COP27: notable agreements, disappointments, and challenges for the future

The 26^th Session of the Conference of Parties, the annual gathering of all Parties to the United Nations Framework Convention on Climate Change, led to some broadly defined guidelines, commonly referred to as the Glasgow Climate Pact. These guidelines were expected to be concretised and further implemented in the following year’s COP27, taking place towards the end of 2022 in Sharm el-Sheikh, Egypt. The ‘Sharm el-Sheikh Implementation Plan’ thus emanated from the conclusion of COP27.

Four main objectives were put forward for COP27, namely:

• Finance: funding to help developing countries with the adverse effects of climate change;
• Mitigation: keeping the target to limit global warming to 1.5 degrees;
• Adaptation: enhancing the global agenda for action on adaptation;
• Collaboration: ensuring adequate representation from all relevant stakeholders in COP27, with a focus on vulnerable communities.

The finance objective, as a ‘loss and damage’ fund

Undoubtedly, the highlight of COP27 were the discussions on a ‘loss and damage’ fund. The intention of such a fund would be to provide financial assistance to help vulnerable countries, hit by the disastrous effects of climate change, recover. After experiencing extreme weather conditions in 2022, developing countries went on to prioritise a ‘loss and damage’ fund at COP27, although it was agreed through an earlier political compromise that this fund would be subject to discussion – and not necessarily established – in a three-year long ‘Glasgow Dialogue’. Developing countries’ first victory was placing this issue on the COP27’s agenda, in spite of the ‘Glasgow Dialogue’ agreement. The developed countries and the G77 disagreed on the question of implementing a ‘loss and damage’ fund.

The G77 on the other hand were looking for an immediate solution, through the establishment of a separate fund for all developing countries. They were able to achieve this goal in the ‘Sharm el-Sheikh Implementation Plan’, as a fund has been established for the most vulnerable nations. The fund will be financed not only through the UNFCCC, but also through other mechanisms outside of the UNFCCC.

Within the ‘loss and damage’ issue, progress was also made on the governance structure and a host selection process for the Santiago Network, which should start providing technical assistance on loss and damage to developing countries, starting from COP28.

Other matters relating to finance

Developing and developed nations disagreed on another financing issue. Whereas developed nations tried to emphasise the progress made towards long-term climate financing, the developing nations focused on the failure to realize many prior goals and pledges. To remedy these arrears, developing nations proposed to add prescriptive, urgent language. Both groups were able to reach a compromise, recognising pledges to different funds, specific contributions by country, while the Standing Committee on Finance will prepare biennial reports with key findings and continued work on definitions.

The mitigation objective, in this “critical decade”

To maintain the earlier agreed limit of 1.5 degrees increase in global warming, countries have recognised they will need to step up. Rapid, deep and sustained reductions in global greenhouse gas emissions of 43% (compared to the 2019 levels) by 2030 are required to reach their goal. Against this backdrop, the Sharm el-Sheikh Implementation Plan set up a mitigation work programme effective immediately and running until 2026. It will hold at least two global dialogues every year on issues like accelerating just energy transition, and it will organise other investment-focused events. Parties are also encouraged to transition towards low-emission energy systems through the use of technology and policies. These may include rapidly scaling up the deployment of clean power generation and energy efficiency measures, downsizing the use of coal, phasing-out subsidies for inefficient fossil fuel, as well as providing targeted support to the poorest and most vulnerable in line with national circumstances. A new feature in the ‘Sharm el-Sheikh Implementation Plan’ is the emphasis on protecting, conserving and restoring nature and ecosystems, in order to mitigate global warming. Lastly, economic and social impacts should be taken into consideration when implementing response measures. Unfortunately, several countries have expressed concerns that these measures may not be sufficient to “keep 1.5°C alive”.

The adaptation objective, as the Global Goal on Adaptation

The responsible working group on adaptation has found that countries are still far off from reaching the levels of adaptation necessary for responding to adverse climate change. Countries are thus urged to enhance their adaptive capacities, strengthen their resilience, and reduce their vulnerability to climate change. Developed countries should also be prepared to assist developing countries in attaining their adaptation goals.

The outcome reached for the adaptation objective should allow countries to achieve the global adaptation goal collectively, through a new long-term, structured effort. Information will be produced to help enable and capture progress, for the different countries and their country-specific climate challenges. Progress towards this goal will also be reviewed.

However, some countries remain disappointed by the progress made on this objective.

The “mixed bag” of the main outcome decision of COP27, the “Sharm el-Sheikh Implementation Plan” (Decision 1/CP.27)

In strong contrast with the historic breakthrough made for the ‘loss and damage’ fund, no agreement was reached to reduce fossil fuel usage, to the disappointment of some world leaders, despite 80 countries supporting the proposal. The agreement reached in Glasgow to phase down coal use could not be expanded to oil and gas reductions. However, an agreement was made to “enhance a clean energy mix, including low-emission and renewable energy”.

In the context of mitigation, no stronger pledges were agreed. The plan merely recalled the original requests made in Glasgow to “revisit and strengthen” their pledges. The Glasgow request, however, led to only thirty countries updating their pledges. Furthermore, a “non-prescriptive and “non-punitive” approach was taken, meaning no country will be compelled to take action within the programme.

Third, referring to the adaptation objective stated earlier, countries could not set out a blueprint for implementing 2021’s goal to double adaptation finance by 2025 (from 2019 levels), although it was planned during COP27. On top of this, even though potential components of the Global Goal on Adaptation have been discussed during COP27, countries failed to make progress on precisely defining it.

Finally, the carbon trading mechanism established by the Glasgow Climate Pact still required that carbon credit be defined. It was expected to be implemented and defined during COP27, but no agreement has been reached. This highly technical issue will be subject to negotiations over the next two years.

The challenges for COP28

The mere establishment of the ‘loss and damage’ fund is not sufficient, and COP27 did not open discussions on its specific design. Neither was the fund’s finance source established. A Transitional Committee is now responsible for preparing recommendations on these matters to propose during COP28, where these issues should be discussed and resolved.

Where COP27 has failed to define the GGA, it has set out a framework to guide its formulation during COP28. This technical issue will thus be discussed during COP28, hopefully culminating in an agreement.

Another potentially crucial issue at COP28 may be the continued debate on including all fossil fuels in a phase down plan, accompanying the already existing phase down on coal.