Set against a difficult geopolitical backdrop, COP27 convened over 45,000 participants, including government representatives, corporate officers, observers and (some) civil society in the Egyptian resort town of Sharm el-Sheikh. The conference resulted in negotiators delivering the “Sharm el-Sheikh Implementation Plan” – a package achieving more on the impacts of climate change than on the causes.
What was achieved?
Loss and damage: countries at COP27 reached an agreement on establishing a funding mechanism to compensate vulnerable nations for ‘loss and damage’ from climate-induced disasters. Governments took the ground-breaking decision to establish a dedicated fund and new funding arrangements to assist developing countries in responding to loss and damage from climate impact. 2023 will be key, as countries – led by a transitional committee – work out how to operationalise this commitment and set up a financial support structure for the most vulnerable by COP28. Although a landmark outcome at COP27, key details of the loss and damage fund are yet to be resolved.
Adaptation: COP27 achieved some progress on adaptation, as governments agreed on how to move forward on the Global Goal on Adaptation. In addition, new pledges (totalling more than USD 230 million) were made to the Adaptation Fund at COP27. These pledges aim to improve resilience amongst the most vulnerable communities by advancing adaptation solutions. Negotiators also agreed to produce a report for COP28 on progress towards doubling adaptation finance by 2025.
What wasn’t achieved?
Mitigation: While some agreement on mitigation, such as the mitigation work programme, was a welcome step in the right direction, there was little progress on mitigation efforts overall. Unfortunately, there weren’t significant steps made on reducing dependence on fossil fuels or reducing emissions. The world’s major emitters didn’t make new commitments on climate mitigation, and the final text ignored growing calls for the phaseout of fossil fuels. As noted in Alok Sharma’s closing speech,
“Emissions peaking before 2025, as the science tells us is necessary – not in this [Sharm el-Sheikh Implementation Plan] text.”
“Clear follow-through on the phase down on coal – not in this text.”
“A clear commitment to phase out all fossil fuels – not in this text.”
Of particular concern is the new language including “low emissions energy” alongside renewables as the energy sources of the future, which is a potential loophole. The undefined term could be used to justify new fossil fuel development against the clear guidance of the IPCC and the IEA. With few steps made to close the significant emissions gap (addressed in my previous blog), the quote by UN chief Antonio Guterres is particularly pertinent: “we need to drastically reduce emissions now – and this is an issue this COP did not address.”
The role of finance
Whilst COP27 may have thrown up some uncertainties and disappointments on mitigation progress, it was also made abundantly clear that investors have a major role to play in addressing the climate crisis. For the first time in history, the official COP agreement text called for the need for the financial system to reform, support and enable global climate goals.
Looking closely at the actual wording of the Implementation Plan, the finance section highlights that “about USD 4 trillion per year needs to be invested in renewable energy until 2030 to be able to reach net-zero emissions by 2050, and that, furthermore, a global transformation to a low-carbon economy is expected to require an investment of at least USD 4–6 trillion per year.” It also highlights that “delivering such funding will require a transformation of the financial system and its structures and processes, engaging governments, central banks, commercial banks, institutional investors and other financial actors.”
Undoubtedly this puts financial actors’ net-zero commitments into sharper focus as the clamp-down on greenwashing continues.
While successful steps were taken on loss and damage, and to some extent on adaptation, COP27 fell short on mitigating climate change with no progress on fossil fuel phaseout. After the conference, 1.5°C is still seen as achievable, but the chances of success are narrowing – the 1.5°C goal is now on life. COP27 may be over, but the fight for a decarbonised world definitely isn’t.
In his closing message, Mr. Guterres highlighted that COP27 ended with “much homework” still to be done and little time to do it. As time ticks by, it’s now more urgent than ever to rapidly accelerate fossil fuel phaseout and scale up renewables – we’re already halfway between the 2015 Paris Agreement and the 2030 deadline to halve emissions globally.
Held in the United Arab Emirates in 2023, COP28 will see the First Global Stocktake, where countries will take stock of their implementation of the Paris Agreement.