Key takeaways from COP27

A year on from COP26 in Glasgow, the international community agreed to come back together for COP27 in Egypt’s Sharm el Sheikh. This year’s event focused on progressing the commitments made in Glasgow and driving implementation of action needed to keep the world on track for 1.5°C.

The conference got off to a dramatic start with the UN secretary general announcing we are on the “highway to climate hell”. What followed was a mixture of highs and lows. Here are some of the key outcomes.

1.5°C Temperature limit

The Sharm el-Sheikh Implementation Plan reaffirms but does not improve on the original ambition of the 2015 Paris Agreement to limit global temperature rises to well below 2 °C, and pursue efforts towards 1.5 °C. The new plan states the commitment to “pursue further efforts to limit the temperature increase to 1.5 °C". This reflects a lack of increased ambition since COP26, with very few nations submitting strengthened NDCs in the 12 months leading to this year’s event, and some nations attempting to backtrack on their earlier commitments. Inclusion of a commitment sought by the UK, EU, and others to peak emissions by 2025 was also absent from the final text of the Implementation Plan.

Loss and Damage

COP27’s biggest achievement was undoubtedly the commitment by developed nations to establish a loss and damage fund to support developing nations to rebuild infrastructure and communities after extreme weather and other climate-related events. At its core is the concession that high emission wealthy nations must do more to support poorer lower emitting nations who suffer disproportionately from the impacts of climate change. In a historic shift from prior resistance by wealthy nations, Pakistan successfully led a group of more than 130 developing nations to what is widely seen as the biggest win of COP27. The next major challenge will be to agree who pays what, and how the fund will be set up and run. This will not be easy.

Fossil fuels

Tense discussions did not result in the much hoped-for expansion of the commitment on fossil fuel phase out. Despite strenuous pleas (including by India who were critical in shifting the wording from “phase out” to “phase down” at COP26), the final text remained unchanged, calling for the “phasedown of unabated coal power and phase-out of inefficient fossil fuel subsidies”. Also lacking despite rigorous debate was the inclusion in the text of “all” fossil fuels as opposed to only coal, as it currently stands. The path to phasing out oil and gas thus remains unclear.

The inclusion of an “increase in low-emission” energy and renewables was also criticised over fears that “low emission” could create a loophole for supporting investment and development of new gas as well as coal-fired power stations with carbon capture and storage.

Significant attention was paid in the media to the number of fossil fuel industry representatives at this COP – more than 600, up 25% since COP26 last year making it the largest of any delegation present, bar next year’s COP28 host, the United Arab Emirates (UAE), which sent over 1,000 delegates.

The organisers of the event have been heavily criticised for allowing the fossil fuel lobby to have such a significant presence. A joint statement by three major global advocacy groups stated: “Tobacco lobbyists wouldn’t be welcome at health conferences; arms dealers can’t promote their trade at peace conventions…Those perpetuating the world’s fossil fuel addiction should not be allowed through the doors of a climate conference.”

As host, Egyptian authorities were also criticised for a lack of transparency in the negotiations. In a shift from COP convention, draft texts of the agreement were not shared with nations and the media but instead shown confidentially to individual delegations, leaving parties unsure how negotiations were progressing, who was asking for what, and how their views were being incorporated.

Adaptation

According to recent analysis by UNEP, annual adaptation costs are expected to reach $160-340bn by 2030 and $315-565bn by 2050, while the current amount of adaptation finance flowing to developing countries is five to 10 times lower than what is needed. At COP27, the commitment made in Glasgow to double the amount of money going towards adaptation (which has historically received significantly less funding than mitigation) was upheld, despite calls to remove it from the text. New pledges of more than $230m were also directed into the adaptation fund. COP27 also saw the launch of the Adaptation Agenda, a plan centred around 30 adaptation outcomes to enhance adaptation and resilience in vulnerable communities, including the goal of mobilising “$140 - 300 billion across both public and private sources and spurring 2,000 of the world’s largest companies to integrate physical climate risk and develop actionable adaptation plans”. [1]

Financing the transition

In addition to the loss and damage fund, much discussion surrounded the need to scale up climate finance to help cut emissions and fund adaptation in developing nations. A recent UNEP report found that the global transformation to a low-carbon economy will require investment of at least US$4 trillion to US$6 trillion per year.[2] Having repeatedly failed to reach the annual $100bn target set over previous COPs, the global community discussed alternative ways to achieve the target and fund the trillions now needed in lower income and vulnerable countries. Agreement is expected following 12 expert dialogues taking place between now and the end of 2024. The ultimate goal is to establish a new target (which unlike the previous one will be based on detailed technical analysis of what’s required where) as well as to decide who will pay, how much, and how to mobilise private finance more effectively.

Climate finance reform

The Barbadian prime minister Mia Mottley proposed her Bridgetown Initiative which calls for reform to the International Monetary Fund (IMF), World Bank and other multilateral development banks to better channel climate finance to poorer countries without further burdening those already faced with high debt repayments. The UK’s COP26 president Alok Sharma also called for a “Bretton Woods 2 moment” to rethink climate finance architecture.

Article 6 – carbon markets  

Article 6 of the Paris Agreement is concerned with cutting emissions via carbon trading. However, since the success of establishing the Article 6 Rulebook at COP26, little has been achieved, and the thorniest of issues (e.g. on treatment of carbon removals, and rules around carbon credits for emissions avoidance) seem to have been deferred until next year. Critics fear progress will remain slow, and the eventual outcome may not have the ambition or impact it needs.

Conclusions

Many have called the year since COP26 a disappointing or even wasted year in which little progress has been made. Though not an outright failure – largely on account of the historic success of the loss and damage fund agreement - COP27 has not lived up to expectations and there remains much to be done. In his final remarks, Alok Sharma did not hide his disappointment at the outcome of the conference.  

“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.

And the energy text, weakened, in the final minutes.

Friends, I said in Glasgow that the pulse of 1.5 degrees was weak. Unfortunately, it remains on life support.”

What’s next

COP15 (due to be held in December 2022 in Canada) will provide a much-needed opportunity to bring nations together to discuss the protection of nature and biodiversity, picking up on some of the themes emerging from COP27.  Though a Paris-style agreement is not expected, debate will focus on the implementation of the protocols of the Convention on Biological Diversity (CBD) that deal with the fair and equitable sharing of benefits from the use of nature.

COP28 will be held in December 2023 in the UAE. Key topics are likely to include peaking global emissions before 2025, phasing out all fossil fuels, and climate finance reform. Given the host nation’s heavy involvement in the oil and gas industry, the coming year will be significant in keeping nations focused on mitigation activities to reduce emissions and transition to a low carbon economy. In the meantime, all eyes will be on the development and oversight of the loss and damage fund.

For more information about any of these topics and to understand how you might be affected, please get in touch.

[1] COP27 Presidency launches Adaptation Agenda to build climate resilience for 4 billion by 2030 - Climate Champions (unfccc.int)

[2] Adaptation Gap Report 2022 | UNEP - UN Environment Programme