OFAC revokes so-called U-turn authorization for Cuba-related financial transactions
OFAC published a final rule that modifies the Cuban Assets Control Regulations to revoke the so-called "U-turn" authorization.
COP22 in Marrakech was overshadowed by the election of Donald Trump on day two (a development which continues to impact on discussions, as the US continues to negotiate despite its planned withdrawal from the Paris Agreement). However, progress was still made with key outcomes1 and announcements being made, including: a five-year work plan on Loss and Damage; guidance and questions for work-plans; agreement to a statement of the need for action and countries’ will to act (the Marrakech Action Proclamation for Our Climate and Sustainable Development); commitment by The Climate Vulnerable Forum to update its Nationally Determined Contributions (NDCs) before 2020; and the launch of a roadmap to 2020 for developed countries to reach the goal of providing $100 billion per year in climate finance for developing countries.
A further important development, in terms of what to expect in Katowice this year, was that countries gave themselves until 2018 to agree on the "rule book" for the Paris Agreement (the Paris Agreement Work Programme or PAWP).
That milestone was confirmed at COP23 by the Fiji Momentum for Implementation decision, which also set out the design of the facilitative dialogue (the Talanoa dialogue) and clarified that "global stocktakes" on pre-2020 efforts would take place both this year at COP24 and at COP252. The aim of these stocktakes is to create a "ratchet mechanism" to increase ambition every five years3. In addition, a mandate was issued for the Chair of the Subsidiary Body for Scientific and Technological Advice (SBSTA) to prepare an informal document for the three components of article 6 ahead of SBSTA 48 this year.
Topics discussed at COP23 included the role of technology in sustainable farming, and how to mitigate the significant amounts of greenhouse gases produced by the agricultural sector. COP23 also resolved a long-standing deadlock on agriculture and food security.
A key issue at COP23, as ever, was finance. Developing countries maintained that they were not receiving enough financial support from developed countries, which in turn makes it harder for them to implement their NDCs. Once again, resolution of this topic was deferred to a later date, and stock-taking sessions on these issues have also been added to the agenda for COP24 and COP25.
A number of partnerships and resources were launched, including the InsurReliance Global Partnership, Fiji Clearing House for Risk Transfer, NDC Regional Hub, and the Ocean Pathway Partnership. Countries also adopted a Gender Action Plan and established a Local Communities and Indigenous People’s platform, which aim, respectively, to ensure roles for women and indigenous communities in the climate change response. The COP23 Presidency presided over the first Open Dialogue between governments and observers (from civil society, municipal governments and business) within the formal climate negotiations.
And last but not least, a delegation of sub-national US leaders presented a report on the ongoing efforts by American states, cities, businesses and civil society to uphold the emissions reduction target of the US under the Paris Agreement.
The period since COP23 has seen several forums and discussions on climate change. In September 2018 key conferences took place in San Francisco, New York and Bangkok. At the Global Climate Action Summit in San Francisco, "Key Summit Challenges" included healthy energy systems, inclusive economic growth and transformative climate investments. While discussions were US-focused, a number of outcomes were reached including the Green Bond Pledge, by which several states and governments pledged to address climate risk in future bonds financing long-term infrastructure and capital projects. Participants also re-affirmed their commitment to the Paris Agreement, with the "We are still in" campaign gaining 300 new signatories.
The New York Climate Week saw more private sector commitments. Larry Fink of BlackRock announced an upcoming climate fund for investment in green sectors in Latin America, Asia and Africa, while Google launched a tool to measure the sustainability of cities.4 The EV100 campaign to increase electric vehicle use gained several new members, among them Bank of America and Lyft. On a national level, the UK was one of four new additions to the Carbon Neutrality Coalition, by which governments commit to publish strategies by 2020 for achieving net zero emissions5.
The Bangkok Climate Talks were intended to be a predecessor to COP24. Talks focused on technical points, which will be discussed through a political lens at COP24 in Katowice. Tension continued regarding funding and reporting means for developing countries, such as the Adaptation Fund and the Clean Development Mechanism. One sticking point has been the option of a "two-tier" system for developed and developing countries in terms of their mitigation efforts. Progress was made towards a technology framework for the Paris Agreement, but the bulk of the discussions left the decision-making to COP24 and achievements were described as "limited"6.
This year’s conference represents the culmination of several debates and processes, and will therefore be opening a day earlier than planned in order to give negotiators extra time to talk. The event is given added urgency by the recently released IPCC Special Report, which warned that only 12 years remain to limit global warming to 1.5 °C, and there have already been indications that this will be a key consideration. The two main deadlines on the agenda are
Launched at COP23, the dialogue will culminate in its political phase this year. It aims to help countries to enhance their NDCs by 2020, and we will hopefully see governments increase their ambitions this year. It is based on three questions: "where are we?", "where do we want to go?" and "how will we get there?", though the primary focus will be on the latter. The International Chamber of Commerce Talanoa Dialogue Roundtable in May 2018 stressed the need for a clear framework for the private sector to move forward and bridge the gap between the financial commitments promised by governments and the funds needed to meet global climate change goals7. It highlighted corporate contributions to these goals, such as HSBC’s choice of an environmentally-friendly fund for £1.85 billion of its pension scheme savings and EDF’s development of low-carbon energy solutions.
This points towards a wider trend of corporations stepping up their commitment to achieving the Sustainable Development Goals as public and investor pressure to do so increases. One recent example of this is Exxon Mobil and Chevron’s decision to join the Oil and Gas Climate Initiative in September 2018, having previously resisted doing so8, an announcement lauded by TOTAL CEO Patrick Pouyanné who helped found the initiative in 2015. Another is the dramatic rise in corporate PPAs, especially as carbon offsetting continues to decrease in popularity.
The PAWP will detail the means by which parties will meet their Paris goals, with a focus on finance. This will likely be the main source of disagreement, particularly between developed and developing countries. One solution proposed at the Bangkok Climate Talks was new global carbon markets, by which countries could trade emission-reduction credits via a "Sustainable Development Mechanism". However, as discussions on the PAWP have so far consistently deferred any firm conclusions, anything and everything is still on the table.
Brexit will no doubt be a hot topic, given the continuing uncertainty as to its impact on the UK’s climate change commitments. Industry leaders, including the CEOs of EDF and Unilever, have urged the UK and the EU to co-operate at COP24 in an open letter which stresses the need for an "ongoing commitment" to implementing the Paris Agreement and asks for further guidance in Katowice. As the conference will take place less than four months from the UK’s withdrawal from the EU, businesses will be watching closely.
As parties debate their fiscal obligations, financial institutions will be considering their role. 2018 has seen significant growth in sustainable finance, and this looks set to continue. The Bank of England is currently working on guidelines for banks and insurers to manage climate change after a survey found that only 10 per cent of lenders are considering its long-term impact. The UK’s Prudential Regulatory Authority (PRA) has published a consultation paper seeking views on a Draft Supervisory Statement which sets out the PRA’s expectations regarding how banks’ and insurers’ should approach managing financial risks of climate change. This draws on findings in the PRA’s September 2018 report “Transition in thinking: The impact of climate change on the UK banking sector”, as well as broader findings from the Bank of England’s climate-related work. The UK’s Financial Conduct Authority (FCA) has also published a discussion paper on Climate Change and Green Finance, which is relevant to the UK’s wider financial services market. The FCA notes the general impact of climate change on financial markets, but its particular focus is on the impact of the transition to a low-carbon economy.
Meanwhile, the Loan Market Association (LMA)’s recently published Green Loan Principles are improving consistency in the sustainable finance market. These initiatives have been working in tandem with smaller initiatives such as the Climate Finance Lab to make it easier and more appealing for investors to put their funds towards environmentally-friendly goals. Regardless of the outcome in December, public-private sector co-operation will be crucial in achieving the aims of the Agreement.
IPIECA: COP22 – Highlights and Outcomes (http://www.ipieca.org/news/cop-22-highlights-and-outcomes/)
IETA: COP23 Summary Report (https://www.ieta.org/resources/COP%2023/COP23-Summary-Report.pdf)
LexisNexis: What are the outcomes of the COP23 climate conference? (https://blogs.lexisnexis.co.uk/purposebuilt/cop-23-climate-conference-outcomes/)
Reuters: Businesses pledge climate change action at New York Summit (https://www.reuters.com/article/us-global-climatechange-summit/businesses-pledge-climate-change-action-at-new-york-summit-idUSKCN1M62VI)
UK expertise to help developing countries tackle climate change and move to cleaner energy (https://www.gov.uk/government/news/uk-expertise-to-help-developing-countries-tackle-climate-change-and-move-to-cleaner-energy)
Bloomberg: Climate talks in Bangkok hit hurdle over financial pledge (https://www.bloomberg.com/news/articles/2018-09-09/climate-change-talks-in-bangkok-hit-wall-on-financing-commitment)
ICC: Key takeaways from the ICC Talanoa Dialogue Roundtable https://iccwbo.org/media-wall/news-speeches/key-takeaways-icc-talanoa-dialogue-roundtable/
Reuters: In U-turn, Exxon, Chevron to join industry climate initiative (https://www.reuters.com/article/us-oil-climatechange/in-u-turn-exxon-chevron-to-join-industry-climate-initiative-idUSKCN1M01I9)
On 5 September 2019, Professor John McMillan AO’s Final Report (Report) on the operation of the Narcotic Drugs Act 1967 (ND Act) was tabled in Parliament. Section 26A of the ND Act required the Minster to cause a review of the operation of the ND Act to be undertaken.