What You Need to Know.
- After the opening day, action at COP28 shifted to the World Climate Action Summit (WCAS), where world leaders convened to deliver national statements and carry out initial negotiations on the Global Stocktake and expanding climate financing. Concurrently, business leaders and philanthropists gathered at the Business and Philanthropy Climate Forum to discuss how the private sector and philanthropy can contribute to climate action.
- UN Secretary General António Guterres opened the WCAS by urging countries to speed up their net zero timelines to 2040 for developed countries and 2050 for emerging economies and accelerate towards a “just, equitable transition” to renewable energy. In his speech, Mr. Guterres laid out a hard line on phasing out fossil fuels, saying that “The 1.5-degree limit is only possible if we ultimately stop burning all fossil fuels. Not reduce. Not abate. Phase out – with a clear timeframe aligned with 1.5 degree.”
- Fifty oil and gas companies representing more than 40 percent of global oil production joined the Oil and Gas Decarbonization Charter, which commits signatories to align around net zero by or before 2050, zero-out methane emissions, eliminate routine flaring by 2030, and to continue working towards emission reduction. COP28 President Dr. Sultan Ahmed Al Jaber praised the declaration as “a great first step” while also highlighting that national oil companies, which represent 60 percent of the signatories, “can and need to do more” to keep the Paris Agreement’s 1.5 degrees Celsius target within reach. More than 300 environmental organizations lambasted the declaration in a letter to the COP28 Presidency, stating that voluntary efforts without any accountability mechanisms are “insufficient” and that “the only safe and effective way to ‘clean up’ fossil fuel pollution is to phase out fossil fuels.”
- The United States Environmental Protection Agency issued a final rule designed to sharply reduce methane and other harmful pollutants from the oil and natural gas industry. The final rule includes standards to reduce methane and volatile organic compounds (VOCs) from new, modified, and reconstructed sources as well as guidelines for states to follow in developing their plans to limit methane from existing sources. The timing of the announcement is indicative of the Biden-Harris Administration’s goal of using COP28 as a platform to elevate pollution-reduction measures in the United States and galvanize global action.
- 117 countries signed the Global Renewables and Energy Efficiency Pledge, agreeing to triple the world’s installed renewable energy generation capacity to at least 11,000 GW by 2030 and collectively double the global average annual rate of energy efficiency improvements from around 2% to over 4% every year until 2030. And twenty countries signed the Declaration to Triple Nuclear Energy with the goal of tripling nuclear energy capacity from 2020 by 2050.
- The UAE announced the establishment of ALTÉRRA, a $30 billion climate fund in collaboration with BlackRock, Brookfield and TPG. The fund will allocate $25 billion towards climate strategies and $5 billion specifically to incentivize investment flows into the Global South. ALTÉRRA aims to mobilize $250 billion globally by 2030.
- Vice President Kamala Harris announced that the United States would pledge $3 billion to the Green Climate Fund (GCF). The pledge by the United States was joined by pledges from Estonia ($1 million), Portugal ($4.4 million), and Switzerland ($155 million). The GCF was established by the UNFCCC at COP16 in 2010 to accelerate the development of climate mitigation and adaptation projects in developing countries by mobilizing financial flows form the private sector to climate-smart investment opportunities.
Why This Matters for Businesses.
- As was the case at COP27, battle lines are being drawn at COP28 by public and private sector entities over whether the world should commit to “phasing out” or “phasing down” the use of fossil fuels. The difference is more than linguistic. Phasing out fossil fuels would require countries to commit to eliminating the use of fossil fuels and ramp up renewable energy production. Phasing down fossil fuels entails reducing fossil fuel use and capturing emissions from their use for utilization or storage where feasible, while transitioning to renewable energy sources. Another point of contention is whether this phase out or phase down should focus on all fossil fuels or just “unabated” fossil fuels, or fossil fuels whose emissions are released into the atmosphere as opposed to caught through carbon capture utilization and storage technology. This argument will permeate every discussion and negotiation at COP28, particularly the global response to the Global Stocktake.
- The Global Renewables and Energy Efficiency Pledge and the Declaration to Triple Nuclear Energy are just two of the many pledges that have and will be announced at COP28. Over 120 countries signed the COP28 UAE Climate Health Declaration, which was joined by a $300 million commitment by the Global Fund to Fight Aids, Tuberculosis and Malaria, a $100 million commitment from the Rockefeller Foundation, and a $68.5 million commitment from the United Kingdom. And over 130 countries signed the COP28 UAE Declaration on Sustainable Agriculture, Resilient Food Systems, and Climate Action, which was accompanied by more than $2.5 billion in funding, including $200 million by a partnership between the UAE and the Bill & Melinda Gates Foundation. Each of these declarations are designed to provide financing, create market opportunities, and accelerate action in their respective domain areas and highlight areas for increased public-private partnerships.
- The operationalization of the loss and damage fund, the UAE’s launch of the ALTÉRRA climate fund, and the national pledges to the Green Climate Fund show that a key objective for negotiators, businesses, and philanthropists at COP28 is ensuring sufficient financing to fund the climate mitigation, resilience, and adaptation projects needed to meet global climate goals. During the Business and Philanthropy Climate Forum, the Green Climate Fund, Allied Climate Partners, and Allianz Global Investors announced a commitment to mobilize $5 billion to propel climate efforts in emerging economies. Similarly, Investcorp, a global manager of alternative investment products, announced the launch of its Climate Solutions investment platform with the goal of targeting $750 million of investments to support decarbonization and address the global impacts of climate change. Businesses should closely monitor these financing platforms to identify opportunities to expand their reach into existing and emerging markets.
“Having completed two days of stage-setting speeches by heads of state, the conference negotiations will now move behind the scenes to tackle some of the thorny issues. Meanwhile, business and civil society engagement will be taking center stage on the thematic days ahead, including with the Green Zone venues opening to the public. With more than 84,000 registered attendees, COP28’s scale dwarfs all prior COPs and is an unprecedented gathering of leaders and doers for business action on climate. The Covington team is fully engaged, contributing thought leadership in multiple forums and assisting clients in implementing their strategic contributions to the climate action imperative.”
—Andy Jack, Partner, Co-chair of Energy Industry Group
More News and Developments.
- COP28 Youth Climate Champion Welcomes Global Youth Statement From Youngo Members In The Presence Of World Leaders During World Climate Action Summit, COP28 UAE (Dec. 2, 2023), https://www.cop28.com/en/news/2023/12/COP28-Youth-Climate-Champion-welcomes-Global-Youth-Statement.
- Oliver Milman, Leaders of World’s Major Cities Call for Phase-out of Fossil Fuels, The Guardian (Nov. 30, 2023), https://www.theguardian.com/environment/2023/nov/30/leaders-of-worlds-major-cities-call-for-phase-out-of-fossil-fuels.
Covington’s multidisciplinary COP28 delegation includes leaders of Covington’s ESG, Environment, Energy, Project Development and Finance, Corporate, and Public Policy practices, as well as our unique Carbon Management and Climate Mitigation (CM2) initiative. Our comprehensive and integrated global team is ready to assist clients as they prepare for COP28, engage with key stakeholders while there, and then strategize about and successfully implement ESG corporate policies aligned with COP28 goals. Follow our Climate Hub for Businesses to stay up to date with the latest developments from COP28.