Out-Law Analysis | 22 Nov 2022 | 4:04 pm | 3 min. read
Little was achieved at the recent COP27 conference in Egypt to dispel criticism that policymakers globally are not going far enough, fast enough, to address climate change.
There remains a lack of clarity on the concept of low-emissions and renewable energy, while the recalibration of the global financial system to align with the need for investment in clean technologies remains incomplete.
There was progress, however, with arguably the most significant announcement from COP27 being the new deal on loss and damage, which could see communities most affected by climate change receive billions of dollars in support from developed countries.
Developing countries, vulnerable to the effects of climate change but with little responsibility for contributing to it, have long campaigned for the establishment of a fund to compensate them for the damage caused by climate events.
However, the introduction of a fund had been resisted by both the EU and US as part of a reluctance to accept any liability or responsibility for their own contribution to climate change.
In his closing speech to COP27, EU vice-president for the European Green Deal, Frans Timmermans, said that the EU was reluctantly agreeing to the fund. He cited lost momentum from COP26 in Glasgow and said it was important that those in the room “pledge to pick up speed again, starting now and here”. This change in stance by the EU prompted the US to reluctantly get behind a fund too.
Attention will now turn to the details of how this political commitment will be delivered through funding arrangements. A ‘Transitional Committee’ will be established and will be responsible for setting out how the fund will operate. It will make recommendations for consideration and adoption at COP28 in Dubai in November 2023.
The Sharm el-Sheikh implementation plan extends the calls for countries to accelerate “efforts towards the phasedown of unabated coal power and the phase-out of inefficient fossil fuel subsidies”.
However, critics were concerned that the call to increase “low-emission and renewable energy” as part of the energy transition did not do enough to define what technology this included, leaving the door open for the use of natural gas.
Delivering on net zero commitments and low-carbon economy will require vast sums of money. The final agreement points to some $4 trillion per year being needed to support renewable energy investment up until 2030 if net zero emissions is to be achieved by 2050. Global transformation to a low-carbon economy is expected to require investment of at least $4-6 trillion per year.
There was a clear emphasis on the need for a transformation of the financial system and its structures to support this investment, and that parties from government to central banks, commercial banks and institutional investors had to work together to deliver this transformation.
The final agreement also calls on multilateral development banks to contribute to increasing climate ambition by using their policy and financial instruments for greater results and to ensure higher financial efficiency.
COP27 undoubtedly took place in a very tough geopolitical and economic environment and the prospects of significant negotiating breakthroughs were considered limited ahead of the conference.
The progress made on loss and damage is commendable and, in the context of it being a central issue heading into the conference, it should be celebrated.
However, the perceived opening of the door to the increased use of gas will leave critics viewing the Sharm el-Sheikh implementation plan as a missed opportunity to build on the momentum gained in Glasgow one year ago
Other than in relation to loss and damage, the formal outcome of COP27 didn’t progress the fight to keep global warming below a 1.5 degrees increase compared to pre-industrial levels – a threshold that the Intergovernmental Panel on Climate Change (IPCC) has said that, if kept below, is projected to lower the impacts on terrestrial, freshwater and coastal ecosystems and to retain more of their services to humans.
Where we can find more progress perhaps is the lesser-documented parts of the final COP27 agreement, such as the declaration that “safeguarding food security and ending hunger” is a fundamental priority and that better conservation of water systems can help protect against the effects of climate change, or in the further range of national and international initiatives announced to coincide with COP27, such as the $20 billion to help Indonesia wean itself off coal. Eyes now turn to COP28 in Dubai.