What You Need to Know.
- Two years ago, governments at COP26 agreed to “phase down” the use of unabated coal. This year, countries remain split on specific language concerning fossil fuels more broadly.
- A draft version of the climate agreement for COP28 provides three different options for the future of fossil fuel use. The first requires the parties of COP28 to commit to “an orderly and just phase out of fossil fuels,” while the second would instead commit to “accelerating efforts towards phasing out unabated fossil fuels and to rapidly reducing their use so as to achieve net-zero CO2 in energy systems by or around mid-century.” The third option would contain no text on this point. Saudi Arabia’s energy minister has already rejected any language that would phase out fossil fuels. And at the same time, NGO reports have sharply criticized the outsized role of fossil fuel lobbyists at COP28, especially at a time when the stakes are high for the energy transition.
- As COP28 reaches its midway point, the United Nations World Meteorological Organization (WMO) released a new report finding that between 2011 and 2020, more countries reported record high temperatures than in any other decade. Glaciers shrank more than ever from 2011 and 2020 and the Antarctic ice sheet lost 75 percent more mass compared to the previous ten years. The report concludes there is no sign of immediate warming reversing, and that each decade since the 1990s has been warmer than the previous one.
- Amidst this sobering backdrop, six of the world’s largest dairy companies—Danone, Bel Group, General Mills, Lactalis USA, Kraft Heinz, and Nestle—joined the Dairy Methane Action Alliance. Initiative members will annually account for and publicly disclose methane emissions within their dairy supply chains and publish and implement a methane action plan by the end of 2024. This private sector action on methane joins EPA’s announcement just days ago of a final rule that will reduce methane and other harmful air pollutants from the oil and natural gas sector.
- Six more countries joined twenty-seven previously announced nations to sign on to the Global Memorandum of Understanding on Zero-Emission Medium- and Heavy-Duty Vehicles. The agreement calls for signatories to commit to working together to enable 100% new zero-emission medium- and heavy-duty vehicle sales by 2040 at the latest, with an interim goal of at least 30% new sales by 2030.
- The U.S. Department of State announced a suite of Export-Import Bank financial tools to support the deployment of small modular reactor nuclear energy systems and help U.S. exporters compete in this global market. Additionally, the United States, Canada, Japan, France, and the United Kingdom announced their collective intent to support increased deployment of zero-carbon, peaceful nuclear energy by expanding nuclear fuel production capacity across trusted, high-quality suppliers free from manipulation and influence.
Why This Matters for Businesses.
- The resolution of the draft text concerning fossil fuels will have follow-on implications for the future of the energy industry going forward and will likely lead to increased scrutiny of the industry from advocacy groups, NGOs, and national governments.
- The World Meteorological Organization highlighted in its report that while public and private climate finance nearly doubled from 2011 to 2020, a sevenfold increase is necessary by the decade’s end to meet climate objectives.
- Paired with the Dairy Methane Action Alliance announcements, as well as the commitments from the U.S. Department of State to promote the nuclear industry, Day 6’s actions and announcements underscore the key role that the private sector is being called to play in global climate mitigation amidst ongoing government negotiations.
“The outcome of the ‘phase out’ debate will be heavily scrutinized, particularly given the attention thus far to the fossil fuel industry’s role at COP28. Regardless of the final text, the attention this debate has garnered reflects mounting pressure on national governments and the private sector alike to sharply reduce fossil fuel emissions, increase renewable energy, and operate in a policy and business environment with increasingly climate-conscious stakeholders.”
—Jayni Hein, co-chair of the Carbon Management and Climate Mitigation Industry Group.
More News and Developments.
- William James and Kate Abenett, Draft Text at COP28 Shows Negotiators Considering Fossil Fuel ‘Phase Out’, Reuters (Dec. 5, 2023), https://www.reuters.com/business/environment/draft-text-cop28-shows-negotiators-considering-fossil-fuel-phase-out-2023-12-05/.
- Nina Lakhani, Record Number of Fossil Fuel Lobbyists Get Access to Cop28 Climate Talks, The Guardian (Dec. 5, 2023), https://www.theguardian.com/environment/2023/dec/05/record-number-of-fossil-fuel-lobbyists-get-access-to-cop28-climate-talks.
- Jamey Keaten, UN Agency Cites Worrying Warming Trend as COP28 Summit Grapples with Curbing Climate Change, The Associated Press (Dec. 5, 2023), https://apnews.com/article/climate-cop28-wmo-decade-trend-report-global-warming-fc7a53b000b95b49aa3f3bfca504510d.
- Valerie Volcovici, US Envoy Kerry Launches International Nuclear Fusion Plan at COP28, Reuters (Dec. 5, 2023), https://www.reuters.com/business/energy/us-envoy-kerry-launches-international-nuclear-fusion-plan-cop28-2023-12-05/.
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.