What You Need to Know.

  • The thematic focus of the day’s programming was on nature, land use, and ocean, including events on scaling effective solutions that protect, restore, and beneficially manage nature ecosystems, addressing drivers of nature loss, empowering Indigenous Peoples and local communities, and creating resilient livelihoods.  As part of this discussion, the United Nations Environment Program (UNEP) launched a report highlighting that nearly $7 trillion of public and private finance each year supports activities that directly harm nature—thirty times the amount spent annually on “nature-based solutions,” or actions to protect, conserve, restore, sustainably use, and manage natural resources that simultaneously provide human well-being, ecosystem, and resilience and biodiversity benefits.
  • Late Friday evening, various news organizations reported that the head of the Organization of the Petroleum Exporting Countries (OPEC) sent a letter to its thirteen members as well as ten additional countries (altogether known as “OPEC plus”), highlighting the increased pressure to reach an agreement to phase out fossil fuels at COP28.  The letter urged the OPEC plus nations to “reject any text or formula that targets energy i.e. fossil fuels rather than emissions.”
  • Various high-level officials from international organizations or countries central to the energy transition made statements in favor of reaching an agreement to curb fossil-fuel production.  Dr. Fatih Birol, Executive Director of the International Energy Agency, noted that it is “imperative” that countries agree to an “orderly and just decline in fossil fuels in line with our international climate goals.”  These comments were echoed by Xie Zhenhua, China’s climate envoy, who noted China’s desire to see an agreement that would reduce fossil fuel consumption, and Alok Sharma, the president of the COP26 summit in Glasgow, who stated that “If you’re going to keep 1.5C alive” countries need both “language on a phase-out of fossil fuels” and “a credible implementation plan.”
  • The Netherlands launched a coalition to phase out fossil fuel subsidies, along with Austria, Belgium, Ireland, Spain, Finland, Antigua and Barbuda, Canada, France, Denmark, Costa Rica, Luxemburg.  The coalition has three pillars: (1) publishing a list of their fossil fuel subsidies before COP29; (2) working together to identify and address international barriers to phasing out fossil subsidies; and (3) shaping an international dialogue to share knowledge, develop national strategies for phasing out fossil benefits, and seek joint action to minimize carbon leakage.

Why This Matters for Businesses.

  • Though the primary focus of COP28 is climate change, the UNEP report underscores that as the climate worsens, business’s role in biodiversity loss and land degradation will be equally scrutinized by governments, NGOs, and international organizations.  The report finds that $5 trillion of the $7 trillion in “nature-negative finance flows”—or public and private finance that supports activities that directly harm nature—comes from the private sector, a figure that is 140 times larger than private investments in nature-based solutions.  According to the report, half of that nature-negative finance stems from five industries: construction, electric utilities, real estate, oil and gas, and food and tobacco.
  • The competing ambitions of the OPEC plus members and the Netherlands-led coalition to address fossil fuel subsidies put into clear contrast the diverging approaches that national governments are taking to the fossil fuel industry.  On one end, oil-producing countries are striving to protect the industry from production limits; on the other end, countries are seeking to reduce subsidies and phase out oil, gas, and coal.  As we highlighted in our Day 8 Recap, failure to reach a satisfactory resolution of the “phase out versus phase down” debate at COP28 may galvanize efforts to establish a Fossil Fuel Non-Proliferation treaty—particularly given the continued attention to the COP28 host country’s own membership in OPEC and heavy reliance on fossil fuels.

Covington Commentary.

While awaiting resolution of the COP28 ‘phase out versus phase down’ debate and the signal that it will portend for corporate energy and carbon management strategies, businesses should not overlook increasing attention being paid in supply chain management to biodiversity and preservation of natural systems.  It is still early days in the trend of corporate goal setting around protection of these scarce societal resources.  But just as emissions goal setting by large companies grew to a now nearly universal practice, we expect increasing stakeholder demands for greater corporate attention to nature and biodiversity goals.”

Andy Jack, Partner, Co-chair of the Energy Industry Group

More News and Developments.

Covington’s multidisciplinary COP28 delegation includes leaders of Covington’s ESGEnvironmentEnergyProject Development and FinanceCorporate, 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.

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Photo of Martin Levy Martin Levy

Martin Levy is an associate in the firm’s Washington office and a member of the Government Contracts Practice Group.

Martin has a particular focus on industrial policy matters and helps clients navigate the legal and compliance issues applicable to organizations and projects that…

Martin Levy is an associate in the firm’s Washington office and a member of the Government Contracts Practice Group.

Martin has a particular focus on industrial policy matters and helps clients navigate the legal and compliance issues applicable to organizations and projects that utilize federal incentives, grants, and loans under the Inflation Reduction Act, the Infrastructure Investment and Jobs Act, and the CHIPS and Science Act. Additionally, Martin works with clients to navigate domestic preference requirements under the Build America, Buy America Act, and prevailing wage standards under the Davis-Bacon and Related Acts.

Martin also has extensive experience advising on environmental and climate policy issues, including greenhouse gas regulatory requirements and international standards. Martin maintains an active pro bono practice advising non-governmental organizations, community organizations, and state and local governments on compliance issues associated with utilizing federal financial assistance.

Before joining Covington, Martin was a vetting attorney with the Biden-Harris Presidential Transition, a law clerk at the Eastern District of New York, and an undergraduate environmental law instructor at Boston College.

Photo of W. Andrew Jack W. Andrew Jack

Andy Jack is a broad gauge corporate and securities lawyer who leads multidisciplinary teams to help clients achieve complex business objectives and solve complex business problems.

Andy often serves in outside general counsel or senior strategist roles working closely on strategic matters with…

Andy Jack is a broad gauge corporate and securities lawyer who leads multidisciplinary teams to help clients achieve complex business objectives and solve complex business problems.

Andy often serves in outside general counsel or senior strategist roles working closely on strategic matters with C-suites and boards. His practice spans mergers and acquisitions, strategic alliances and joint ventures, venture capital, capital markets, securities compliance, corporate governance counseling, crisis management and dispute settlements.

With deep experience in the energy, diversified industrials, transportation, technology, sports and hospitality industries, much of Andy’s recent transactional and advisory work focuses on issues arising from global sustainability trends and ESG considerations, including the energy transition, vehicle electrification and advanced mobility.

Some examples of this trending work include:

  • Energy
    • Structuring and negotiating joint ventures to produce sustainable aviation fuels and to develop and deploy shared resources to respond to offshore well blowouts.
    • Advising on a carbon capture project funded by the U.S. Department of Energy.
    • M&A, finance, capital raising and commercial projects for solar PV panel suppliers.
    • Representing corporate offtakers in virtual power purchase agreements to procure renewable energy in support of wind and solar power projects.
    • Advising on U.S. public policy matters affecting the energy transition.
  • Vehicle Electrification and Advanced Mobility
    • A capital markets transaction for an industry leader in advanced mobility.
    • Multiple venture capital financing rounds for an electric truck manufacturer.
    • Joint venture restructuring and M&A transactions for EV battery manufacturers.
    • Collaboration agreements among vehicle electrification technology providers and OEMs.
    • M&A of advanced vehicle components suppliers and engineering service providers.
  • Other industries
    • Advising on board governance structures to address ESG and Sustainability oversight.
    • Assisting clients in developing voluntary sustainability reports and improving SEC reports and proxy statements to address these topics.
    • Responding to shareholder proposals on various ESG issues.

Andy co-chairs the firm’s multidisciplinary global Energy Industry Group and multidisciplinary Sustainability Solutions Initiative. He also serves as pro bono outside general counsel to the American Council on Renewable Energy and as a member of the World Resources Institute Global Leadership Council. With this background and experience, Andy frequently speaks at industry conferences and publishes on these topics. He also serves as an editor of the firm’s Inside Energy & Environment blog

He is Chambers-ranked in Corporate M&A & Private Equity, where clients report that Andy “gives practical advice with commercially reasonable solutions to problems.” He also has been ranked in Legal 500, both for Energy – Renewable/Alternative and Mergers & Acquisitions.