A decade since Paris, can COP30 deliver another defining moment?

Ten years ago something momentous happened in Paris. At COP 15 (Conference Of the Parties), 195 countries agreed to limit temperature warming to well-below 2°C from pre-industrial levels. This was it; a seismic shift in the battle against climate change… or so we thought. True, great progress has been made in some areas: renewables have overtaken coal in global electricity production¹, EVs (Electric Vehicles) sales are ticking up² and net-zero pledges, at least on paper, have multiplied. But ultimately, emissions keep rising³.

And with climate seemingly shifting down the political, corporate and investment agenda, this year’s COP in Brazil is an opportunity to reset the conversation. Without a decisive shift in tone, the conference risks becoming little more than theatrics.

Aside from moving away from the usual alphabet soup of regulation and guidance (TCFD, CBAM and ETS to name a few)⁴, COP 30 should frame outcomes in everyday terms: fewer bottles from drought-hit vineyards⁵, pricier ski trips as snowfall declines⁶, and rising mortgage and insurance costs⁷. In our experience, we somewhat cheekily suggest that these touchpoints are more likely to grab the attention of European investors.

But beyond this crucial step towards more ‘real’ analysis of the Herculean climate challenge, in our view, there are four key topics to be addressed this year:

• The absence of carbon markets and pricing
• The investment opportunities from national adaptation plans
• Whether the scandal-hit offset market can set minimum standards
• The evolution of methane emission management

We believe that carbon pricing is the most effective tool to address climate change. Its lack of international implementation is probably the root cause of the failure of the historic COPs to bring down emissions.

Global carbon pricing would address the market-failure to price in the negative consequences of greenhouse gas pollution. By artificially adding in the costs of climate change, it levels the playing field for alternative energy sources to compete economically, thus enabling the transition.

While carbon markets are rapidly growing, with more than 80 pricing instruments around the world covering 28% of global emissions⁸, the average weighted price remains $19 per tonne. This is far below the required range of $90-300 per tonne that adequately reflects the harm from climate change and would tip the balance in favour of clean technologies like carbon capture or green hydrogen^9,10.

Despite the increasing prevalence of carbon pricing mechanisms, sustained impact on broader prices has yet to be seen in inflation figures¹¹. This is either due to relatively low carbon prices or the use of free allowances.

A carbon pricing agreement between countries would highlight the reality of climate change now. Afterall, over the coming decade, carbon costs are set to soar. Ammonia, which currently has seen minor price impacts from carbon pricing will jump by ~40%. Methanol, which is already has a 40% premium due to carbon costs will see the premium increase to close to 60% by 2035. Finally, jet fuel, which already has a ~35% premium due to carbon costs will see the premium increase to more than 60% by 2035¹².

Similar trajectories are to be expected on the materials side, where products like cement or steel, already face cost increases of 5-15%^13,14. This has material competitive dynamics for the associated industries.

A globally harmonized carbon market will not only propel action, it will help avoid a self-establishing market that is uneven and highly disruptive.

Unfortunately, the development of an international carbon pricing market is notably absent from the COP negotiation agenda. While organisers insist this is because carbon markets are a national issue, in our view, international promotion and coordination is desperately needed to avoid a patchwork of schemes, with different prices and subsequent perverse incentives.

With emissions continuing to rise, focus is shifting from mitigation to adapting to the consequences of climate change. Somewhat ominously, this represents a huge and expanding market that is estimated to grow tenfold over the next five years from $22bn to $300bn¹⁵.

COP plays an important role in facilitating this market expansion, by formalising the projects required within country level National Adaptation Plans (NAPs). This provides the market with clear guidance as to where investment is required, with countries set to publish COP-aligned NAPs over the coming weeks. These should have more formalised transparency, detail and measurement at a project level.

This is set to be welcomed by investors and impacted industries who will have more visibility of a healthy pipeline of projects such as resilient infrastructure, food security, and changing healthcare trends.

Storms, floods and wildfires, cause severe strains to utility infrastructure, with the cost of outages estimated to be $100bn a year (0.1% global GDP)¹⁶. Unless sizeable investments are made in undergrounding at-risk sections of infrastructure, additional redundancy measures, or failure detection and prevention systems these costs are likely to rise exponentially. Estimates point towards more than 80million km of electricity lines by 2040 needing construction or refurbishment¹⁷. In the US alone, nature-related grid outages already cause similar levels of economic losses compared to grid equipment or technical failures every year¹⁸. Severe droughts cause yearly losses estimated at around $28bn¹⁹, and are increasing the value of emerging agricultural practices to ensure high water and yield efficiency. New irrigation technologies in drip and micro irrigation, drought tolerant crop genetics, or desalination technologies will see large increases in their addressable markets. Global water infrastructure needs investments of $6.7tn by 2030²⁰ to ensure they are fit for purpose. Finally, health-related concerns linked to heatwaves will offer new opportunities and challenges from air conditioning manufacturers to grid operators.

These dynamics create a durable investment case for construction, building materials, machinery and equipment, the enablers of climate resilience, whose full benefits are yet to be captured or valued appropriately.

Offsets allow a company to neutralise its emissions by investing into projects that seek to reduce emissions elsewhere. Think of it like a sugar tax – you know consuming sugar is bad for you, but you pay a price to cover the costs of its consequences. The idea is an offset, or sugar tax, helps incentivise better choices.

The problem is measurement challenges, low prices and fraud have plagued the reputation of the offset market. And their effectiveness has been called into question²¹.

COP can play a pivotal role in restoring the reputation of offsets, potentially making them a more legitimate tool in companies’ climate strategies. The creation of a globally agreed standard with rigorous guardrails to avoid poor quality projects could be game changing. As an offshoot of carbon pricing, and a method of re-allocating capital to climate solutions, offsets are easy to support in principle and therefore we hope for progress in this area.

This topic will be of particular interest to big tech companies and investors in those companies, like us. Tech giants have been propping up the carbon offset market for years in order to reconcile their ambitious climate targets with their increasing AI-driven emissions. For instance, Microsoft accounted for 63% of all carbon-removal credits, a type of offset, purchased in 2024²². Its $800m bioenergy with carbon capture deal is the largest permanent carbon removal agreement in history²³.

Methane emissions can be likened to carbon emissions even-more troublesome cousin. While they remain in the atmosphere for a shorter time than carbon emissions, their warming potential is 82x higher on a 20-year timescale²⁴. The oil and gas sector has been rapidly designing and implementing plans to reduce these emissions – particular progress has been made by European oil and gas majors. Last month, for example, the largest all-cash buyout in Australia’s stock market history of Santos by the Abu Dhabi National Oil Company was withdrawn after finding methane leaks late in the due diligence process²⁵. This ‘anti-methane’ sentiment has been underpinned by the Global Methane Pledge, signed by 160 countries in 2024 to reduce methane emissions by 30% by 2030²⁶.

However, the elephant, or cow, in the room, is that 40% of global methane emissions come from agriculture, with beef production being the highest causal driver²⁷. This puts Brazil in a tight spot, as the world’s largest beef exporter with a national champion JBS listing a few months ago on the US stock exchange²⁸.

It is becoming increasingly difficult to justify a lack of action. Denmark has pioneered a first-of-a kind carbon tax on livestock and agricultural lime when used as a fertilizer. The carbon tax will be implemented gradually, beginning in 2030. It will start at around $40 per tonne and rise to over $100 per tCO2e by 2035. In order to mitigate social backlash, the measure includes tax allowances to reduce adverse impacts on farmers, which has been an important learning from the gilets jaunes experience in France. We will be closely monitoring if Brazil, as COP host, makes any concessions in this sensitive area to symbolise its desire for this COP to turn words into decisive action.

Conclusion

In truth, the chance of a Paris-scale agreement at COP30 feels limited, given the world’s second biggest emitter will be absent from the discussion. Nevertheless, we are cautiously optimistic about the outcomes. The EU and Asia are likely to keep pressure up on transitioning, led by their desire to shift to cheaper clean energy that removes their dependency upon other regions.

We don’t expect any immediate market reaction given the focus is framework setting rather than directly shifting volumes or prices but we’re hopeful the foundations for meaningful change will be laid.

Our focus remains on investment in green technology where there is a favourable supply/demand dynamic and reduced technology risk, with a particular focus on the electrification theme via power equipment, cables and batteries.