COP’s Bumpy Road From Glasgow to Sharm el-Sheikh
This year’s Conference of Parties, COP27, will be held November 6-18 in Sharm el-Sheikh, Egypt. As with every edition, this conference will spotlight the global debate on climate. During last year’s COP in Glasgow (COP26), steps were made in the battle against climate change. But overall, the COP was less impactful than some had hoped. In this article, we discuss where COP26 left us and guide you through the main topics that are expected to be addressed in the following weeks at COP27.
Various pledges highlighted last year’s conference. Among other things, additional countries committed to decarbonizing their economies. Over a hundred countries pledged to reduce methane emissions and end deforestation. For the first time during a COP, parties agreed to phase down unabated use of coal for power production and end inefficient fossil fuel subsidies. An agreement was reached on Article 6 of the Paris Agreement, which governs carbon markets. And, the Global Financial Alliance for Net Zero (GFANZ) was announced, an agreement under which financial institutions with over USD 130 trillion worth of assets under management commit to help finance the transition to a net-zero-emissions society.
While the above list represents an important step in a good direction, we still need to do more. As António Guterres, UN Secretary-General, said earlier this year, “Most national climate pledges are simply not good enough.” Unfortunately, the geopolitical developments that unfolded over the last year have complicated delivering on those pledges. The COP26 motto of “putting coal to history” did not live up to expectations, as global geopolitical tensions inclined various governments to place energy security higher on their agendas than the climate crisis. Last but not least, COP26 left a bitter taste with regards to the discussions on climate finance. The promised yearly financial support from richer nations to help poorer countries adapt to climate change and implement mitigation technologies remains a sensitive topic that needs to be further addressed.
Characterized by some as an “implementation COP,” COP27 in Sharm-el-Sheikh is expected to focus more on actions than on (more) promises. The president of Egypt, Abdel Fattah El-Sisi, said in his welcome message to COP27: “As incoming Presidency Egypt will spare no effort to ensure that COP27 becomes the moment when the world moved from negotiation to implementation and where words were translated to actions….”
Committing to action will not be straightforward, given the high inflation and energy and economic crises in various parts of the world casting a shadow over the climate discussions. For example, the new UK prime minister, Rishi Sunak, decided to attend COP27 only after mounting public pressure.
The Conference of Parties (COP) is an annual summit that forms the supreme decision-making body of the United Nations Framework Convention on Climate Change (UNFCCC). The UNFCCC is a multilateral environmental agreement to combat “dangerous human interference with the climate system.” The most well-known agreements to have emerged from COP meetings are the Kyoto Protocol (COP3) and the Paris Agreement (COP21).
Climate Finance Takes Center Stage
COP27 will continue discussions on climate-related financial support for developing countries. This encompasses both financial support for adaptation and mitigation as well as support for the losses and damages already suffered due to climate change.
At COP21 in Paris in 2015, developed countries committed to providing USD 100 billion per year to less wealthy countries by 2020 for climate adaptation and mitigation. As of 2020, however, this yearly climate finance support (both public and private financing combined) was only around USD 83.3 billion. But the debate goes beyond the exact amount and form of financial support (e.g. credit lines or grants). Some are questioning whether support in the form of knowledge and capacity building or technology transfer would be more beneficial than direct financial support. Germany has proposed establishing a “global shield” against climate risk in poor and vulnerable countries by focusing on improving insurance and social security schemes so support comes systematically.
Aside from not delivering on promised adaptation and mitigation support, COP26 failed to resolve the debate around the funding required to cover loss and damage. This is a separate aspect of climate finance that is not related to adaptation and mitigation technologies, but instead covers the losses and damages that have already occurred as a result of climate change. Developing countries requested a financial facility that would govern financial support for losses and damages, but saw their initiative blocked by, among others, European countries and the US. The financial facility initiative was pushed back, and instead, it was agreed to establish the Glasgow Dialogue on Loss and Damage with possible funding arrangements at a later time (set to run through 2024). Being in Africa, where the impact of climate change is already threatening human health and food and water security, COP27 is expected to focus heavily on loss and damage financing.
Climate finance for less developed countries will also have to come from the private sector. So far, the private sector has shown relatively little climate-financing activity in Africa. According to the Climate Policy Initiative, the private sector has contributed just 14% of the total climate financing Africa has received. Fostering this process, though, is a huge task. Furthermore, attention from investors might be weaker than last year, as major banks and asset managers, including BlackRock and Citigroup, are planning to send senior delegations but not their CEOs.
1.5°C Still Out of Reach
The effects of global warming are set to transition from the shadows into our daily lives. We are already experiencing extreme climate events in various continents. The increasing occurrence of heat waves (Europe), droughts (Africa and Europe), wildfires (Australia, Mongolia, and the US), and floods (Pakistan) are just a few examples of the importance of keeping warming compared to pre-industrial levels below 1.5°C.
Civil groups are increasingly vocal about the need to act urgently on the climate crisis, like the worldwide September climate protests organized by Fridays For Futures. Monday’s opening events at COP27 have been even cancelled, and security has been tightened, which may hamper NGOs’ ability to debate with heads of state about climate change.
When observing and experiencing such catastrophic events and social unrest, one would expect developed countries to step up their game and transition into low-carbon societies. Yet, with a few exceptions such as Australia, nationally determined contributions (NDCs), which embody a country’s efforts to reduce national emissions, have not had significant updates since Glasgow. Based on the current NDCs, the 1.5°C target will likely not be reached. In the best-case scenario, we are on track for 1.8°C above pre-industrial levels, according to Climate Action Tracker. More realistic estimates, based on the current policies and commitments in place, put us on a worrying path of 2°C to 3°C global warming.
One of the reasons underlying the lethargic attitude toward climate policy is the energy crisis, which worsened the economic conditions of most global economies and shifted short-term priorities. For example, in areas of Europe, the commitment to phase down coal usage in 2022 was sidetracked as coal consumption increased to reduce natural gas dependency. But there is a silver lining: The energy crisis can present an opportunity to speed up the energy transition. Efforts to reduce dependency on natural gas can stimulate the adoption of energy-efficient technologies (e.g. better property insulation and heat pumps) and renewable energy. With this in view, the EU put forward the REPowerEU plan to deliver the energy transition faster. There is great potential for renewable technologies like solar photovoltaics (PV), wind energy, and hydrogen production in Africa and the Middle East, in alignment with the hosting of COP27 (Egypt) as well as COP28 next year (Dubai). The current energy crisis has also put nuclear energy back on the table in countries that, thus far, were reluctant to build new nuclear power plants, and has accelerated plans for bio-based gases and hydrogen. In other words, even if it is unlikely that major NDC enhancements will be announced in Egypt, countries motivated by energy independency are considering speeding up their transition strategies.
The First ‘Food COP’
While climate finance and the geopolitically driven energy crisis are expected to represent the core of COP27, it is interesting to note that food and agriculture (agrifood systems) are also getting more attention. For the first time, agriculture and food-production pavilions will be held at a COP. This acknowledges the fact that such systems are vulnerable to climate change as the frequency of extreme weather events increases. Building more resilient food systems that can adapt better to climate change is of great importance for our local and global food supply.
To safeguard our food supply and ensure our agrifood systems evolve into more resilient ones, several developments are needed: access to climate financing for agrifood systems, increased knowledge and technological development, and inclusion of agrifood systems in climate change policies.
However, the importance of agrifood systems goes beyond food security, as they are also an important factor in reaching the 1.5°C target and the energy transition. To move toward a net-zero-emissions world, we must also address emissions from the agriculture and (agro)forestry sectors. But at the same time, a change in agricultural practices and a focus on carbon sequestration within both sectors offer potential opportunities to reduce GHG emissions and enhance carbon sinks.
To stimulate the development of nature-based carbon sequestration initiatives, carbon credit markets, which are rapidly growing and maturing, need further development. In this respect, one of the highlights of COP26 was the discussion of rules to govern the use of carbon markets to help countries meet their NDCs under Article 6 of the Paris Agreement. This article enables countries to exchange carbon credits, which can be ‘generated’ by reducing GHG emissions. International carbon trading allows capital to flow to climate change mitigation activities where there would otherwise not be any funding available. Enabling developed countries to invest in host countries’ climate change mitigation activities allows developed countries to meet their NDCs using carbon credits and allows the host country to have an inflow of developmental funds. There is, however, the danger of double-counting, where both the buyer and the seller count the reduced emissions associated with the carbon credit in their own NDC balance. The details and ambitions of Article 6 will have to be further discussed during COP27 in order to take the next steps in translating the general principles of carbon credits into market designs and mechanisms.
Fighting Climate Change at COP27 Will Require Solidarity
Climate change will affect all of us. This challenge that we face should be tackled with unity and solidarity at the global level, despite local political and economic differences.
COP27 will be an opportunity for richer countries to show solidarity with developing countries. We expect fierce debates about financial support for climate-related loss and damage, in which countries will try to define who deserves to be compensated, what should be compensated, and how to translate loss and damage into monetary value.
As Amina Mohammed, UN Deputy Secretary-General, said earlier this year, in the fight against climate change “every moment counts.” Economic and energy crises come and go, but the climate crisis remains, and we need to act on it urgently and more firmly. We have an opportunity to use the current turmoil to accelerate the energy transition by focusing on replacing natural gas consumption not with other fossil options but with renewable energy technologies.
We don’t expect COP27 to result in new pledges, but we hope at least to see concrete actions defined that will deliver on the existing commitments.