Cop28 keeps 1.5°C goal within reach

20 December 2023

 

The 28th Conference of the Parties of the UN Framework Convention on Climate Change (Cop28), helmed by the UAE’s Sultan al-Jaber, stopped short of recommending the phasing down of fossil fuels, which was on the wish list of half of the countries that ratified the Paris Agreement eight years earlier, and which were present at the 2023 climate summit in Dubai.

However, the conference scored a major victory by referencing, for the first time since Cop started, the need to transition away from fossil fuels to keep the 1.5-degree-Celsius temperature goal alive.

With few exceptions, the Cop28 UAE climate agreement – or the UAE Consensus, as Al-Jaber prefers to call it – has been described by world leaders as historic.

The UN Framework Convention for Climate Change said the agreement signals the “beginning of the end of the fossil fuel era by laying the ground for a swift, just and equitable transition, underpinned by deep emissions cuts and scaled-up finance”.

“We are standing here in an oil country, surrounded by oil countries, and we made the decision saying let’s move away from oil and gas,” Denmark’s Climate & Energy Minister, Dan Jorgensen, said after the final climate text was adopted on 13 December.

Phasing down or out

After campaigning for the final text of the agreement to exclude the phasing down or phasing out of fossil fuels, reports say that Opec member Saudi Arabia appears satisfied with the outcome.

According to a report by Reuters, Saudi Arabia views the agreement as akin to a menu that allows every country to follow its own pathway to the energy transition.

Opec members account for close to 80 per cent of the world’s proven oil reserves, along with about a third of global oil output. Phasing fossil fuels out threatens the members that have not yet diversified their economies away from oil revenues.

As expected, the least-developed countries and islands that are most vulnerable to climate change wanted more from the Cop28 agreement. 

“It reflects the very lowest possible ambition that we could accept, rather than what we know, according to the best available science, is necessary to urgently address the climate crisis,” said Senegal’s Climate Minister, Madeleine Diouf.

“The agreement highlights the vast gap between developing-country needs and the finance available, as well as underscoring rapidly dwindling fiscal space due to the debt crisis,” she explained. “Yet it fails to deliver a credible response to this challenge.”

Despite opposing views, various research and studies, including those conducted by the International Panel for Climate Change, confirm that human activities – with burning fossil fuels at the top of that list – contribute to global warming to a huge extent.

Taking the carbon from the environment, or replacing fossil fuels with non-carbon emitting alternatives, are seen as a key solution to keep the ocean levels from rising as icebergs dissolve, or to avoid extreme weather events such as droughts or flooding.

Some experts say that even the 1.5-degree-Celsius target will not entirely rule out the more frequent occurrences of catastrophic events, based on today’s environmental scenario, when the temperature is estimated to be at 1.06 degrees Celsius above pre-industrial levels.

In September, for example, thousands of lives were lost in Derna, Libya, when a storm swept through the region. Experts said Storm Daniel drew energy from extremely warm seawater in the Mediterranean, causing unexpected heavy rainfall that overwhelmed two dams in the area.

Phasing fossil fuels out threatens Opec members that have not yet diversified their economies away from oil revenues

Next steps

Beyond the initial reactions and responses, many agree that the Cop28 text will provide momentum for a global energy transition, and will have a fair impact on hydrocarbons-producing countries in the Gulf.

A Dubai-based consultant focusing on energy projects and investments tells MEED: “It is a step in the right direction, and if the implementation leads to positive gains, it will allow confidence to deepen.

“There is a lot of talk about how it is watered down with regards to fossil fuel use, but we need to give the Middle Eastern countries the time to transition to new revenue sources, otherwise we only bring economic fragility to an already politically fragile region,” the consultant adds. “That is in nobody’s interest.”

The consultant warns against using the text as an excuse to put new money into polluting projects, however. “We need a more robust methodology for new capital commitment to ensure that it goes into clean projects,” she notes.

Karen Young, a senior research scholar at the Centre on Global Energy Policy at Columbia University in the US, agrees. “I think the final language was obviously a concession to oil and gas producers, but also a push to make them more accountable,” she says.

The language implies a shift in demand. “Gulf producers reason that they will be able to meet the tail-end of that demand curve more efficiently and with fewer emissions than their competitors,” adds Young. 

“That logic has not changed, and the timeline is, of course, totally dependent on technology, finance and how quickly and in what geographies that demand curve moves.”

Over the short term, the Cop28 agreement is not expected to result in any real change to the Gulf economies, except in terms of domestic infrastructure, where momentum will likely grow for more renewables deployment; more carbon capture, utilisation and storage (CCUS); and new investment in – and export of – liquefied natural gas, ammonia and hydrogen.

There will also be continued competition for market share and market management of oil, according to Young. 

Loss and damage

The call to transition away from fossil fuels was not the only accomplishment at Cop28.

The agreement called on the parties to contribute to tripling renewable energy globally and doubling the global annual rate of energy efficiency improvements by 2030, as well as accelerating efforts towards the phase-down of unabated coal power.

It also rallied the parties to reduce methane emissions and accelerate zero- and low-emission technologies, including renewables, nuclear and abatement and removal technologies such as CCUS, particularly in hard-to-abate sectors, as well
as in the production of low-carbon hydrogen.

Equally important, Cop28 managed to secure $89bn in pledges covering climate finance, local climate action and the Loss and Damage Fund.

Lisa Jacobson, president of the US-based Business Council for Sustainable Energy, tells MEED that the agreement on the Loss and Damage Fund early in Cop28 demonstrated a commitment by governments to assist the most vulnerable countries as they cope with the impacts of climate change.

Jacobson, like many others, expects the pledges – which some analysts say equate to only about 0.2 per cent of the necessary funding – to grow in time.

Unlike the funds that focus on climate mitigation and adaptation projects, the Loss and Damage Fund addresses the needs of communities or countries that have already sustained economic losses due to extreme weather events like floods, droughts or wildfires.

“The Loss and Damage Fund operationalisation has been critical … other financing pledges have also been important,” says Jessica Obeid, a partner at New Energy Consult. “Yet the critical factors are the processes [for] eligibility, among others, which remain to be seen, along with moving from pledges to commitments and disbursements. 

“In all cases, the commitments still fall short of the required financing for climate change mitigation and adaptation measures.”

The next step for Cop will have to include developing transparent eligibility and allocation criteria and simplified application processes, as well as building domestic capacity, says Obeid. “Leveraging further financing is also key, and may require institutional and technical assistance.”

Cop28 secured $89bn in pledges covering climate finance, local climate action and the Loss and Damage Fund

Coalition of the willing 

Despite Cop28’s historic substance and intent, a healthy dose of cynicism remains. “Cop has been around for nearly 30 years, yet emissions have continued to increase year after year,” a UAE-based business leader tells MEED.

From this vantage point, the forging of a coalition of the willing – or several coalitions of the willing – could be the best way to deliver the energy transition without exceeding the 1.5-degree-Celsius temperature goal.

An example of this is the more than 125 countries that have signed on to the pledge to triple renewable energy capacity globally and double the energy efficiency improvement rates by 2030. While such agreements are non-binding, a willing coalition will help encourage others to pursue those pledges. 

“That is an example of a coalition having a strong impact and working effectively to elevate the issue they are advocating for, and creating a platform for countries and stakeholders to identify emission reduction and adaptation strategies,” concludes Jacobson.

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Jennifer Aguinaldo
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    26 June 2026

     

    The Iranian drone strike on Kuwait International airport on 3 June was a reminder of the severity of the threat that Gulf aviation has faced. The attack caused significant structural damage to Terminal 1 and wounded several individuals. It was the third drone strike on the hub in recent months.

    Kuwait has not been alone. After the conflict erupted on 28 February, Iranian strikes targeted some of the region’s most important aviation infrastructure. Dubai International airport, Zayed International airport in Abu Dhabi and Hamad International airport in Doha have all been hit. The attacks caused unprecedented disruption: between 28 February and 5 March alone, more than 15,000 flights were cancelled across seven major regional airports, affecting over 1.5 million passengers. 

    Although the Gulf’s national carriers have resumed services, many international airlines have yet to return.

    Aviation is crucial for the region. The sector is one of the most important drivers of economic growth across the GCC. In Dubai, it contributed an estimated AED137bn ($37bn), or 27% of GDP, in 2024 and supported 631,000 jobs. Those figures are expected to rise to AED196bn and 816,000 jobs by 2030. In Saudi Arabia, Vision 2030 targets 330 million annual passengers, connectivity to more than 250 destinations and air freight capacity of 4.5 million tonnes a year. The sector’s economic contribution is targeted to reach $74.6bn by 2030, up from $21.3bn.

    Sector deteriorating

    The financial community has been quick to update its assessment of the sector’s prospects. Fitch Ratings revised its global airport sector outlook from ‘neutral’ to ‘deteriorating’ in early June. The agency said the conflict has increased uncertainty over regional airspace availability, airline operations and travel demand, with implications for route stability and traffic quality.

    Fitch’s assessment is a warning sign for the Gulf. The region’s major airports have built their business models on international connectivity, long-haul flying and transfer traffic – precisely the categories Fitch identifies as most exposed to rerouting risk and weaker visibility on demand. Gulf hub operators also face the prospect of further airspace restrictions affecting routes linking Asia, Europe and Africa.

    The knock-on effects extend beyond airline revenues. Transfer passengers are also the highest-spending travellers in duty-free, retail and food and beverage outlets. Fitch noted that some Asia-Pacific airports have already begun benefiting from the redistribution of transit and long-haul traffic away from disrupted Gulf hubs.

    The global body representing airlines, the International Air Transport Association (Iata), was equally downbeat when it released its latest financial outlook on 8 June. The organisation now expects the global airline industry to achieve a combined net profit of $23bn in 2026 – roughly half the $41bn previously projected and about half the $45bn estimated for 2025. The net profit margin is forecast at 2%, compared with the earlier projection of 3.9% and last year’s 4.2%. Net profit per passenger is expected to be $4.50, down from $9.10 in 2025.

    “War-related disruptions in the Middle East and rising fuel costs have shifted the outlook for airlines to the worse,” said Willie Walsh, Iata’s director general. “At the regional level, all are in the black but with sharply reduced financial performance, with the exception of the Middle East. The Gulf carriers face operational uncertainty following a near complete shutdown of airspace at the outbreak of the war. These carriers are doing an amazing job maintaining connectivity, but major financial impacts are unavoidable.”

    Fuel costs are a key part of the problem. Jet fuel prices are expected to average $152 a barrel for the year – an increase of almost 70% on the $90-a-barrel average recorded in 2025. The crack spread, or the premium for jet fuel over Brent crude oil, is expected to average $57 a barrel, an historic high. Total fuel costs for the global airline industry are forecast to rise by nearly 40% from $252bn in 2025 to $350bn in 2026. This is based on an expected average Brent crude oil price of $95 a barrel for the year, up 37% from $69 in 2025. Overall, industry operating expenses are expected to grow by 13% to $1.117tn, outpacing total revenue growth of 9.4% to $1.165tn.

    Fitch also raised concerns about the availability of jet fuel in Europe, noting potential disruption to Middle Eastern supply chains. While the agency expects European fuel reserves to cover the summer months even if the Strait of Hormuz remains effectively closed, it cautioned that winter operations could prove more challenging if the disruption persists. Higher airfares and fuel surcharges could further weigh on near-term demand – a headwind for Gulf airports that have benefited in recent years from the restoration of long-haul leisure travel following the Covid-19 pandemic.

    The insurance market adds another layer of complexity. Aviation policies typically grant insurers the right to cancel cover during active conflict, and the terms on which cover is being extended in a region that has seen airports repeatedly targeted are likely to be materially more expensive than before.

    Jet fuel prices are expected to average $152 a barrel for the year – an increase of almost 70% on the $90-a-barrel average recorded in 2025

    Carrier optimism

    The Gulf’s airlines are more optimistic about the future. Abu Dhabi’s Etihad Airways said in early June that it is operating at 90% of its pre-war available seat kilometres – the key industry capacity metric – and that by 15 June the airline will surpass 100%. Planes are 84% full, and crucially, fares are back at pre-war levels. Officials at the airline say that demand for transit through Abu Dhabi from Paris to Asia is running so strongly that the airline is laying on two of its A380 aircraft a day on that corridor from July. 

    While the expectation in the industry outside the Gulf had been that carriers such as Etihad and Emirates would need to discount heavily to entice passengers back after the ceasefire, Etihad has said that it does not expect prices to come down.

    The airline will not be entirely unscathed. Etihad had been on course to deliver a 10% operating margin in 2026, up from 8% in 2025, but that target will now be missed. The airline was badly hit in March, April and May and will not be fully back on track until August.

    Dubai’s Emirates Group released its 2025-26 annual results in May, which confirmed the airline’s status as the world’s most profitable carrier for the reporting year. The group posted a record profit before tax of AED24.4bn ($6.6bn), up 7% year-on-year, on revenues of AED150.5bn, also a record. 

    Unprecedented situation

    The context is important: the results cover the financial year to 31 March 2026, meaning only the final month of March was affected by the conflict. For the first 11 months, the group was surpassing its targets every month. March then brought what Emirates’ chairman and chief executive Sheikh Ahmed Bin Saeed Al-Maktoum described as an “unprecedented situation”. Emirates was flying just 58% of its capacity by 31 March.

    Despite the disruption, the results illustrate the depth of the financial cushion the group has built. Emirates also announced a 20-week salary bonus for employees – far exceeding the 13-week payout that had been linked to performance targets. For the year ahead, Sheikh Ahmed said Emirates would continue taking aircraft deliveries and pressing ahead with its retrofit programme, without resorting to “knee-jerk cost control measures”. The group has hedged its fuel exposure through to 2028-29. “Our fundamentals are strong,” he said.

    On 8 June, Riyadh Air – the airline backed by Saudi Arabia’s Public Investment Fund – announced five new destinations: Cairo, Dubai, Jeddah, Madrid and Manchester, coinciding with the arrival of its first three Boeing 787-9 Dreamliner aircraft. The airline also moved up its inaugural London flight from 1 July to 10 June. 

    The airline will play a key role in delivering Saudi Arabia’s ambition to develop Riyadh into a global aviation hub and to position the kingdom as a major connecting point between East and West. The carrier has set a target of connecting Riyadh to more than 100 destinations worldwide by 2030. Pressing ahead with new routes and aircraft deliveries amid regional turbulence sends a signal that Saudi Arabia’s aviation ambitions are not for deferral.

    Future direction

    Looking ahead, there appears to be diverging fortunes for the sector. Globally, analysts say point-to-point leisure airports are typically better positioned than large hubs reliant on transfer traffic and international corridors, and this may also play out across the Middle East. Airports with a large share of local origin-and-destination demand may prove better insulated compared with the major connecting hubs whose business models depend on stable long-haul routings. 

    For the Gulf’s flagship hub carriers, including Emirates, Etihad and Qatar Airways, state ownership and strong backing mean that the question is less about survival and more about how long it will take to restore the full confidence of international airlines and their passengers. 

    Much remains uncertain. A ceasefire is in place and, as Sheikh Ahmed noted in the Emirates annual report, there are hopes for “a clear resolution to the hostilities soon, and a return to market stability”. But the drone attack on Kuwait shows that the threat from Iran to the region’s aviation infrastructure has not been neutralised. The coming months will be crucial in determining the long-term trajectory of Gulf aviation. 

    Dubai and Riyadh reaffirm airport ambitions

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  • Etihad Rail to begin passenger rail operations from 30 June

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    Abu Dhabi’s Etihad Rail is set to begin passenger rail operations on 30 June 2026, launching an introductory operational phase on the Abu Dhabi-Fujairah route. Tickets are already on sale through the operator’s digital platforms.

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    • Comfort: guaranteed seating, Wi‑Fi, power at every seat and luggage space
    • Premium: wider reclining seats, extra legroom and complimentary refreshments

    Within each class, passengers can choose from three fare types based on flexibility:

    • Saver: lowest fare for fixed plans; available only via the app, booking website and contact centre
    • Value: includes complimentary seat selection and ticket changes
    • Flex: includes seat selection, ticket changes and refunds

    Etihad Rail said introductory fares are designed to encourage early uptake and will be available for a limited period, with pricing expected to transition “towards a more advanced fare structure and, ultimately, a broader fare framework” as the service matures.

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    • Abu Dhabi to Fujairah: 105 minutes
    • Abu Dhabi to Dubai: 57 minutes
    • Dubai to Fujairah: 69 minutes

    Train features include generous legroom, Wi‑Fi, power at every seat, foldable tray tables, overhead storage, space for larger baggage and accessibility provisions. Station features include clear signage, comfortable waiting areas, staff assistance, accessibility features and parking.

    Etihad Rail said the onboard experience is designed around “comfort and time well spent”, enabling passengers to work, relax or switch off in a “calm and spacious environment” with guaranteed seating, Wi‑Fi and charging points.

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