Update

COP27 Takes a Step Toward Climate Justice But Fails To Contain Global Warming

22 November 2022 17:30

Climate finance took center stage at COP27, resulting in an agreement to establish a “loss and damage” fund, albeit with all the details missing. Aside from this achievement, COP27 failed to bring us closer to the goal of limiting global warming to 1.5C compared to pre-industrial levels. Although new pledges were announced, the text of the conference decision does not increase ambitions to phase out fossil fuels.

Wind farm at sunset

The 27th Conference of the Parties to the United Nations Framework Convention on Climate Change (COP27) concluded last week in Sharm el-Sheikh, Egypt. In a time of mounting concerns about global energy security and unfavorable geopolitical developments, COP27 failed to produce new pledges as ambitious as those of the prior edition in Glasgow, but this was expected. Instead, the organizers focused on the implementation of previous pledges. While these discussions represented focal points throughout COP27, the spotlight was taken by negotiations surrounding the establishment of a new fund to cover the losses and damages already incurred by the most vulnerable countries.

A “Loss and Damage” Fund for Vulnerable Countries

Many around the globe already experience rising sea levels, droughts, and extreme storms. In response to these extreme weather events, vulnerable countries seek compensation for damages, and have argued for decades that developed countries, which are responsible for the majority of past greenhouse gas emissions, should step in and help them cope with their increasingly vulnerable position. While developed countries acknowledge the role that their past and current emissions play in climate change developments, these countries fear that a “loss and damage” fund might lead them into a debt spiral.

The request for a finance facility to compensate for loss and damages was denied at last year’s summit by, among others, European countries and the US. At COP27, a group of more than 130 developing countries insisted on formally agreeing upon a fund dedicated to the matter. Initially, the EU was reluctant to accept this request, explaining that the existing mechanisms could be used instead to address loss and damage and that setting a dedicated fund would require time. As negotiations progressed, however, the EU put forward a proposal that supported the creation of a “loss and damage” fund under the condition that that the fund is filled by a broad donor base, including China, and that countries step up their climate ambitions. In the end, the richer nations relented, and it was agreed a fund for loss and damages would be established, although the exact details of the fund are still to be defined. A transitional committee will prepare recommendations on how to operationalize this fund at next year’s COP.

Without knowing details such as the size of the fund, which parties will contribute to it, or where the money will go, it is hard to judge how impactful the fund could be. If we also consider the track record of past climate finance commitments, which are not without their flaws, we can only be cautiously optimistic about the future development of a “loss and damage” fund. Climate finance has been a recurring theme at COPs, often resulting in disappointment. For example, back in 2009 at COP15, richer countries pledged to financially support developing countries with their climate change adaptation and mitigation[1] efforts in the form of USD 100 billion per year by 2020. This self-set target has yet to be reached, with only USD 83 billion given in 2020, most of it in the form of loans. To put things in perspective, while the UN estimates that developing countries will need up to USD 340 billion annually by 2030 (and even more beyond this date), only USD 29 billion was earmarked for adaptation finance in 2020. Moreover, financing needs for mitigation are estimated to be even higher than those for adaptation. Therefore, despite some positive developments[2] in climate mitigation and adaptation at COP27, the financial gap between the promised support and the allocated support remains high, and it will continue to be an important discussion point at the next COP.

[1]Climate mitigation tries to avoid greenhouse gas emissions and minimize the possible impacts of climate change, whereas climate adaptation looks at how to reduce the negative effects of climate change.

[2] One of the highlights was the launch of the Indonesia Just Energy Transition Partnership, which will mobilize USD 20 billion over the next three to five years to help Indonesia move away from fossil fuels and toward renewable sources. Another notable development is the offer from the EU and four member states (Denmark, France, Germany, and the Netherlands) to provide EUR 1 billion to African countries in adaptation support. Furthermore, the need for international institutions such as the World Bank, International Monetary Fund, and other multilateral development banks to increase their role in climate finance was put forth by Barbados Prime Minister Mia Mottley’s Bridgetown Agenda. To further address the adaptation-financing gap, the COP27 Presidency launched the Adaptation Agenda to stimulate global action around 30 adaptations focused on five impact systems: food and agriculture, water and nature, coasts and oceans, human settlements, and infrastructure.

COP27 Fails To Steer Away From the “Highway to Hell”

A dedicated “loss and damage” fund will bring us a step closer toward climate justice. However, the hallmark achievements of COP27 do not go much further. New pledges were made in areas such as faster deployment of low-carbon solutions[3], reduction of methane emissions[4], decarbonization of agrifood systems[5], deforestation[6], and carbon credits[7]. Even so, the goal of keeping global warming below the 1.5C target is rapidly slipping away. At the beginning of COP27, the UN Secretary-General warned that, “We are on a highway to hell,” and called for more ambitious actions to tackle this global problem.

Unfortunately, his concerns were not heeded. On the contrary, “There were too many attempts to even roll back what we agreed in Glasgow,” as Frans Timmermans, the EU’s climate envoy, explained. In the end, the final agreement at COP27 looks in many respects like a re-edit of the decision reached a year ago in Glasgow, when parties formally agreed upon phasing down unabated coal power and phasing out inefficient fossil fuel subsidies. Initiatives to expand this to a call to “phase down all fossil fuel,” including oil and gas, did not meet a consensus, as several countries, including China and Saudi Arabia, opposed them.

Moreover, the decision’s text also raises concerns with regards to the “emphasis” and “stress” put on the need for more immediate “low-emission and renewable energy.” While the mention of “renewable energy” is definitely welcomed, the vague term “low-emission energy” causes controversy, as it can also be interpreted as a push for more natural gas. The fact that Egypt, the host country, signed natural gas deals during the conference only amplifies such concerns. The topic of natural gas is a sensitive one, as the energy crisis is pushing areas such as Europe to seek new supplies of natural gas, potentially by tapping into Africa’s gas resources. Climate justice activists pointed out the hypocrisy of richer nations trying to keep natural gas prices low by stimulating more fossil fuel projects in Africa.

[3]Egypt and the United Arab Emirates, host of next year’s COP, signed a deal to develop 10GW of onshore wind power in Egypt. This will also benefit Europe, as Egypt’s power grid is expected to be connected with Europe’s via Greece using an undersea power interconnection. Furthermore, 10 countries joined the Global Offshore Wind Alliance, which aims to speed up the installation and deployment of offshore wind capacity. For the first time at a COP, there was a nuclear pavilion, as interest in this technology has resurfaced, partly due to the energy crises. Poland and the US, among others, are considering nuclear power as a replacement for coal-fired power plants. The EU signed hydrogen trade agreements with Egypt, Kazakhstan, and Namibia, and the Netherlands made an agreement with Oman and Namibia to work together on developing a hydrogen supply chain.

[4]COP26 saw the launch of the Global Methane Pledge, in which 100 countries (now 150) responsible for around 50% of global methane emissions aim to collectively reduce methane emissions by 30% by 2030. To complement this, at COP27 the EU, US, Japan, Canada, UK, and Norway announced the Joint Declaration from Energy Importers and Exporters on Reducing Greenhouse Gas Emissions from Fossil Fuels, an international methane agreement aimed at creating a framework for import and export standards. Moreover, as promised during the summit last year, China has developed a strategy to reduce methane emissions in its energy, agriculture, and waste management sectors. In addition, the worldwide, satellite-based alarm system to monitor methane emissions, Methane Alert and Response System, was launched. The EU and US launched various other initiatives that will tackle methane emissions in the oil, gas, agriculture, and waste sectors. Among them is an effort to reduce methane in the dairy systems of smallholder farms in numerous countries.

[5]At COP27, the Food and Agriculture Organization launched a roadmap to make the world’s food systems more sustainable and provide guidance on matters such as methane emissions. To help companies deal with climate challenges, the Agriculture Innovation Mission for Climate was launched last year and has this year doubled its investment commitment to USD 8 billion. This initiative also looks at the potential for carbon sequestration, methane reduction, and agricultural waste streams. Several other initiatives were launched to transform agrifood systems, including the Food and Agriculture for Sustainable Transformation Initiative, which aims to enhance access to climate finance for small- and medium-scale food producers and to support appropriate climate action policies. An holistic approach was agreed on to tackle issues related to agriculture and food security. This was complemented by the establishment of the four-year Sharm el-Sheikh joint effort on the implementation of climate action in agriculture and food security. Furthermore, the issue of food loss and waste was addressed, resulting in the new ‘123 Pledge,' which aims to make reducing food loss and waste a part of governments’ and businesses’ climate agendas.

[6]At COP26, 140 countries (representing 90% of the world’s forests) pledged to work together to halt and reverse forest loss and land degradation by 2030. At COP27, this pledge was further enhanced by the launch of The Forests and Climate Leaders’ Partnership, an initiative aimed at building high-integrity carbon markets for forests, developing robust forest economies, protecting the rights of indigenous peoples and local communities, and increasing efforts to conserve and maintain high-integrity forests. The EU has signed five Memoranda of Understanding for a Forest Partnership with Guyana, Mongolia, the Republic of Congo, Uganda, and Zambia, with the aims of reversing deforestation and enhancing climate and biodiversity protection. In addition, they will support the development of legal and sustainable forest products. At a company level, several large food companies published their roadmap to align with the goal to limit global warming to 1.5C and stop deforestation earlier this week.

[7]A carbon credit is a tradable certificate that represents the right to emit a certain amount of carbon dioxide. Trading carbon credits allows market mechanisms to reduce the cost of abating emissions. The Africa Carbon Markets Initiative was inaugurated at COP27 to support the growth of carbon credit production in Africa, with the ambition of achieving 300 million carbon credits annually by 2030 and 1.5 billion credits annually by 2050. Similarly, the US announced the launch of the Energy Transition Accelerator, with the intention of unlocking financial resources to help developing countries phase out fossil fuels. The US hopes to invite companies to provide upfront financial commitments in exchange for high-quality carbon credits. With these initiatives, carbon credit markets are poised to grow, yet development comes with challenges. The International Organization of Securities Commissions made recommendations to deepen liquidity and prevent greenwashing in voluntary carbon markets.

The ‘African’ COP Legacy

As we turn the page on COP27 and look toward COP28, we can only hope that the next edition will be more successful. In a year when energy security, once again, dominated political agendas, climate discussions became more challenging. In this context, except for the agreement to establish a “loss and damage” fund in the future, the main merit of the Sharm-el-Sheikh Implementation Plan, the draft decision of COP27, is that it does not open the door to a reversal of our climate ambitions. This is rather a sad achievement, and it is definitely not the type of result we need, given the urgency we face as extreme climate events occur with increasing frequency. To steer away from the “highway to hell,” we need to take more ambitious actions now.