Podcast - COP27 in Review: It Takes a Village

Isabel Lane: Welcome back to the Eyes on Washington Podcast. My name is Isabel Lane, Senior Public Affairs Advisor with Holland & Knight, and I'm here today with our very own Beth Viola, Senior Policy Advisor and co-chair of the firm's Energy and Natural Resources Industry Sector Group. Beth recently returned from Sharm El-Sheikh, Egypt, where the U.N. Framework Convention on Climate Change, or UNFCCC, hosted its annual meeting to address climate change. These meetings, known as the Conference of the Parties or COP meetings, are annual opportunities for the world to come together to negotiate and engage across borders from diplomats to lawmakers to NGOs, industry, academics, activists, indigenous groups and more. Beth has been a player at these COP meetings since her time as a senior advisor in the Clinton Administration, where she worked closely with former Vice President Al Gore as the UNFCCC and Kyoto Protocol were first established. We've been fortunate to have her here at Holland & Knight guiding clients and navigating both domestic and international energy, environment and climate public policy issues for two decades. We're even more fortunate to have her here today to talk to us about her time over in Egypt and what this most recent meeting means for businesses here in the United States. Thanks for joining us, Beth.

Beth Viola: Isabel, thank you so much for having me today.

Setting the Stage for COP27

Isabel Lane: Diving right in, you've been highly engaged at these meetings since the Paris Agreement was reached back in 2016, setting a new course for international cooperation on climate. Can you help us with a little bit of history here to frame the big picture surrounding the most recent COP27 meeting in Egypt? As the U.N.'s countries work together to mitigate global emissions and determine strategies for adaptation in a changing world, how did this meeting fit in? What needed to be accomplished here, and was it overall a successful COP?

Beth Viola: Those are all very good questions, and I will say that I've been engaged in the COP process actually since 1997. I attended my first COP when I joined then-former Vice President Al Gore to attend what was then COP3, which was a very important COP as well. But I will say it has been interesting to watch these COPs evolve over the last couple of decades. I will say, obviously, the 2016 Paris COP was a very significant event with a very strong outcome and commitment to sticking to two degrees C by every country and an agreement to move forward collaboratively. I think that, you know, we've had some ups and downs here with the U.S. engagement given that during the last administration there was the withdrawal of the Paris Accord by the U.S. government. So last year, being able to be in Glasgow and have the United States fully engaged was not only welcomed by folks here in the U.S. and stakeholders here in the U.S., but also by the global community at large. Leading up to Paris was all about how do we reach a global agreement on what the targets should be and what the timeline is? And then the last several COPs, especially in Glasgow, were trying to resolve some of the key issues that needed to be addressed. And one of those in Glasgow last year was how do we create a level playing field for international emissions trading? And so that was one big hurdle. And that was a very significant outcome from last year's COP. This year's COP, the big question that needed to be resolved was the issue of loss and damage, which is really driven by the developing world, wanting to ensure that they were not only compensated for the impacts of climate change that they've faced to date, but that they are continued to have a fund to help them mitigate potential issues going forward. So I would say that overall there continues to be a lot of conversation from NGOs and from the next generation in particular who obviously are very, very eager to see something aggressive done to address the climate change crisis. That it does create, this last COP did create a very good glide path for helping us meet carbon emission reductions. It just may not be as aggressive, I think, as some folks would like it to have been.

This year's COP, the big question that needed to be resolved was the issue of loss and damage, which is really driven by the developing world, wanting to ensure that they were not only compensated for the impacts of climate change that they've faced to date, but that they are continued to have a fund to help them mitigate potential issues going forward.

On the Ground at COP27

Isabel Lane: A lot of people at these meetings, a lot of different perspectives, and it's really encouraging to hear the progress that was made. Can you paint us a picture of what the on-the-ground experience was like in Sharm El-Sheikh? Who was there? What was the energy like? How did this compare to COPs of years past on the ground?

Beth Viola: Yeah, that's a good question, too. It is interesting. Again, how these Conference of the Parties have evolved. They have you know, they initially were just very much, just that, a conference of parties, of negotiators from countries and with very limited observer participation, and the stakeholders that attend, like myself, are all a UNFCCC-accredited stakeholder for the negotiations. Over time, what has happened, though, is that these conferences have become essentially a very large conference and expo, for lack of a better term, where you have everything, is what they call in the blue zone there. But what you have, is you have essentially one portion of the facility where you have negotiations happening, and only delegates from those countries are allowed to participate in those discussions. But the observers are primarily all participating in a bunch of side events that happen all day, every day, for two weeks where you literally have hundreds of pavilions hosted by different countries, by different organizations, and there is programming that goes on in all of those pavilions all day long. So, for example, there was the first-ever Environmental Justice Pavilion during this COP, and there was a lot of really good programming there that focused on environmental justice priorities in the United States, but also brought in representatives from other countries to talk about what they're doing and how they're handling some of the environmental justice issues in their nations. And then you have everything from, you know, the Climate Registry Pavilion, the International Emissions Trading Association Pavilion, and during all of those facilities, there are just tremendous conversations going on that involve representatives from the United States government, oftentimes from other governmental leaders, have industry stakeholders, NGO stakeholders. So a lot of really good dialogue happening during the day in a lot of those pavilions. I would say one of the things that had me most excited — or has had me excited really the last couple of COPs — is the level of participation from industry leaders. Obviously the NGO community has had strong presence at most of these COPs over the years, but more and more as I've been going especially over the last decade, we have seen an increase in the number of C-suite executives that are now engaged in these events, both in terms of official side events or in some of these pavilions that I mentioned where you have very high-level folks participating. And I think it's really a sign of where we are. For the first time you've got CEOs and C-suite executives making the case like, you know, regardless of what comes out of the United States government in terms of policy, the reality is there's a recognition that we are, that this is a global economy and that they are moving goods and services across country lines and that there's a recognition of needing to meet targets in other countries, but I think they're also feeling pressure from consumers, customers and shareholders, and a recognition that regardless, we are moving towards a low carbon economy. So it's really exciting to see industry leaders at the table, because at the end of the day, we are not going to see progress on climate without industry leaders and their know how to help us make those reductions that are so desperately needed.

It's really exciting to see industry leaders at the table, because at the end of the day, we are not going to see progress on climate without industry leaders and their know how to help us make those reductions that are so desperately needed.

The Biden Administration's Goals for COP27

Isabel Lane: Couldn't agree more. That's great to hear. Speaking of leadership, not just from the business community, but also national leadership, as you acknowledged, just a few years ago the U.S. was in the process of withdrawing from the Paris Agreement. It feels like we're in a very different place today. In particular, the Biden Administration has taken a very proactive approach to climate issues, including greater engagement with the UNFCCC and presence at these COP meetings. What do you think the Biden Administration's goals were going into this COP, and what was the international reception of the U.S. like compared to years past?

Beth Viola: Well, you know, when president, well then-candidate Biden was running for office, he made it very clear that he was going to not only rebuild our nation's infrastructure, he was going to do it and ensure we had good-paying jobs in this country, but we were going to do it as we move to a low-carbon economy and that we were going to do it and reduce emissions and one of the very first actions he took when after he was sworn in as president of the United States, was to reenter the Paris Agreement. So there was a lot of enthusiasm from both the global community and I think even from stakeholders here in the United States. I would say from a global perspective, there was a little bit of like: OK, so you were in, then you were out, now you say you're back in. Can we trust the United States? Are they going to really deliver? Are they going to really put their money where their mouth is? And I think we saw some strong commitment by industry when we were in Glasgow that were led by Secretary Kerry, who's the special envoy for climate. But I think coming into this COP, there was just tremendous, tremendous momentum in a way that we have never seen. In many ways, going to this COP was a victory lap for the Biden Administration. In the last year, we have seen, since we were at COP in Glasgow last year, we have seen the Bipartisan Infrastructure Act get enacted, which also has significant investments in our infrastructure, but in a way that is also a very tremendous down payment on climate reductions, but also most importantly, the Inflation Reduction Act and even the CHIPS Act that was passed earlier this summer. I think those three bills are kind of the trifecta. And so for the administration to be able to walk in and say, OK, we are putting our money where our mouth is, and we have just committed unprecedented amounts of money to help the United States make that transition to a low-carbon economy.

I think coming into this COP, there was just tremendous, tremendous momentum in a way that we have never seen. In many ways, going to this COP was a victory lap for the Biden Administration.

Status of U.S.-Chinese Cooperation on Climate Change

Isabel Lane: Certainly has been a big year for the U.S. While the U.S. engaged with dozens of countries at COP, eyes were trained pretty keenly on the discussions between the U.S. and China, including the first in-person meeting between President Joe Biden and China's President Xi Jinping in Bali during the G20 summit, which took place simultaneously with COP27. What were people saying in Sharm El-Sheikh about China's engagement in addition to the U.S.? Was there optimism for U.S.-Chinese cooperation on climate change, or does that still feel elusive as well?

Beth Viola: You know, I think there was actually some added momentum when word came back from Bali that the United States and China had agreed to reengage informal discussions on climate. I think overwhelmingly, China kind of remains the one big issue where people are like, OK, we have to figure out how to engage China. So much of what we see in the Inflation Reduction Act, the Bipartisan Infrastructure Act and even CHIPS is all about how does the United States onshore its manufacturing and develop its own supply chain here in the United States to become less dependent on China. But at the end of the day, there are still going to be ways that the U.S. and China are going to need to cooperate. And there is a recognition that we are living in a shared environment and so while the United States can make significant investments to reduce emissions, it's going to be incumbent upon China to also make commitments and follow through on them as well. From the U.S. side, I think that there was a lot of enthusiasm and excitement going into this COP, and I think the China reengagement with the United States on a formal basis was just an added shot in the arm. So I do think that there will continue to be skepticism about what China will do or will they see through on their commitments. But I do feel like this is the one area where there was some breakthrough in the conversations between President Biden and President Xi that, you know, I think send[s] a signal of the importance of trying to move collaboratively on these issues.

And there is a recognition that we are living in a shared environment and so while the United States can make significant investments to reduce emissions, it's going to be incumbent upon China to also make commitments and follow through on them as well. From the U.S. side, I think that there was a lot of enthusiasm and excitement going into this COP, and I think the China reengagement with the United States on a formal basis was just an added shot in the arm.

Isabel Lane: Takes a village.

Beth Viola: It takes a village.

Impact of the U.S. Emphasis on Domestic Production and Onshoring

Isabel Lane: One thing you mentioned in your remarks just there is this U.S. emphasis on domestic production and onshoring. I want to dig in on that a little bit more. We've been hearing a lot of concerns from the international community about some of the features of the Inflation Reduction Act that emphasize these components in the clean energy transition. For example, the tax credit for domestically produced electric vehicles comes to mind. Countries who are our major auto producers have raised a lot of questions about this and potentially, you know, have talked about seeking WTO proceedings. Were you hearing about this while you were in Sharm El-Sheikh? And were there countries saying good things about the Inflation Reduction Act? Bad things? Are the trade concerns, I guess, muddying the law's perception as a step forward to addressing climate change?

Beth Viola: I would say there was a tremendous amount of conversation about this in Egypt. I think this is one of those areas, for people that are listening, where the United States as part of the Inflation Reduction Act has very strict provisions about being able to take advantage of the tax incentive for purchasing electric vehicles, and it has some serious domestic content requirements, and there is a sense of U.S. protectionism and lots of threats of WTO action. So I think that the United States government, as it looks to implement the Inflation Reduction Act, is trying to figure out how to thread the needle. Given the legislation that they have and the way the statute has been written, we know this is going to be one of the top issues that gets addressed. I think it's going to continue to be a challenge. I think that both USTR, the Department of Commerce are all actively engaged in how do they address this globally? But I'd say that while there was a lot of enthusiasm globally from the global community about the U.S. putting unprecedented amounts of money in a package like the Inflation Reduction Act, there is this double-edged sword of, well, it's very protectionist and the U.S. is just going to go it alone. And so I think there are some, these are just going to be continued concerns that we're going to have to face, and the Biden Administration is going to have to figure out how to address.

I'd say that while there was a lot of enthusiasm globally from the global community about the U.S. putting unprecedented amounts of money in a package like the Inflation Reduction Act, there is this double-edged sword of, well, it's very protectionist and the U.S. is just going to go it alone.

Isabel Lane: It sounds like a complicated issue and one that I think businesses will be well-served to keep eyes on as things progress.

Beth Viola: And I'll say to this too: You know, it's interesting, you've got, you know, you had a lot of the big automakers participating in the COP. And we had one U.S. major automaker just before we went to Sharm El-Sheikh make it clear that they were going to be able to meet the targets for the domestic content requirements in the IRA. And I think that has sent a little bit of shockwaves here and also through the global community about what that means, because I think prior to that commitment, there was concern that no automaker would be able to meet those domestic content requirements. And then having a big car company come out and say it has only sort of muddied the waters, if you will, from a global perspective.

Isabel Lane: Well it's a trend that we do see, you know, companies trying to take the lead on some of these components. But interesting, you know, to hear about the international perception of that. Again, something I think to keep eyes on.

Beth Viola: For sure. We will be watching this issue very closely for many of our clients.

Implications of Egypt as the COP27 Host Country

Isabel Lane: Turning to a sort of different topic, Egypt is one of many geographies across the world on the frontlines of climate change today. Its water resources and food security are very much threatened by some of the changing weather patterns across the globe and in Egypt. It was also the subject of a lot of international controversy. We saw quite a bit of pushback on political issues and questions raised about Egypt's regime in the context of the UNFCCC's decision to host the meeting there. What was the overall sentiment about Egypt as a host? How did you see the Egyptians trying to leave their mark on this meeting in particular? And were they successful? And also, what precedent does this set heading into COP28, which is scheduled to take place in Dubai next year?

Beth Viola: Egypt for sure left its mark on this COP. For those who don't know, the UNFCCC definitely tries to make it a priority to have these meetings happen in places in the developing world so that negotiators get to see firsthand what it means, what the impacts are from climate and what the potential challenges are for them going forward if we don't address climate. So it is definitely by design to make sure that things like food security, water scarcity are highlighted in some of these locations, and Egypt is obviously a perfect example of that. I think there was a lot of controversy around them hosting it. As you referenced there were a couple of things that they did that were problematic. I think there was a lot of concern, first, in terms of the fact that they had to put together some infrastructure relatively quickly, and there were issues around labor, not unlike what we've seen with the World Cup discussions going on right now and some of those controversies. But perhaps one of the things that really stands out at this COP is that Egypt forbade any protests in the actual blue zone of the conference. So where normally at any given time during the day you'd be in a session, there'd be protests going on outside, within the bounds of the blue zone, there would be protests going on in certain pavilions, they would go through the hallways — it was a very different feeling without having those kinds of protests. And while it was great from a perspective of not having to fight people as they're protesting, trying to get from one event to the other — like from a logistical perspective, I think it was helpful — the reality is it's a real lost opportunity for voices to not be heard, especially we've seen so many young protests, protests by young leaders at these COPs in the past, and it's unfortunate not to have their voices included. Sure, they were there and credentialed, but they weren't able to organize the way that they normally do.

But perhaps one of the things that really stands out at this COP is that Egypt forbade any protests in the actual blue zone of the conference... the reality is it's a real lost opportunity for voices to not be heard, especially we've seen so many young protests, protests by young leaders at these COPs in the past, and it's unfortunate not to have their voices included. Sure, they were there and credentialed, but they weren't able to organize the way that they normally do.

Unfortunately, I think that we will probably see a similar situation going forward in Dubai next year, which is the host of COP 28. So it will be interesting to see if that sticks. I think it will. One of the other controversies out of this COP in particular was you saw a number of NGOs saying that there were too many industry stakeholders credentialed and participating at the COP. And that, you know, under the guise of OK, there are all these industry leaders, there's a lot of fossil fuel industry executives here, why are they here? They're just here to greenwash. You know, I don't have any problem with transparency. I think having transparency and recognizing everybody who is credentialed should be public. I don't think that's a challenge at all. But I do think that it is short sighted to think that we wouldn't want to have industry leaders in the room. First of all, you have some industry leaders who are very, very much committed and driven and making significant investments to making this transition to a low-carbon economy but also, we're not going to be successful here in the United States or even with the deployment of technology abroad and be able to meet one and a half degree C if we do not have industry knowhow and wherewithal at the table. There's a lot of major technologies that need to be deployed, a lot of renewables that need to be deployed. You look at offshore wind, for example, you're not going to be able to build out a successful offshore wind industry here in the United States without the knowhow of the offshore oil and gas industry. So I think it is incredibly shortsighted for there to be pressure to eliminate or severely limit industry participation at these meetings. I think it really does, it really is crucial to the conversation.

Isabel Lane: Going back to our theme here, it takes a village.

Beth Viola: It takes a village.

Isabel Lane: Yeah, you know, it's interesting to hear that perspective. You know, these COPs historically have such a great opportunity to have a cacophony of voices. So, you know, from the challenges with having protests to the challenges with having industry voices at the table, it sounds like your, your message is the more the merrier. As difficult as that might make logistics.

Isabel Lane: You know, I learned something early on when I went to work in the White House, and that was it's really hard to solve a problem if you don't bring people to the table. And so even if people don't agree on how to get there, if they can agree that they need to get there and figure out then within the bounds of that. That we're going to slowly get there, maybe not as quickly as people would like — I'm all about trying to do it as quickly as possible. But I would say I think it's really important for people to be at the table and look each other in the eye and recognize that there is a commitment to making significant progress.

It's really hard to solve a problem if you don't bring people to the table. And so even if people don't agree on how to get there, if they can agree that they need to get there and figure out then within the bounds of that.

Looking Ahead: Opportunities in 2023

Isabel Lane: And progress can be made. As you were saying, this seems like it was a very successful COP in that there were some of these major breakthroughs on the long-standing debates between industrialized and developing nations about how to finance the clean energy transition. So with the loss and damage fund now in development, what's the next big hurdle at these negotiations? Where do you see the most opportunity heading into 2023?

Beth Viola: Look, I think that what we're heading into is what somebody coined as the decade of delivery. I think that these COPs are going to be less about negotiation and more about progress and reporting. And it's going to, like the loss and damage resolution was a significant resolution because it was kind of the last big outstanding issue. And so now I think we're definitely going to head into this new phase, and I think it's really going to be about countries making sure that there is transparency in terms of the progress they're making, that they are updating their NDCs, their nationally determined contributions to the COP, and that there's some general transparency about the progress. So I think going forward, the tenor of these discussions is going to just be very different in that it really is just going to be about the progress and ensuring that countries are holding other countries accountable. And then of course, while we have a resolution on loss and damages and we've come to an agreement on the amount of money, that will not be without controversy and challenges here in the United States. We've already seen concern from some Republican leaders saying the United States shouldn't be committing to a U.N. slush fund to pay other countries for the hardships they've experienced, so I think there will be, at least from the U.S. side, the need to figure out how to ensure they are meeting their commitment to the loss and damage fund and do it in a way that allows the U.S. politically to generate some support around that. So it will be, it will be a challenge, and, you know, the United States has not kept its commitments to some of the green funds that were committed in Paris, and so it's going to really, there'll be a lot of pressure on the U.S. to, as there always is, to lead, but to ensure that they continue to contribute to these funds going forward.

I think that what we're heading into is what somebody coined as the decade of delivery. I think that these COPs are going to be less about negotiation and more about progress and reporting.

Isabel Lane: Yeah, you know, I feel like the scale is perhaps a little bit different. But we have seen, you know, I'm thinking back to the Montreal Protocol and the multilateral fund there. We have seen the U.S. be able to make the business case back home for why international investment in climate treaties is good for business and good for our economy back home. So hopefully that's something that the U.S. can focus on here in the next year and pull together on.

Beth Viola: You know, the Montreal protocol is one of the best success stories that we have. It really is a model of how we ought to be working on international cooperation. And I really hope that after the last several COPs that we've had, the resolution of some of these big outstanding issues, that we really are going to start to see some genuine progress towards meeting emission target reductions that countries have made.

Closing Thoughts

Isabel Lane: We can, we can hope. Well, winding down, it sounds like businesses have a lot of reason to stay tuned and stay engaged. Beth, thank you so much for your time and your insights today. The COP meetings can seem really overwhelming in scope and in scale, especially if you're just reading press reports here in the U.S., so it's invaluable to have an insider's perspective on these meetings. Speaking for myself, I've also really enjoyed hearing from you about all of this and what we can expect next year in Dubai. We'll be looking forward to that meeting and hopefully reporting out from Holland & Knight there as well. Should listeners have any questions about specific issues we've talked about in regard to this most recent COP or other broader climate issues, or you want to get engaged in 2023 for the next meeting, please don't hesitate to reach out and follow up with Holland & Knight. Beth, any final thoughts before we close out here?

Beth Viola: No. I just really appreciate your time, and I think you're right. I think the greater engagement, the better. So I look forward to having this conversation with you again this time next year.

Isabel Lane: We need to trademark, it takes a village.

Beth Viola: Exactly. I think it's already been taken.

Isabel Lane: Probably. But anyway, well, thank you so much, Beth.

Beth Viola: Thank you again.