COP28 : notions clés à retenir et impact potentiel sur votre stratégie en matière de facteurs ESG (en anglais)

Jennifer L. King: Welcome everyone. We are just waiting for everyone to join before we start.

So everyone who is joining, we are just going to give it another few minutes for people to join before we start.

While everyone is joining, our webinar today is to discuss key takeaways from COP28. I will cover a few housekeeping notes before we begin. Today's session will be recorded, uploaded to our website and circulated via follow-up email. Please use the Q&A function at the bottom of your screen throughout. We will try to answer as many questions as we can. If we do not get to your answer live then we will get back to you separately. We have about 45 minutes/an hour in the diary for today's session and we've got a lot to cover, so we will get started.

My name is Jennifer King. I am an environmental lawyer litigator at Gowling WLG based in Toronto and I am co-leader of our national ESG advisory services practice. I am honoured to introduce our expert panellists who hail from all over the world.

Jonathan Brufal is a partner in our projects group based in the UAE and co-leads our energy sector practice. He advises on energy transition projects across the Middle East and Africa.

Tom Timmins is based in Toronto, Canada. He is a senior commercial lawyer serving finance and renewable energy product development and finance. With more than 20 years of experience in renewables, he is frequently sought out for his intellect knowledge of the sector and his ability to help get complex projects across the line. He currently leads our Canadian energy practice and also serves as an adjudicator under NX309 of the Canadian free trade agreement.

Ben Stansfield is a sustainability partner in our London office with a particular focus on climate issues. He is the co-chair of the firm's ESG group.

Lasitha Perera is the co-founder and CEO of the Green Guarantee Company, the world's first climate-focused generator and guarantor. The Green Guarantee Company is looking to address the climate finance gap by providing investment grade guarantees to help global capital markets finance climate resilience projects in developing countries. Gowling WLG is the legal advisor to the Green Guarantee Company, which is backed by the Green Climate fund and the governance of the UK, Nigeria, US and Norway. It was launched at COP28.

Before I jump into my first question for the panel, I thought I'd take a few moments to remind us what COP28 is. The Conference of the Parties is a meeting between the Parties of the United Nations Framework Convention on Climate Change (UNFCC), which has formed the basis for international climate negotiations since the Earth Summit held in Rio de Janeiro in 1992. The ultimate objective of the convention is to achieve stabilisation of greenhouse gas concentrations at a level that would prevent dangerous epigenetics altering the climate system. There are 197 countries in the European Union that ratify the UNFCCC and will call to refer to any meeting between the parties. It's contra-referenced the UN Climate Summit, the international summit held annually where world leaders negotiate and agree on how to address climate change.

COP28 was the 28^th COP and it was held in Expo City, Dubai, with the UAE president, the COP28 president, Dr Sultan al-Jaber. And this COP marks the halfway point between targets set in the COP21 Paris Agreement, so for the past two weeks, the meetings and negotiations have really held the world's attention. There has been a lot of debate and discussion about what the final text should say, and what we feared it might not, and it came to an end early yesterday morning.

Today we are going to take some time to review what happened at COP28 and the key takeaways from the conference. Ben, can you set the stage by reviewing the key highlights from the text of the global stocktake?

Ben Stansfield: Sure. So I think we were pretty smart in having this webinar tonight, rather than on Tuesday when it was due to end, because I think if we had had our webinar on Tuesday night, we would be a bit fed up, I should say Tuesday night UK and Dubai. We would have been pretty fed up because the draft that came out on Sunday was pretty disappointing. Quite easy to read, you know 20 pages, 200 paragraphs, but there was sort of one or two, well one or two paragraphs, which were really key on Sunday in the draft. And it called upon the parties to take action that could include…, so a list of things you might want to think about maybe, and in there was phasing down of unabated coals, there was no mention of fossil fuels, and so yeah you go on LinkedIn on Monday morning – loads of grumpy posts and newsletter articles.

A cynic might say they deliberately took two steps back from what we had hoped for, so that they could then go forward a little bit more – so the final text is better for sure. It is not perfect, but go and check our paragraph 28. That is the really essential one amongst the 200, so in there we've got referencing reductions to keeping to 1.5 degrees, and that is really important. We are still talking about 1.5 degrees and there are no pathways to 2 degrees yet. That might be a seal we break in a few years' time but for now 1.5, and there is none of that 'could include' type of optioneering language, which is really important too. So parties now have to contribute to the following global efforts and then it lists things like: doubling energy efficiency, tripling renewables, looking at still phased unabated coals – phase down rather than phase out, but you know you can't have everything – accelerating net zero omissions in energy systems well before 2050.

So there are a few things in there and I'm sure we will get into the detail of 28A2H in a minute, but we've still got phase down we haven't got phase out. We've got fossil fuels so that is great. Some other really good stuff in there too around following the science, keeping to 1.5. Very, very clear on the adverse and horrible impacts for certain communities – that is really important – and the role of businesses, and the importance of nature conservation and climate change, so pretty good stuff.

Jennifer: Just to follow up on that, should we be feeling glass half full or glass half empty about the global stocktake. Maybe I'll start with you Tom?

Tom Timmins: Thanks Jen. Maybe because I'm a glass half full kind of guy, I'm going to say glass half full. When you think about COP with 197/198 parties at the table, it is almost an impossible situation, where in theory anyways anyone has a veto, and it is really nearly an impossible situation really for the political representatives as well when you think about particularly those from oil and gas producing nations but also consuming nations as well, including ourselves here in Canada; very tough situation.

So what came out of it – and thank you for that summary Ben – what came out of it? So first of all, and this is going to be bizarre for people who aren't really insiders in this world, we are now mentioning the word fossil fuels, right. Fossil fuels only became mentioned at Glasgow a couple of years ago. It wasn't mentioned in Paris, like so that is probably thing number one that we are allowed to; it kind of reminds me of that old Fawlty Towers episode, 'Don't Mention the War' like, so we can now say fossil fuels… just the fact that we are saying it is a movement. The other thing that I think came out of this, and it's a positive, so talking about the leaking OPEC memo, the kind of optics around the visit from Vladimir Putin into the Middle East immediately before the event, all of those optics. I think the public and like the newspaper reader kind of now knows whose kind of holding things back, and maybe future generations will too, and so people are starting to understand the real politics and maybe some of the dirty politics that are in play here. And I don't think that was intended by anyone, and I think that that really became quite apparent; particularly with leaking of the OPEC plus memo, which I think really kind of hit the media. So there's my two cents.

Jennifer: Thank you Tom. So Jonathan, Tom says glass half full, what's your view? Should we feel glass half full or glass half empty about this stock take?

Jonathan: I think on balance – and I was a bit of a COP sceptic, I must confess – although being based in the UAE and looking at my client base I probably have to be glass half full but I think, on balance, I have got there. I think for the reasons Ben and Tom said, it is probably better than expected. Has it done enough? Probably not but, on balance, better than expected. I think the US probably got away with it; a very small contribution to the loss and damage fund and its position as number one oil and gas producer is intact, probably India and China and OPEC are feeling similar. But I think generally it is giving a good message and I think there was some good useful sort of sidebar references to things like 'just transition', and I think the role of indigenous people, women and children in the process is helpful and to be encouraged.

Jennifer: Jonathan, before we move to Lasitha's overall view here, there is a question that someone asked in the chat about just transition and how do you mention that? Can you tell us what a just transition is and why it is important?

Jonathan: I think the whole purpose of just transition is that it is designed so that no community or demographic is left behind in the discussions, so I think that is a very important development. It is particularly empowering women and youth in communities from emerging economies and I think that is of crystal importance. And I think from the people who have actually attended COP in person in Dubai that has very much been a message and a feeling that people on the ground have had about the whole conference, so I think that is a very positive feature.

Jennifer: Lasitha, glass half full or glass half empty? What are your thoughts?

Lasitha Perera: I am going to go with glass half full as well. I think largely, I think that actually to add to what Tom was saying, you know when I was at COP, a lot of what I was hearing around the sort of the immediate impact of what was coming out around OPEC and all the others was very much a case of well, if these guys aren't going to move or they're not going to, they don't get it and they are not prepared to accept the science, then we need to invest in the technologies that are effectively going to make them redundant. And what I heard was a lot of people saying well, we now need to shift our focus away from not just trying to do more renewable energy but also leapfrogging fossil fuels so that, in a way, we don't need them anymore, much quicker. And that's why I see a lot of the philanthropy money and the finance institutions I was talking to, they are saying that's what we are now going to focus on because there is no point, the fossil fuel producers are just not going to move fast enough. We need to find a way to make them irrelevant, redundant. So from that perspective I thought it was clearly a positive move in that there's a mind-set shifting and that was very clear. I think, you know, that is certainly from you know having now attended COP from Glasgow to now that I think is what I noticed at COP28, just a big shift in mind-set around the urgency and the need to invest in new technologies to try and facilitate the catch-up, if you like, in terms of the stocktake.

Jennifer: Thank you. Well, speaking about fossil fuels… Ben, the reference to fossil fuels in the text, is that enough to satisfy people?

Ben: It is not going to satisfy the environmentalists and I am going to say I'm glass half empty on this, because after this webinar, go on the world economic forum and google global risks and it will say the top ten global risks in the next five years, sorry next two years, five of them relate to environment and climate change, in the next ten years, six of them relate to environment and climate change, because they had bio-diversity loss and what have you. So this is by far and away the biggest issue globally. If this was 2003, 20 years ago, then I would think this would be more than glass half full, this would be amazing, really brilliant. 2023 was the warmest year on record, but for my kids it is going to be one of the coldest and that is just so unacceptable that – and I get, you know, its pragmatic, fossil fuels have been mentioned and what have you – but I'm disappointed by it. I wish we had gone further. It is probably pragmatic, you know, Dubai was never going to phase out coal, it was never going to. You know, that Dubai has put in fossil fuels is a good thing, it has broken the seal. We'll have fossil fuels in every single COP agreement from now on, but I think there will be a lot of people accepting it but disappointed by it.

Jennifer: Jonathan, do you have any thoughts on the reference to fossil fuels in the text?

Jonathan: Yeah I'd agree with Ben on that. It must be viewed as progress, but clearly what we'll need in the near future is deadlines and a plan for phasing down, and out, of fossil fuels. We will need to start tackling the emissions much more seriously. I mean, I think we had a 2% increase in emissions this year and we need a 43% reduction by 2030, so it is progress. As John Kerry said, it is a diplomatic compromise but it is progress and a cause for optimism.

Jennifer: There has been a lot of talk of the stocktake and its comments on fossil fuels. What about the stocktake is not being talked about in the media? Jonathan, could I start with you?

Jonathan: So obviously the focus has been on fossil fuels, the increase in renewable energy for example. Some things that maybe the media haven't picked up on is there's talk about transition fuels, transition energy systems, which really is shorthand for allowing countries to continue to burn natural gas as a fuel source and try and mitigate the effects of that with some carbon capture storage or switching to hydrogen. And I don't think there is enough debate in the media about the viability of that as a transition technology, so I think that sort of hasn't got enough scrutiny and, as I said earlier, I think one of the positives that probably hasn't been picked up enough in the media is the 'just transition' and the involvement of women, children and indigenous people. And then another thing that was probably disappointing was transport references were limited to road transport and there wasn't really much exploration of things like sustainable aviation fuel or sustainable shipping fuels, which obviously aviation and shipping sectors are obviously huge polluters, so that is just a mixed bag of things that I don't think the media picked up.

Jennifer: I can see Tom is nodding his head on some of the comments that you have made Jonathan. Tom, what do you want to add about what is not getting media attention?

Tom: I think the mention of fossil fuels is a powerful market signal and I think the media is maybe missing that nuance to a certain extent. The train is leaving the station, the ship is turning and that is why I am probably more positive than negative about the outcome of this, that this is a powerful market signal. So to those who are investing, and those who are out in the market place doing great things and the entrepreneurs inventing things and all of that, you kind of know where this is going, like directionally, and that is why I am excited about this and I don't think that the media is actually picking up on that; and we can probably come back to this later. I don't think the media is really picking up on kind of what is happening in the energy sector, like what is actually happening on the ground in terms of what is getting built and where the investment's going but that's a whole other topic Jen. So I think there is a deeper nuanced story that the people might find interesting.

Jennifer: Yeah, well certainly, absolutely, and I'll give Ben a chance to comment on what is the media missing?

Ben: So the thing that has just jumped out at me, so I do quite a lot of real estate type of work and what have you, so we have got tripling renewable energy capacity, great, and then on the next line it says "and doubling the global average annual rate of energy efficiency improvements by 2030", and so maybe people are interpreting that differently but I interpret it as, you know, how do you retrofit all our property? You know, you go for a walk at lunchtime and most of the buildings you see are still going to be here in 2050, certainly going to be here in 2030. So how do you retrofit those? And, so again, it is that market signal Tom's talking about – it is saying we have got to go hard on retrofitting property, making them more energy efficient, making them use less energy, trap heat, all that kind of stuff. So although we think of COPs as being for the big and dirty type businesses or energy and stuff like that, actually I think there is something in here for property too.

Jennifer: Lasitha, do you have anything to add?

Lasitha: Yeah, I think just to build on what Ben was saying, you know one of the things I heard being talked about at COP that wasn't necessarily focused on the stocktake is the unintended consequences of adaptation, right. So assuming that there are still going to be parts of the world that even if we hit 1.5, you know the best case scenario, so it is still too late for them. So let's take India as an example, Delhi summers are now 40 degrees plus right, and so it is incredibly hot, but one of the shocking statistics I learnt at COP was that if India moves towards having air conditioning in all of its buildings the carbon footprint of just the air conditioning units in India alone would be greater than the global aviation sector. So if you take that as an example that is the consequence of adaptation. You can't expect them not to, you know, to adapt to their circumstances, but understanding the consequences of that adaptation and making sure that that is factored into the entire pathways are also part of that. Sometimes you don't know what you don't know, because we don't know what the cost of adaptation will be if we need to build higher walls for flooding, what about the concrete that comes out of that that is required for that and the carbon footprint of that and so on.

So there is a lot of stuff there that just the complexity of the stocktake is one thing that really hit me, if you are looking forward on a forward basis, so that is why I kind of equally – going back to my earlier point – why I feel it is a glass half full; is that people are thinking about this right now because it is a question of this is right. They're slowly realising, you know, what are the known unknowns, as they say, so this is the stuff they are trying to work out, and it will be a process but again a lot of money I'm seeing being pushed towards better data collection, understanding the data better, AI is becoming a big player now in this whole climate discussion. So I think all of that is positive and fundamentally I hope will act as a catalyst for quicker action in the future.

Jennifer: Thank you. Thank you very much. Now one of the things that was talked about particularly before COP, and in the first few days, was the loss and damage fund. Ben, can you tell us what that is and what happened?

Ben: Yeah, so if COP28 goes down in history as the first COP where, or the big thing in COP28, was about fossil fuels in the agreement, then the big thing at COP27 in Sharm el Sheikh was this establishment of the loss and damage fund. So sort of established last year and effectively operationalised this year, and it is a fund that is going to be contributions from, sort of you know, developed countries who I guess have benefited from using a lot of fossil fuels since the industrial revolution and is essentially going to be paid for the most vulnerable countries to deal with it who are facing the harsh effects of climate change. So there were a number of headlines weren't there at the beginning of COP about some of the meetings that the president of COP28 had had, and given his fossil fuel background, I don't know whether the loss and damage fund is big news, you know it had loads of contributions on day 1, day 2; whether that was always going to be on the agenda or whether that was going to be announced later. But it got us off to a really good start and you know you had the UAE put in $100 million. I think Germany did the same, France and Italy I think put in $110 million each, so that was really good, UK was I think between $40 and $60. The US put in $17 million which is not a particularly big number right – they probably spend more on paperclips in Federal Government than that but Congress is so gummed up – but that is probably all they could squeeze out of it.

So you have got this fund, the World Bank are going to manage it I think from 2024 for the next four years. They have got to set up a 26-person Board who is going to look after this, and I think it has got to have a name, and John Kerry for the US, the climate envoy, has made it very clear he does not like the words 'loss and damage'. He wants it to be the 'climate impact response fund' – it sounds a little bit more, I guess a little bit more friendly. So at the moment we've got what $650/700 million dollars, and that again sounds like a big number but then you look at what annually the cost of climate change is for these vulnerable countries; that's $400 billion. So we're not even close to it, and then just before we came on about 4 o'clock my phone flashed up that Congress in the US had approved the defence budget for next year – that is $886 billion, so we're not even at 1% of that, so it is a start but it needs a lot more cash in it.

Jennifer: Thanks Ben, so besides this early adoption of the loss and damage fund, none of the biggest items on the COP28 agenda focus exclusively on climate finance. However, this was a key talking point in most of the negotiations. Lasitha, can you talk to us about climate finance and why it is essential in the transition away from fossil fuels.

Lasitha: So fundamentally everyone, countries either need to mitigate or they need to adapt and they need to pay for it somehow and, as Ben was just saying, the more vulnerable countries who are probably the least responsible for the situation we are in today are left with a very large bill that they cannot afford, so the debate really going on is who is going to pay for that? The loss and damage fund is one concept that has been set up but there are others, for example, there's a green climate fund which was set up about 15 years ago to finance projects that would help these countries adapt and mitigate, but they are actually an investor in the green guarantee company. Fundamentally, just to give you a sense, if you took all the money in the capital markets of these vulnerable countries, actually all developing countries, you end up with a number of around $1.5, $1.7 trillion, which sounds like a lot, but let's just assume that is money that they are also using to finance healthcare, education, infrastructure, everything else that they need right. But if the gap is fundamentally, you know its $4 billion a year, but if you took it as a whole and you needed to write a cheque today it is about $5 trillion. So actually the countries, if they took every penny they have got and didn't spend it on anything else that they needed but just on climate finance they still can't meet the gap.

Fundamentally, you need to look to the global capital markets in the developed countries, and they are sitting on over $100 trillion of assets. And actually very little, so you actually need to put a very small amount of that, 3% of that, into the pot and you could potentially bridge that gap. But the fundamental reality is that money is not going in. And why is it not going in? Because investors sitting in these global capital markets are very risk adverse – they sit there and they say they look at Africa and Latin America and Asia, and they say that it is just too risky for us, we wouldn't want to put our money in there. A lot of them are driven by credit ratings and a lot of these countries are non-investment rate, so our initiative the green guarantee company is effectively going to provide these investors with investment rate guarantees to get them to invest in more climate primary projects in developing countries. And where backed by, as I say, the green climate fund, the UK, the US, Nigeria and Norway in starting this up and getting it done, but we are hoping others will join in because we can scale this. But fundamentally, until the perception of risk changes for these investors, it won't happen quickly enough.

You know that money, that $100 trillion dollars isn't going to mobilise quickly enough into that and so you really need other actors like the multi-lateral development bank, like the World Bank and so on to come in and do more but they have been moving very slowly and one of the trends that I saw in the climate finance side in COP28, which I thought was very encouraging, is a lot of these multilateral banks coming together and saying we need to work as partners and we need to make it easier for people to access us. So there is an initiative underway where if you put an application into the World Bank say for financing, they could share that with the Asian Development Bank or the African Development Bank and rather than having to go through multiply different processes these guys are trying to find a unified process or climate finance so that you can go to any one of them and access all of them in a way. And I think if that can actually be made to work, very quickly, suddenly, you can get access to much larger amounts of money very quickly as well, and that can only be a positive thing. But again, even if these guys get their act together and they start doing things really well and quickly there is still a drop in the ocean. We really need the big institutional investors sitting in London, New York, Dubai and the other big global countries like Singapore and so on to be coming in and doing that, and we need to find a way to incentivise them to change their perception of the risks to do that.

Jennifer: Thank you very much. Tom?

Tom: I just want to jump in with just one observation, and Lasitha that's very helpful. Jonathan and I were in a couple of meetings last week with huge investors. They know they are going to have to access debt. The banks have 2050 targets, zero carbon, and so 2050 is not that far away any more and this is the first time that I've kind of seen this conversation play out: well, we're not going to be able to invest in that gas plant or that coal plant, although nobody really talks about coal plants anymore, at least not in Canada, but we're not going to be able to make this investment, because we know that our banks are not even going to have the conversation. They know that they have a 2050 target and we are getting into that 2025 year tender period now, where like those hard 2050 targets – and Lasitha I don't know if you can share this experience – but those hard 2050 targets of zero are actually now playing back, 2025 years back, when people are looking at the financing term. Jonathan, does that play with your recollection of those conversations?

Jonathan: I mean it is 100%, so that in itself I think is a big challenge to the future of natural gas as a transition technology, because I just don't think the funding will be there unless governments are giving hard commitments on carbon capsule and dual firing; and I think you and I both remain quite sceptical about that. So I think that will hasten the need to invest in new technologies and so truly renewable technologies. I mean my experience is completely aligned with Lasitha, as someone who has been trying to develop power projects in Africa for 25 years. There is lots of money available. There are lots of initiatives. There are lots of multinationals and the World Bank are all very supportive of the development of the power sector. The trouble is and I personally think people are concentrating at the wrong levels, and I think companies like Lasitha who are looking at changing the sort of macro structure of these economies to enable private sector investment is the way forward. There is plenty of private money to develop these projects, the risk just needs to be taken out of the investment and today, my experience with multi-lateral initiatives like Power Africa is that they soon realise they can't change the sort of structure of the economy, so they end up looking at the micro-level of getting involved in project procurement where the private sector will do that quite happily. So the focus needs to be on de-risking the investment, not assisting in the procurement of the projects, as a personal view.

Jennifer: Alright. This is probably not for today's discussion, but we might get a little bit into the ESG. When we think about ESG, the reporting standards that are coming up everywhere in the world, including in Canada, and the risk that companies and banks are facing with litigation and the greenwashing litigation that we've seen a lot of in Canada that is following what's been happening in Europe and other places, there is a lot of risk in investing in fossil fuel projects. So I think that there is going to be a lot of incentives, but certainly litigation risk is something that a lot of companies are thinking about, including the financial sector. And so thank you for that discussion, I think I want to go back to something that Tom had mentioned earlier that he promised he would get to and that is the energy transition. Tom is there hope that we might meet a 1.5 degree target set down in Paris?

Tom: Yeah, I mean I am a lot more optimistic and this is actually one of those stories, so I guess I should be quite truthful here.that I am the former chair of the Canadian Solar Industries Association – so maybe not unlike Sultan Al-Jaber I am biased – but the media is really missing the story on solar, and in terms of storage as well, like these technologies. So solar took more money in 2023, more investment dollars went into solar than into the oil and gas sector. I am not talking about solar and wind and other renewables, just solar. It's far outpaced nuclear and far outpaced other technologies, so that in itself is a thing; but that's important.

But then when you look at the scale of what is going on in solar – so you can google this, there is something called Swanson's Law, which applies to solar, which is akin to Moore's Law like the price of solar goes down every year and basically it relates directly to the scale of solar production capacity and that has been true since the 50s. So solar goes down by half every couple of years basically and the scale of what has been built around the world is just incredible. So in 2022, we did 268 gigawatts of solar capacity installed relative to overall 600 gigawatts that is out there. You are seeing new production plants that are in the like 70/80 gigawatts of like single plants that can produce such solar capacity in a single year. And just to put it in context, Ontario's overall capacity is about 35 gigawatts, Canada's overall capacity is about 149, UK is about 76 gigawatts. So like you are seeing single factories that can produce roughly on the scale of what the UK produces, and then the price of solar is going down, like every year, so we already have the cheapest form of electricity ever in human history. It is only going to continue to go down. Of course the curve will vary; it is not a straight line curve and there are always price constraints and things like that, so this technology is already out there, it is already out and like these things are being built and so there's COP but then there is kind of the market realities and that is what I think is kind of an interesting kind of story that is maybe not really getting the play that it should – is that these things are getting built, people are making choices based purely on economic for economic reasons. To go back, in governance, of course, those who are trying to kind of protect the domestic oil and gas industries, their position, and like I feel for them, it is a very tough position to be in because these are jobs and these are people and these are lives, and we saw two of our premiers out there doing their best from Canada. Like I completely, like I completely understand that, but this is coming and this is kind of a technological shift that is going to be really hard to resist. So maybe I'll leave it there like, I think there is a real story here and that cost curve of solar. Lasitha, you probably know more about this than I do, like that cost curve is continuing. We are continuing to swoop down and it is like I'm seeing like point one per cent kilowatt per hour electricity in not too long, and what do you do then when you are trying to sell coal plants. You might want to shift industries. That is my view so…

Lasitha: I mean, that is supported by storage coming down as well right?

Tom: Yeah, which totally changes the economics of the whole proposition.

Jennifer: Jonathan, do you have any comments on the energy transition?

Jonathan: I mean, I echo Tom's views on that. I mean, I think the reality is, as Lasitha touched on earlier, we might soon be having to move away from the 1.5 target. I think even with the global stocktake, with hard obligations. I think we will struggle to keep to 1.5 – even if they were hard obligations and active tomorrow.

Ben: We are at 1.1 now, right, so it feels a little bit of a stretch of the imagination to think that we will keep it within 1.5; but you know if you don't try, you don't succeed.

Jennifer: Jonathan, we heard little bit about technology, different types of technology and the role of technology in energy transition. Do you have any comments about some of the new types of technology that are coming out and getting some play in the media?

Jonathan: I think we've touched on a few of them today, like solar, wind and particularly battery storage, the cost of that, if you apply the Swanson Law, that's difficult to say, but I think the same thing will be the battery technology. That has to be the way forward. I think gas is a potentially poor transition alternative, but it will just require the developed countries to assist the developing countries in subsidising the development of those new technologies. So if you are a developing country with a huge debt pile, how are going to fund your energy transition?

Jennifer: So COPs are they useful? I'll start with you Tom. Obviously, COP28 text is non-binding. Are these conferences useful?

Tom: Yes they are, absolutely. It is really important that the parties be together and that there be an airing on the views. And even the fact that the next one is going to be in Azerbaijan and like there has been a lot of criticism and kind of questioning of that. I think they are incredibly useful. It is important to get both political actors, but also business and of course the very dedicated and talented civil servants who make all of this happen – it is important to get them out together mixing, having those conversations. That being said, and this was an example given by Phil Dunsky at the National Energy Roundtable in Ottawa a couple of weeks ago, which I thought that was quite funny, and the example he gave us was, think of Uber. The National Taxi Cab Owners Association and the City of New York weren't going to invent Uber; that is not going to happen, right. They weren't going to invent an entirely new way of hailing and paying for cabs and being paid to be a cab driver. That had to happen by an innovator, someone who is willing to break things in San Francisco, and so the situation, frankly the pickle we are in, is not going to get solved at COP but it is still important that particularly political actors be on stage; and you know politicians don't start parades, they get in front of parades that are already well underway. There is a parade already well under way. Let's get the politicians in front of it… sorry, I'm missing all kinds of metaphors. I love that example of Uber, like Uber is not going to be invented by the taxi cab drivers. It is invented by someone who is willing to move quickly and break things. The solar industry, the renewables industry, the people out there that are developing new sources of heat for our built infrastructure, new sources of transportation or propelling transportation, new sources of aviation fuel, those people out there are those animal spirits of the marketplace are out there inventing things and, sometimes despite the COPs of the world, things are happening. And we are in a very fortunate place here at Gowling WLG in that we get to actually see this stuff, and I am always amazed – and I have been in this industry for 20 years - by what my clients are doing, what our clients are doing and quite impressed and infused about it, as you might be able to tell. So that's my two cents.

Jennifer: Ben, do you have anything to add? What do you think? Are COPs useful?

Ben: Yeah I think so. I mean, I suppose the cynical view is, you know it is a bit like Christmas, the older you get the faster they come round and the less the magic excites you and you start worrying about the cost of it. But it was obviously depressing that President Biden did not turn up, Rishi Sunak, the British Prime Minister, reportedly spent more time flying there and back than he did boots on the ground, so there's part of me that thinks does it need to be every two years but I think that's wrong, because it gets us talking about it. You know, we wouldn't be having this webinar, we wouldn't be talking about these issues with our clients if it wasn't for COP, and I think the points made earlier about what the banks are doing – you know, businesses and funders go quicker than governments, right. They are more nimble, so having these texts, it's the market signal, it's great. You see the direction of travel, it tells you we are going to go from A to B and roughly how fast and then business reads the texts and thinks right, that's the route, that's where we are going. So in that sense it sets a really clear direction of travel. Everyone knows where we are going, broadly how quickly we have got to get there, and they crack on so, yeah, they are really useful. They are good.

Jennifer: You mention business a few times there, so what do business leaders need to take away from this year's COP? Has the landscape changed at all and really what should clients be doing in the next 12 months, if anything? Jonathan I'll start with you.

Jonathan: Well, that is a difficult question to answer I think today, because not enough time has passed to see what needs to be done. But I think what it does show to business leaders, to touch on what Ben just said, is it shows the mind-set, it shows the direction of travel that countries are signing up to taking, and it tells them where the areas of focus need to be. So in that sense, I think it sets a framework for business leaders to develop their strategies within that framework.

Jennifer: Lasitha, do you have anything to add? What do business leaders need to take away from this year's COP?

Lasitha: So while I agree with Ben that COP does require some level of clarity in terms of direction of travel, what I heard a lot was that business needs clear standards – what does green actually mean? You mentioned earlier about greenwashing and the risk attached to that. Everyone is really worried about the liability of coming into something, thinking they are doing the right thing but then ending up finding our later that they are not, because there wasn't a clear definition of what they should have been doing, right. So a lot of what I heard from business, and even towards us as a Green Guarantee Company, is can you guarantee it's going to be green as well – not just a financial risk, can you guarantee the liability, the reputational risk or the liability, which we can't actually to be perfectly honest about it but what you do really need are more clear standards.

So the capital markets association have green principles attached to their… to what they define as green debt, you know, loans and bonds. Principles aren't really strong enough. They need to be clear standards as to what the criteria needs to be, because are they going to be green or blue or whatever colour that they want to do with regards to climate and this is going to be… frankly, we need people to come together and agree the standards quicker, because that is going to be a real barrier – aside from the challenges around credit risk and perceptions like we were discussing earlier, the absence of standards. People have said to me, you can give me a guarantee but if you cannot get me comfortable that I'm not going to be having somebody calling me up and telling me that I have been involved in greenwashing because I went into some investment. I am really just going to prefer not taking that risk at all. So we need to address that ourselves. We are aligning ourselves with the Climate Bond Standard which is set up by the Climate Bond Initiative, but you know, again, that is just organisation. We need to find a more global approach to this.

Jennifer: That's really important insight, thanks very much. Tom, do you have any comments or takeaways for business?

Tom: Yeah, well as Ben said, you can see the direction of travel, and the oil and gas sector and Sultan al-Jaber took some heat. I don't think any president of COP has been under the microscope as much as the Sultan al-Jaber was, but he took some heat for some of his comments regarding you know whether oil and gas would be done away with or not, and the oil and gas industry is, I think, in many ways becoming more what Warren Buffett would have referred to as a cigar butt industry. There is still value there. It is not going to go away and there was lots of footage of Elon Musk saying as much as well. This is not going to happen overnight. This is a very, very large ship that is turning. The motion, it is already moving, but this is becoming a cigar butt industry in that there is value there but it is not what it was. It is not as optimistic as it was 15 years ago. You can see the direction of travel – if you are putting money into carbon heavy or greenhouse gas heavy industries, then you might want to make sure you have got your risk waiting of return calculated correctly. If you are running a country or running a sub-national jurisdiction that is heavily reliant on oil and gas, just like the Saudi's, just like the Emirates have done, you might want to start thinking about other industries, and they are doing a great job of that but if you are not doing that then the future is not as bright as it was, just you know directionally. And if you are in the renewables business, maybe the future's just a little bit brighter but you know there are lots of competitors too and there is no free lunch, so.

Jennifer: Thanks Tom. I have had a couple more questions that I want to take this opportunity to encourage everybody who is participating to throw some questions in the Q&A function, if you have any questions for our panellists. And while I wait for you to put your questions into the Q&A, I wanted to ask Ben, what's on the agenda for COP29?

Ben: So as Tom said, COP29 is going to be in Azerbaijan, in Baku and it is going to be 11 – 24 November, and that's important because six days before, the US goes to vote for their president on 5 November, the UK will be voting for a new prime minister at some point, so will South Korea, South Africa and what have you. So I think there is some crazy stat like half the world is going to be voting for a new government next year and so – I'm going to talk about what is on the agenda in a minute – the success of COP29 probably won't be felt until a few months afterwards because it depends as to what happens I guess in the US as to whether the agreements Azerbaijan are adhered to or whether, you know, Donald Trump gets into power (he has other views), so I think that sets an interesting tone I guess for Azerbaijan.

So I think the big topic will be climate finance, you know where is the money coming from for all of this. We have accepted at COP28 that we need to support the developing world and these are various things we need to do, but where does the money come from. I think in 2009 it was the developed countries they agreed to join and mobilise at least $100 billion a year towards addressing the needs of the developing countries; that, I think, was going to last until 2020 and then it has been extended to 25. So next year we have to agree how much we are going to be doing and I guess $100 billion is the floor, so that is the starting point and it is just how high it goes. So yeah, there is a lot at stake next year. Again, Azerbaijan, another oil and gas rich, heavily dependent economy. I guess Dubai has shown that you can have a successful COP in that sort of economy. There will be lots of talk clearly about fossil fuels as well, and we will be back to this phase down phase out again.

Jennifer: Lasitha, do you want to add to that? What do you expect to see on the agenda at COP29?

Tom: No, I agree with Ben was saying around the importance of climate finance and there's going to be a lot of clamour at the loss and damage fund… it isn't anywhere near big enough, So a lot of people are going to be asked for scalable sustainable finance solutions and to some degree that's where are going to play a role as well, and so a dollar into to us and we can actually mobilise ten dollars of private sector financing with that. So those kind of scalable models will be coming more apparent and I'm aware of other models that people are now working on , hoping to launch next year in advance of COP29. So it's really going to be a case of people, the investors that I was just referring to, global capital markets, saying we need these products to be able to invest in developing countries. So once we are operational next year and we are there at COP29, then it is going to be a question of right you haven't got any excuses, you want the products we have developed them for you, you know, put up now. Right, that is really where we're going to see what is going to happen and that will be the interesting thing at COP29 – are these guys now finally going to say yes, let's lets start moving that $100 trillion towards the developing world that needs it.

Jennifer: Thank you. So we touched a little bit on the ESG. Ben, how does this impact our clients' businesses and their ESG strategies?

Ben: So as Tom said it is not a legally binding agreement, it is a bit more than being written on the back of a cigarette packet but it is like MOU. But what I think is really good about COP is that it is like the canary in the lantern isn't it? It gives you the sort of early warning signals of what people are interested in and I think it is a really good way to sort of test the temperature of what you are doing. So again we go back to paragraph 28, and we look at renewables, we look at fossil fuels, we look at all this kind of stuff and I think you know if I was in charge of the ESG strategies, I'd be looking at what are we doing as a business in relation to that because we are starting to talk about it, you know: Where is my power coming from? What is my fleet doing? How quickly do I need to move over to zero emissions? Do we need to talk about wider greenhouse gases? I think there is a question around methane and stuff.

We are so focused on carbon, decarbonisation, net zero all this kind of stuff. Methane is mentioned, I think possibly for the first time, you know there is a focus on non-carbon greenhouse gases being far more harmful. So, again, a business needs to be thinking, you know, what am I doing about that? Do I need to start thinking about getting involved in COP29? Do I need to start growing and being more vocal and calling on other industries in my group, other businesses in my industry, my peer group, working with them to focus on these issues. So yeah I don't think the GCs on the line need to worry about a compliance issue tomorrow but these issues are bubbling up ever more closely to the top, right.

Jennifer: Ben you mentioned methane, and we have a question in the chat about the mention of methane and the global stocktake and a commitment to near zero leaks of methane by 2030. This question is for anyone: Do you think that this timeframe will be met and do you think it will have a big impact on reducing emissions and keeping to the Paris agreement?

Jonathan: I think on that I'm probably sceptical about whether that target is achievable but I think as Ben just said, it is good to have mention of it. Methane obviously, as Ben said, is more harmful in many ways, so I think it's helpful. Whether the target is met, doubtful, but I think one of the good things was that we did at least see some national oil companies committing to a reduction in emissions, if not a reduction in production. So small steps on that front but positive.

Tom: And what's great about that is that those changes actually can pay for themselves, or for the gas producers, so they are not going to have put too much in out of their own pocket to kind of reduce their accidental emissions.

Jennifer: Tom, I think we've mentioned it a few times, everyone has mentioned it in some way, that COP28 text is non-binding – even though I think the consensus here in this group is that it is still useful. So I think we also need to look at national and sub-national commitments and to see whether or not countries are going to follow through. Can you tell us about some of the national and sub-national commitments you have been seeing this year?

Tom: Sure, so the US Inflation Reduction Act is of course the one thing, at least in Canada, we are all following quite closely, so that's huge. That is going to multiply solar production, domestic solar production in the US, but other things that are going on… policies within Europe, the EU Net Zero Industry Act. The other really interesting thing what we would call a border adjustment tax here, in the EU they call it the carbon border adjustment mechanism, which sounds more exciting, but it is really interesting. So what we are talking about there is products being imported into Europe are going to be tariffed on the basis of their carbon footprint, so that means manufacturers in Taiwan, and manufacturers in I don't know wherever like, are going to have to think through what's the actual carbon footprint of my product that I am exporting into Europe.

I can see other, I know other countries are already talking about these border adjustment mechanisms. They are quite handy, they are an easy way to tariff products and kind of be on the side of the angels while being a little bit protectionist as well, and so that is going to kind of cause a kind of dispersion of carbon concern into economies and sub-national economies that might not historically have been so concerned. So that is interesting.

Canada's Investment Tax Credit, the ITC, which has been designed in a direct response to the IRA in the US, is still a work in progress but it is coming and it is really, really exciting and it is going to drive a lot of change across all of the provinces and territories. But then also India's national electricity policy, where they are talking of putting a stop on the development of coal plants, which is you know high time but it is a great outcome, and then of course thinking about China and China has a lot of really good reasons for shifting to heavier reliance on coal; as most people on the ca,ll will know, China does not have strong domestic oil and gas production capabilities and so is, like most of us, entirely reliant on the Strait of Hormuz and peace in the Persian Gulf in terms of its energy strategy. So China is also really, really driving change here and that's a good thing because China is obviously a huge global economy and both China and the US are kind of rolling in the same direction which they are at present… then that is a hopeful sign for all of us. So lots of things happening and that is just a sort of a high-level picture. All of the subnational governments are making changes and they are competing with each other, which is great, that's terrific.

Jennifer: Thank you. I mean, we could do a whole webinar just on that topic. I have one more question from the Q&A before I give you a chance to leave us with your takeaway. The question, thanks you for this question, what are the most promising nature-based solutions to mitigate climate change? Anyone have any thoughts?

Ben: It is a phenomenal question right. We have been degrading the natural environment since, well since we learnt to farm and, yeah, globally about a third of our land is used for agriculture, growing food, growing food for animals and what have you. So I think looking at how we use our land differently, restoring and, you know, re-wilding and enhancing biodiversity, but who pays for that? I mean, it is just phenomenally expensive and so, you know, the UK has been putting together various mechanisms to get private capital into nature restoration and, you know, the UK has put various regulations together to try and get a billion pounds by 2030; and that is just for England and Wales. So not entirely sure what is going to be the solution, but the money to restore nature is just mind-blowing I think. Not quite sure where we get it from.

Jennifer: Thanks Ben. So starting with you Lasitha, can you tell us what your one takeaway is that you'd want the audience to take away from this, you know, your key takeaways from this COP28 webinar?

Lasitha: Um well, I think I'd like them to takeaway that it is still very much a glass half full scenario, and I think what I'd say is that, I don't know where our audience is coming from in terms of their backgrounds, but you know everyone has a role to play in this right and we can all be enablers. and the question is how can we do that? And I think what I took away from COP is that if we can't rely on the big guys in the fossil fuel industry or the governments, a lot of us need to look at ourselves and how we can be part of it. I think that was what I took away from COP28 and how people were changing the mind-set. I said earlier about let's not rely on others, let's try to focus on what we can do, and every little bit that adds up and that counts, and that is kind of where we will take it, so I would say that.

Jennifer: Thank you. Well, we are out of time, so I am just going to give Jonathan the last word.

Jonathan: What pressure. I would say better than feared, but less than needed.

Jennifer: Thank you. Thank you all ,so thank you all to the panel for taking the time with us today and thank you for everyone who joined and asked questions. I think there is a lot more to do to get into what happened at COP28 and impacts on business and our communities, and I look forward to continuing the conversation in the future. Thank you.