FTI Consulting’s COP27 Summary
Despite a couple of notable developments, COP27 has not delivered the progress that was hoped for, and potentially signals a new era of climate change discussions. On the one hand, significant progress was made on one of the central issues at the outset of negotiations, the question of whether, and if so how, wealthier countries would compensate developing countries for costs incurred related to climate change (the so-called “loss and damage” debate). On the other hand, strong concerns have been raised that COP27 did not sufficiently progress efforts to mitigate climate change through increased decarbonisation commitments.
1. Significant progress on Loss and Damage
In the run-up to COP27 there was discussion about the extent to which the annual climate conference would prove to be decisive step forward. Against the odds, COP27 has resulted in significant progress in efforts of the global community to address loss and damage. The United Nations Framework Convention on Climate Change (UNCC) is calling this development a “breakthrough agreement to provide “loss and damage” funding for vulnerable countries hit hard by climate disasters”[1].
The loss and damage fund was revealed as COP27 finished in the early hours on Sunday. At its core, the agreement is a historic deal to create a special fund to cover climate-related damages suffered by the world’s most vulnerable nations. Almost 200 countries signed up to establish this new structure by the time of the next annual summit, which will be hosted in the United Arab Emirates (UAE) in November 2023. One notable discussion point was representatives of the EU advocating for wording to ensure that wealthier developing countries, such as China, are not beneficiaries of the fund.
Most of the details of this fund are yet to be decided. For example, key elements of the funding mechanism, such as the exact amount to be contributed and from which countries, are as yet unknown. As such, Governments have agreed to establish a ‘transitional committee’ to make recommendations as to how to operationalize the new funding arrangements. The first meeting of the transitional committee is expected to take place before the end of March 2023.
Read more on this new loss and damage fund for vulnerable countries here.
2. Lack of progress on decarbonization
The final agreement was disappointing for those who wanted to include wording for a ‘phase-down’ of all fossil fuels, not just coal. Although the language used in the Glasgow climate pact calling for countries to “accelerate efforts towards the phase-down of unabated coal power and phase-out of inefficient fossil fuel subsidies” was reiterated, there was a failure to broaden the language to encompass oil and gas. This was despite a proposal led by India that was backed by more than 80 countries including the EU and US.
Remarks from the COP26 President Alok Sharma at the COP27 Closing Plenary brought these issues into stark focus. Of the final text, Sharma noted that:
“Emissions peaking before 2025, as the science tells us is necessary. Not in this text. Clear follow-through on the phase-down of coal. Not in this text. A clear commitment to phase out all fossil fuels. Not in this text”[2].
The lack of progress on decarbonization has a direct impact on the level of warming the world should expect. According to a recent UNCC report, current national government commitments put the world on course for 2.5 degrees of warming. During the COP27 negotiations, there were multiple reports from senior Government ministers including Frans Timmermans, vice-president of the European Commission, that some countries were trying to unpick the 1.5C goal, and to abolish the requirement established in Glasgow for countries to update their plans on emissions every year.
With no progress made, and in the global context of high energy prices and global geo-political instability, some commentators have declared that we have shifted from the catchy soundbite “keep 1.5 alive” at COP26, to the more austere “every fraction of a per cent counts”. The phrase seeks to signal that if we are to overshoot the goal to keep warming below 1.5 degrees, we should at the very least minimize the overshoot.
3. Looking ahead to COP28
Already, attention is turning to COP28, which is due to be held in the UAE in November 2023. Barely 24 hours after this year’s COP concluded, there were already reports of a “shake-up” in the coordination of the annual summit, after many delegations expressed concerns about the handling of this year’s negotiations. Simon Stiell, head of the UN Framework Convention on Climate Change, has said he intends to review the COP process to make it as effective as possible.
The UAE had 1,000 delegates at COP27 this year, the largest country delegation by far and twice as much as the next largest, Brazil, and this is expected to be indicative of the UAE’s commitment to hosting a successful COP28.
With the loss and damage fund now established, the UAE will need to find a way to progress these discussions at COP28 whilst bolstering momentum and commitments that seeks to progress mitigation and adaption.
[1] For full details, please refer to the UNCC’s press release here: https://unfccc.int/news/cop27-reaches-breakthrough-agreement-on-new-loss-and-damage-fund-for-vulnerable-countries
[2] For full details, please refer to the press release here https://ukcop26.org/cop26-president-closing-remarks-at-cop27/
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