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How US-China renewables agreement could shape COP28 talks

Business and world leaders are gathering for the 2023 United Nations Climate Change Conference, or Conference of the Parties of the UNFCCC, in Dubai from November 30 to December 12. The conference aims to create "specific solutions that must be scaled to limit warming to 1.5 degrees," according to COP28.

David Callaway, Callaway Climate Insights Founder, joins Yahoo Finance to discuss the COP28 conference and how a recent pledge from the United State and China to cooperate on climate change could provide momentum to upcoming talks.

Callaway explains why world leaders are slow make significant progress on climate issues: "The pressure continues to rise on these global leaders and then they have alternative pressures such as facing reelections and the higher costs of climate change. So they're not on the same schedule. They need to be essentially shocked into that and I think what we saw this year in climate disasters, something like $89 billion in climate disasters over the last few years, is going to start to put that pressure on."

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Video Transcript

SEANA SMITH: What is-- I guess, in order for COP to be successful, what would that entail from your--

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DAVID CALLAWAY: So what we saw in 2015 was the Paris Accord, right? It was-- COP was in Paris. All the countries of the world signed on to an agreement to keep global prices from-- global temperatures from rising too far, right? That was the last time they agreed on anything.

And every year we all go to COP, something like 70,000 people go in this year to Dubai. And everyone's looking for a global agreement and every year it collapses or it's kind of warm toast or something like that. This at least sets the stage that we might see something interesting, either in the agreement to phase down oil, which is good for renewable energy investors or the payment of loss and damages to poorer countries, which is another thing.

You know, I for one am kind of skeptical that you can get hundreds governments in a room to agree on anything. But if you have the two biggest polluters in the world, US and China, agreeing on something, there's room for some optimism.

BRAD SMITH: I mean, when we've spoken with climatologists and even some of the climate economists out there, what they've continued to remind us is that we're coming off of-- or we're still in the midst of but perhaps going to be rounding out one of the hottest years on record during 2023. How does that change the dialogue, the discourse from some of the global world leaders?

DAVID CALLAWAY: Well, you know, the problem is the global world leaders are either running for election or, you know, authoritarians with their own schedules. They're not on the climate change schedule, the world is continuing to get hotter. It's the hottest September we ever had. Probably we're going to look back on that as the coolest one we've had 20 years from now, right, because they're going to continue to get hotter.

So the pressure-- it's like a frog in a boiling water, right? The pressure continues to rise on these global leaders, and then they have alternative pressures such as facing re-elections and the higher costs of climate change. So they're not on the same schedule. They need to be essentially shocked into that. And I think, Brad, you know what we saw this year in climate disasters, something like $89 billion climate disasters last few years is going to start to put that pressure on.

SEANA SMITH: And when you take a look at what's happened just over the last 4 or 6 weeks when it comes to the strategic investments that we've seen from Exxon and Chevron essentially doubling down on fossil fuels, but when you take into account this transition that we're hopefully are going to see to clean energy, how do you address, I guess, the disconnect that we're seeing play out between the developed and the underdeveloped world?

And these larger players that are trying to, obviously, position their businesses best to address the undeveloped world, but then also position for the developed world transition hopefully eventually here to clean energy?

DAVID CALLAWAY: Yeah. A lot of what they're going to be talking about in Dubai is loss and damages, which is will America pay hundreds of billions of dollars to protect, you know, Madagascar and stuff like that. Probably not going to happen, right? The oil companies, I'm a big proponent of the fact that they're going to help us with solutions.

And there are-- a lot of talk is going to be about carbon capture and storage, which is one of the hottest subjects on Wall Street, has been for the last year, the idea that you can pull carbon from the air and at the same time continue to produce oil. So they're going to be pushing that. They're doubling down on squeezing the last drops of oil out of the Earth, unfortunately.

But if they can push that technology, and they're the ones that have that technology, not the startups that we talk about or write about, they're the ones that have it. They can push that and come to some agreements with the governments. You know, we could see a radical new era of creating more energy for people, renewable plus fossil fuels, and making the world a cleaner place.