By Emma Cox and Kiran Sura
COP27 in many ways felt like the world’s last chance to keep global temperature increases to within 1.5°C. As the world continues to be ravaged by climate impacts and parallel crises, world leaders assembled in Sharm el-Sheikh to restore faith in multilateralism and agree a plan for addressing the greatest and most urgent challenge of our time.
UN Secretary General António Guterres opened the summit with a warning that humanity is on a “highway to climate hell with our foot on the accelerator”. We knew negotiations would be difficult, with pressures at home limiting what countries would bring to Sharm el-Sheikh on climate ambition, action and finance. Talks began tentatively with many negotiators looking to the Egyptian Presidency to provide direction and vision on the outcomes COP27 needed to deliver. Positive geopolitical momentum came in week two with statements from President Biden (US) and President-Elect Lula (Brazil) reaffirming that they were back in the climate fight; the US and China resuming talks on climate; and the G20 Bali Leaders’ Declaration reaffirming their commitment to pursue efforts to limit warming to 1.5°C and to deliver the Glasgow Climate Pact. However, as talks unfolded, it became apparent that preventing any backsliding on the Glasgow Climate Pact might be the best outcome anyone could reasonably hope for.
Amidst many challenging areas where little progress was made, COP27 ultimately delivered one historic outcome, namely to agree to fund and address the impacts of climate change that go beyond the limits of adaptation. After three decades of little progress, developed countries finally agreed to provide finance to vulnerable countries to deal with the ‘loss and damage’ caused to human societies and the natural environment by climate change. The fund will be informed by a ‘transitional committee’ that will hold at least three meetings over the next year, and develop recommendations for the operationalisation of the fund to be considered (and adopted) at COP28.
However, on a less positive note, little progress was made by governments on accelerating action to tackle the causes of the climate crises in a year when global emissions reached record highs (again) and the Global Carbon Project warned that the planet will burst through 1.5°C in nine years at current rates of emissions. The ’Together for Implementation’ COP27 ultimately failed in its endeavor to raise ambition and pick up the pace on emissions reductions.
Here we reflect on some of the major negotiated and real economy outcomes from COP27, and what they mean for the world’s chances of limiting warming to 1.5°C.
Climate negotiations
Climate negotiations went into overtime in Sharm el-Sheikh with the gavel finally coming down in the early hours of Sunday morning. What took the negotiations into overtime was agreeing what would be included in the final COP27 cover text - Sharm el-Sheikh Implementation Plan. This document, developed and agreed by all participating countries, offers the opportunity to send a strong global political message communicating shared and far-reaching longer term climate aims.
So where did the final COP27 cover text stick, raise or fold on the COP26 Glasgow Pact priorities?
1.5°C: The cover text references 1.5°C but some suggest that focus on the more ambitious Paris Agreement temperature goal has been weakened by its placing in the ‘science and urgency’ section. By contrast, in the Glasgow Climate Pact it sat alongside the solutions to the climate crisis in the ‘mitigation’ section. The cover text recognises that rapid, deep and sustained emissions cuts and a significant increase in climate finance will be required to achieve 1.5°C but fails to elaborate on the additional actions, solutions and pathways required to get there.
Mitigation: Mitigation ambition remains unchanged from COP26 with reference to ‘phasedown of unabated coal power’ not expanded to include oil and gas, despite a proposal from India and an eleventh hour call from the High Ambition Coalition to do so. With Delhi hosting G20 next year, India’s proposal sends a positive signal for what can be expected from the G20 on climate ambition. The cover decision requests countries who haven't done so to update and strengthen their climate plans before COP28.
Energy: In stressing the importance of enhancing a clean energy mix, the cover text makes reference to “low emission and renewable energy”, a potential loophole that could allow for the further development of gas production, which produces less emissions than coal but is still a dirty energy source.
Adaptation: Egypt made adaptation a key pillar of its Presidency. However the cover text does not reaffirm the Glasgow Climate Pact request for countries to double adaptation finance pledges by 2025. Rather it urges countries to urgently scale climate finance for adaptation and invites further pledges to dedicated developing country adaptation funds. Given that every fraction of a degree of warming is leading to more severe and frequent climate impacts, the cover text fails to reflect the urgency with which adaptation efforts and finance need to be ramped up, especially in the most vulnerable regions.
Loss & Damage: COP27 delivered an historic outcome to set up a financial support structure to address the loss and damage faced by the most vulnerable countries by COP28. In 2022, damages from climate change so far are estimated to be over $227bn. With only $300m of new money being pledged for loss and damage at COP27, there are challenging discussions ahead on where finance will come from and who will be eligible to receive finance from the fund: should the donor base include China and India given the scale of their economies and their emissions? And what of private sector contributions and other innovative sources of finance?
Finance: For the first time the cover text calls on multilateral development banks and international financial institutions to reform their practices and priorities to ensure they are fit for purpose to tackle the global climate emergency. Known as the Bridgetown Agenda and first put forward by Barbados PM Mia Mottley, reform of the international finance system at the highest levels is gaining support from a number of leaders including France, the EU, Brazil and the IMF. PM Mia Mottley will offer a concrete proposal by February 2023 to be discussed at the Spring Meetings of the IMF and World Bank, followed by a summit to be hosted in Paris in June 2023. The proposed reforms were given added impetus by a High-Level Expert Group report on Finance for climate action: scaling up investment for climate and development, chaired by Vera Songwe and Lord Nicholas Stern that estimates that $2.4 trillion per year will be needed in external finance by 2030 for emerging markets and developing countries (other than China) to meet their climate and development goals.
Nature: The cover text references nature-based solutions in the context of mitigation and adaptation action. This is the first time a COP cover decision has ever included the term ‘nature-based solutions’ as it was removed at the last moment in Glasgow. However, it fails to reference COP15 of the Convention of Biodiversity (the sister Convention to the UNFCCC) taking place next month in Montreal, where world leaders and experts will convene to try to forge a global deal for nature - the Paris COP for nature. Positive developments outside of negotiations include Brazil being back at the table promising to halt and reverse the destruction of the Amazon and the UN Food and Agriculture Organisation announcing they will produce a 1.5°C roadmap for agriculture.
Beyond the climate negotiations
COP27 was the second largest COP on record, drawing in [approximately 33,000] people from the private sector, cities, states, regions, the third sector and civil society. Although some attendees may have felt that the conference itself underdelivered, there were some encouraging signs of progress elsewhere in Sharm el-Sheikh. During the ‘Together for Implementation’ COP, each day in Sharm el-Sheikh saw a myriad of announcements showcasing non-government climate action across all sectors of the economy. Whilst not possible to cover all the announcements here, we highlight several developments of particular note:
Renewable energy transition. Despite prevailing global economic woes, members of the Clean Energy Ministerial attracted $705 billion in investment for energy transition technologies in 2021, a new record. This marked a 32% jump from $533 billion invested in
2020. During the G20 Bali Summit Indonesia announced that it has secured $20 billion in finance (half private, half public) for its Just Energy Transition Partnership (JET-P), and there are other JET-P deals in the pipeline for Vietnam and Senegal. The JET-P model and experience could usefully support the development of energy transition pathways in other emerging and developing economies, including providing lessons on how to leverage new and additional sources of capital to finance the transition.
At COP27, under the Breakthrough Agenda, countries representing over half of global GDP (G7, European Commission, India, Egypt, Morocco and others) launched a package of 25 new collaborative actions to be delivered by COP28 to speed up the decarbonisation under five key breakthroughs of power, road transport, steel, hydrogen and agriculture. The Breakthrough Agenda seeks to accelerate climate action by harnessing the power of radical collaboration between governments and business, investors, cities, states and regions. The actions under each breakthrough will be delivered through coalitions of committed countries in partnership with private financiers and leading industry initiatives.
In response to the devastating impacts of climate change affecting vulnerable people all over the world, the COP27 Presidency launched the Sharm-El-Sheikh Adaptation Agenda in partnership with the High-Level Champions and the Marrakech Partnership for Global Climate Action. Developed in collaboration with 2000+ organisations spanning 131 countries under Race to Resilience campaign, the Sharm El Sheikh Adaptation Agenda outlines 30 adaptation outcomes, to enhance resilience for four billion people living in the most climate vulnerable communities by 2030. These outcomes represent the first comprehensive global plan to rally both government and non-government actors behind a shared set of adaptation actions that are required by the end of this decade across five impact systems: food and agriculture, water and nature, coastal and oceans, human settlements, and infrastructure, and including enabling solutions for planning and finance.
While businesses, investors, cities, states and regions are getting more granular about how they will turn their pledges into actions and deliver the breakthroughs needed to protect the 1.5°C goal, they are also facing greater scrutiny and challenge to ensure they are not simply greenwashing.
Last year at COP26 the UN Secretary General commissioned a High Level Expert Group chaired by Catherine Mckenna to review and provide recommendations for ensuring the robustness of private sector net zero pledges. At COP27 he called for ‘zero tolerance for net-zero greenwashing’ as he launched ‘Integrity Matters: Net Zero Commitment by Business, Financial Institutions, Cities and regions’ report. It provides a how-to guide to ensure credible, accountable net zero pledges including the development of detailed and concrete plans to achieve net zero targets and accountability and transparency to verify progress. We can expect these measures to continue to be strengthened and tightened over the coming year to ensure voluntary initiatives deliver on their commitments.
Other welcome developments related to accountability and transparency included International Sustainability Standards Board (ISSB)’s new Partnership Framework designed to support preparers, investors and other capital market stakeholders as they prepare to use IFRS Sustainability Disclosure Standards and the launch of International Organisation for Standardisation (ISO) flagship Net Zero Guidelines. Finally, in what has been claimed to be a global first, the US Federal Government, the world’s single largest buyer of goods and services - purchasing over $630 billion in the last fiscal year alone - proposed a rule that would require all federal suppliers to disclose their environmental impacts through CDP (Carbon Disclosure Project). It would also require these companies to take tangible action by setting science-based greenhouse gas reduction targets.
Summary
COP27 could have achieved far more than it delivered. That is not to detract from the momentous decision taken to provide finance for the loss and damage suffered by those countries on the frontlines, who have contributed least to the climate emergency. Hard lessons must be learned from COP27 to maximise scaling of ambition and driving progress on implementation at COP28 in the UAE. Organizations worldwide should not wait another day to accelerate action given how perilously close the global temperature rise is getting to 1.5°C. UN Secretary General António Guterres reflected in his closing remarks that COP27 has left a lot of work to do: “It will take each and every one of us fighting in the trenches each and every day. Together, let's not relent in the fight for climate justice and climate ambition. We can and must win this battle for our lives.”
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