COP28: Urbanization and transport

As the conference gets underway, McKinsey Sustainability recaps the news and announcements leaders need to know.

December 6, 2023Today, COP28 focused on multilevel action, urbanization, the built environment, and transport. Cities are critical settings for action on climate adaptation and mitigation: Urban areas are home to over 55 percent of the world’s population and account for 75 percent of total global CO2 emissions. There is momentum toward net zero on many topics that matter for cities, like the built environment and transport.

Attention at COP28 will increasingly shift towards the negotiations, where countries are seeking to agree on a response to the Global Stocktake—the "score card” which indicates that the global community is not on track to achieve Paris Agreement goals.

Here, we recap the announcements on urbanization, the built environment, and transport. Note: Tomorrow is rest day at COP28. We’ll return with our COP28 Daily Pulse on Dec. 8.

News and announcements

Urbanization

City and local governments are often responsible for overseeing climate actions and are already driving mitigation and adaptation. But acceleration is needed. At this COP, there have been announcements aimed at enhancing NDCs and collaboration between cities.

Enhancing NDCs: 64 countries joined the Coalition for High Ambition Multilevel Partnerships (CHAMP) for Climate Action, committing to partner with subnational governments to enhance the next round of Nationally Determined Contributions (NDCs) and other climate plans. The Global Stocktake suggests that the NDC could be more ambitious. Given that local authorities often have responsibility for high emissions sectors like public transport or construction, including them in the NDCs is an opportunity to improve planning and implementation of emissions reduction plans.
City collaboration: The Local Climate Action Summit, the first of its kind, hosted more than 250 mayors and governors and mobilized $467 million for urban climate action—financing urban infrastructure and subnational climate action.

Built environment

The built environment is responsible for about a quarter of the world’s greenhouse-gas (GHG) emissions. Our research has identified 22 levers that could potentially reduce overall emissions from the built environment by up to 75 percent if implemented at scale in the next five to ten years.

Cement and concrete decarbonization: Canada and the UAE launched the Cement and Concrete Breakthrough. Cement contributes ~7 percent of global emissions, but the sector is not on track to reach net zero. Novel decarbonization solutions are emerging, from new applications of carbon capture, utilization, and storage (CCUS) to innovative material deployment, but require collaboration across the ecosystem to scale. This initiative could speed up progress toward net-zero cement by accelerating investment and collaboration across the value chain.
Building decarbonization: 27 countries and UNEP launched the Buildings Breakthrough, an effort aimed at near-zero emissions and resilient buildings by 2030. Under the Buildings Breakthrough, UNEP and partners will undertake an annual assessment of global progress in the sector, closely aligned with the annual Global Status Report for Buildings and Construction.
Green procurement: Governments are responsible for a large share of total procurement. For example, the UK government represents 15 percent of the UK steel market. Today, the United Kingdom, United States, Canada, and Germany signed the Green Public Procurement Pledge, committing to drive demand for low and near-zero-emissions steel, cement, and concrete through public procurement; and to develop and use harmonized emissions accounting standards and definitions for construction materials. In Canada, green procurement standards enforcing the use of low-carbon concrete in new government construction could reduce the annual energy consumption of cement for buildings by around 17 percent within seven years.

Transport

Transport produces 23 percent of global energy-related CO2 emissions and is a major source of local outdoor air pollution.

Green shipping: Shipping currently accounts for 2 percent of all emissions and the sector is not on track to meet Paris Agreement goals. The Green Shipping Challenge made several announcements: a number of Green Shipping Corridors have been opened between the United States, the United Kingdom, Canada, and South Korea; regulatory commitments have been made (such as the Australia Maritime Emissions Reduction National Action Plan); and Norway will invest $20 million to support emerging markets in decarbonizing shipping.
Hydrogen for shipping: 30 leaders in shipping signed a Joint Commitment to enable the use of renewable hydrogen-derived shipping fuel this decade to meet maritime industry decarbonization targets. The commitment includes supporting the IMO’s revised target of 70-80 percent emissions reduction by 2040, and cargo owners’ commitment to only use zero-emission freight services by 2040. These announcements follow a number of others at this COP, including the UAE Hydrogen Declaration of Intent, an agreement by 39 countries to develop a global hydrogen certification standard.
Zero-emission buses: Partners in the Collective for Clean Transport Finance agreed to spearhead lighthouse projects on global deployment of zero-emission buses, medium and heavy-duty freight, and two- and three-wheeler electrification.

McKinsey at COP28: Insights from our events

How can leaders partner to accelerate the transition towards zero-emission mobility? McKinsey’s Swarna Ramanathan, Eric Hannon, and Mikael Hanicke moderated a discussion with diverse sector leaders on the challenges and opportunities in decarbonizing the transport sector.

On an ecosystem approach: Leaders need to think about a transport ecosystem, not just zero-emission vehicles (ZEVs). With the vehicles transition falling behind on global targets for 2035, Mikael pointed to the important role of enabling infrastructure to advance progress: “We need to prioritize building out the EV infrastructure faster and build an ecosystem of players to ultimately make end-to-end transportation work for consumers in a more efficient manner.”
On decarbonizing upstream emissions: To reach net zero, we also need to decarbonize the upstream emissions from ZEVs—and rethink component design, supply chains, and material choices. Panelists suggested the end goal should be cost-efficient circularity.
On consumer appetite: Consumers are ready—but progress varies by region. One executive pointed to improvements in UK public transit and described this as “the most efficient” method to lower emissions. However, adoption is slower in the United States and Europe, where “regulators need to help people” accelerate the transition to lower-emission transport.
On trust and transparency: Maria Persson Gulda, CTO and CPO of H2 Green Steel, says she’s optimistic about the path forward, noting companies are starting to invest in talent and in building stakeholder trust. “Transparency between all parties is the key to success,” she said. “How you work with stakeholders and how you work with the authorities lay the foundation for […] the path forward within the industry—it's [about] trust and transparency.”

How could a shared understanding of the socioeconomic impacts of the climate transition help us move faster?

More than 40 climate leaders gathered to discuss the Climate Transition Impact Framework, designed by McKinsey to help leaders understand the challenges and opportunities of the net-zero transition. Participants from intergovernmental organizations, multilateral development banks, academic institutions, philanthropies, and the private sector pressure-tested the tool’s design and approach.

Quantifying the socioeconomic opportunities and challenges of the transition: Still in the concept phase, this framework measures socioeconomic effects across five dimensions: lived environment and health; affordable energy access; investment requirements; jobs impact; and growth and competitiveness.
Improving data quality and measurement: Reliable data is critical to evaluating in-country climate pathways, prioritizing transition investment, and supporting strategic planning by the private sector. This data can also help decision makers track progress against measurable objectives.
Achieving global alignment: Global acceptance of a common transition impact framework could encourage more thoughtful, coordinated action that addresses the unique needs of countries and communities.

How can companies drive a world-class net-zero transformation? In collaboration with COP28, McKinsey’s Eric Hannon and Poorni Polgampola delivered a masterclass for companies on best practices for decarbonization transformation. Achieving net zero requires companies to take a comprehensive look at their systems, from product design to supply chains, manufacturing and operations in order to determine where the carbon is and the best method for removing it. The session highlighted how marginal abatement cost curves (MACCs) can help industries understand the costs of various decarbonization actions, and identify decarbonization opportunities that work both environmentally and financially.

How does the net-zero transition intersect with gender equality? McKinsey’s Mekala Krishnan joined a Foreign Policy panel to explain how climate risks can interact with existing gender inequalities, creating compound effects. For example, women are disproportionately exposed to the risks of climate change because a large number in the developing world work in agriculture. In addition, they have less access to finance and less build-up of wealth to address those risks. At the same time, not tapping into the talent pool of women and bringing their perspectives into the climate agenda can hold back progress. That’s why the intersection of gender equality and climate is so important. “We’re spending trillions and we have the opportunity to move forward both on gender equality and climate change,” Mekala said.

Questions for leaders:

Urbanization: How can my organization collaborate with public and private partners to build the low-carbon infrastructure needed for climate action (such as grids, active mobility infrastructure, and electric charging facilities)?
Built environment: How can my organization implement new construction material standards in a way that saves cost, reduces emissions, and avoids stranded assets? What measures can we implement to reduce both costs and emissions in our construction, heating, cement, and cooling?
Transport: Has my organization considered the full breadth of potential in the lower-carbon transport ecosystem?