What You Need to Know.
- With a focus on multilevel action, urbanization, and the built environment and transport, the events of Day 7 of COP28 highlighted efforts to transition to low-carbon and resilient infrastructure, particularly in urban areas. This thematic focus is significant; according to the UN Environmental Programme, cities are responsible for an estimated 75 percent of global CO2 emissions, primarily from transportation and buildings.
- In the Blue Zone, global leaders gathered at the second Ministerial Meeting on Urbanization and Climate Change to discuss how to accelerate local climate finance and help local governments be better equipped to address the impacts of climate change. Members of the air transport sector gathered at the Global Sustainable Aviation Forum to explore how to transition the industry away from fossil fuels and promote decarbonization, while Charging Ahead: A Collective Vision on Charging Infrastructure to Accelerate the EV Transition shared global best practices on the rollout of EV charging infrastructure. The Climate Pledge and C40 Cities hosted an event on decarbonizing urban freight transportation by transitioning to electric freight vehicles.
- “We can only overcome the climate crisis by ditching business-as-usual,” UN Climate Change Executive Secretary Simon Stiell said in a statement to journalists on a day that marks the halfway point of COP28. “[G]ood intentions won’t halve emissions this decade or save lives right now,” Steill continued, describing the draft agreement on the Global Stocktake as “a grab bag of wish lists and heavy on posturing.” “At the end of next week,” said Steill, “we need COP to deliver a bullet train to speed up climate action. We currently have an old caboose chugging over rickety tracks.”
Why This Matters for Businesses.
- Decarbonizing the transportation sector is a critical component of the energy transition. As reported at the 2021 United Nations Sustainable Transport Conference, the transportation sector is responsible for approximately one quarter of greenhouse gas emissions and is the largest source of energy-related emissions for 45 percent of countries. Accordingly, countries have begun making significant investments in programs and incentives designed to decarbonize surface transportation.
- This trend holds true in the United States, where the transportation sector accounts for 29 percent of total U.S. GHG emissions. The 2021 Bipartisan Infrastructure Law includes more than $27 billion in funding for carbon pollution reduction projects, including the National Electric Vehicle Infrastructure program, which provides $5 billion to states to develop a national electric vehicle charging network, and the Low or No Emission Vehicle Program, which provides $5 billion to replace transit buses with zero-emission electric buses. Similarly, the 2022 Inflation Reduction Act provides tax credits to purchase qualifying electric vehicles and the development of sustainable aviation fuels, among other clean energy programs.
- The European Union and its Member States, where transport emissions represent around 25 percent of total EU GHG emissions, also have various programs and individual support mechanisms in place to decarbonize the transportation sector. Examples include Important Projects of Common European Interest in the hydrogen technology value chain or in batteries (HyTech, allocating €5.4 billion to thirty-five companies, first and second IPCEI on batteries granting €6.1 billion to fifty-nine participants), the InvestEU Fund, and the Innovation Fund. Business leaders should continue to review and monitor these U.S. EU, and incentives and funding announcements provided by other authorities to best take advantage of the market opportunities created by these programs.
- While the nature of COPs emphasizes the importance of national-level negotiations, subnational leaders play a key role in driving climate action. And in many cases, it is subnational leaders that are responsible for implementing national-level climate action programs. Earlier in the week, subnational leaders, including mayors and governors and partner organizations from around the world, gathered at the first-ever Local Climate Action Summit to discuss the role and importance of local leaders in reducing emissions and addressing climate risk. Businesses should actively engage and develop relationships with local leaders to identify areas where they can partner on climate action.
Covington Commentary.
“Government-sponsored programs and tax incentives create significant opportunities for businesses to contribute to the energy transition and expand their reach into new markets. The global action on decarbonizing transportation and urban areas at COP28 underscores the importance of these sectors and the promise of continued public-private action in this space.”
—Lindsay Brewer, Associate, Environmental Practice Group
More News and Developments.
- Seth Borenstein and Dana Beltaji, After a Fast Start, COP28 Climate Talks Now in Murky Middle Of Hope, Roadblocks, The Associated Press (Dec. 6, 2023), https://apnews.com/article/renewable-energy-cop28-climate-change-fossil-fuels-98436e29d0be3a4a1ddc36181ace49b6.
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.