave the factory gate has got nothing to do with them. So, that I think we have to watch,” Robinson said.

One unique component of the Dubai climate talks is the conclusion of the first global stocktake since the landmark Paris Agreement — the 2015 accord that aims to limit global heating to 1.5 degrees Celsius (2.7 degrees Fahrenheit) above pre-industrial levels.

The world has already warmed by around 1.1 degrees Celsius, scientists say, after over a century of burning fossil fuels as well as unequal and unsustainable energy and land use. Indeed, it is this temperature increase that is fueling a series of extreme weather events around the world.

The stocktake is the main tool through which progress under the Paris Agreement is assessed. According to the U.N. global stocktake synthesis report released in early September, only transformational change will be enough to get the world back on track to meeting its climate goals.