The 5 Key Takeaways From CoP27

Time is ticking and catastrophic natural events are on the verge of becoming a new normal for human existence. The uncertain times of economic and regional instabilities are marred by dreadful climate events across the globe – from floods in Pakistan to raging forest fires in Australia. The signs are clear for the policymakers and the stakeholders to take immediate actions, considerable enough and not just for calming the climate change concerns.

In such calling times, the 27th round of the Conference of Parties, CoP27, took place in the Egyptian city of Sharm El Sheikh. Although concrete steps were expected from COP27, the conference has drawn criticism since the beginning of the talks – from hosting a “high number of oil and gas lobbies” to the language of the draft outcome published on Thursday. Yet, there is a silver lining. The parties at CoP27 agreed to long-standing demands of the loss and damage fund for assisting developing countries that are particularly vulnerable to the adverse effects of climate change.

History was made today at #COP27 in Sharm El-Sheikh as parties agreed to the establishment of a long-awaited loss and damage fund for assisting developing countries that are particularly vulnerable to the adverse effects of climate change. pic.twitter.com/spmWVUjTva

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— COP27 (@COP27P) November 20, 2022

“This COP has taken an important step towards justice. I welcome the decision to establish a loss and damage fund and to operationalize it in the coming period,” UN Secretary-General António Guterres said in a video message.

How the world builds up on outcomes of CoP27 will now define the future of the human race. In that context, we look at the top 5 takeaways from this year’s Conference of Parties, the CoP27.

#1 Loss and Damage Funds, Finally!

The Loss & Damage was the biggest thorn in this year’s talks. Ravaged by climate impacts, the developing world demanded finances from developed nations as an essential component of their efforts.

After missing their Friday night deadline in a long-drawn saga of agreements and disagreements, negotiators finally reached conclusions. It evolved into a commitment to set up a financial support structure for the most vulnerable by the next COP in 2023.

While the developing countries got the loss and damage fund they fought for, it was on the proviso that the burden of paying into it does not all fall on rich governments. Rich countries are pushing for China to chip in and finance to be targeted at “vulnerable” countries. Thus, who pays and who benefits is a battle for the next version, Cop28. A transitional committee will look into what funding is needed and where the money should come from. The committee will also be the one to define the “vulnerable” countries.

#2 Oil and Gas Escaped the Censure

The Sharm El-Sheikh CoP27 failed to stop oil and gas expansion fueling further climate chaos. The final text barely changed from the previous draft, except to back “low-emission energy” as well as renewables. This is potentially a loophole for gas (being less polluting than coal, or even fossil fuels with carbon capture and storage (CCS).

In CoP26, coal was targeted for the first time, with countries agreeing to phase down its use. In CoP27, coal-reliant India sought an extension of the CoP26 agreement to include other fossil fuels as well. While a considerable coalition of over 80 countries took up the call, the Egyptian presidency refused to include it in the cover statement. Expectedly, the countries like Saudi Arabia and Russia strongly opposed any reference to oil and gas which gave a clean cheat to oil and gas industries.

#3 Transformation of the Financial System

An investment in clean energy of USD 4 trillion every year by 2030 is needed to reach net zero emissions by 2050. The world needs climate finance to assist in the energy transition. The “Bridgetown agenda“ of Barbados’ Mia Mottley has recently been gaining momentum. The agenda focussed on the need to reform global financial institutions, such as IMF and WB. While Mottley’s flagship proposal to use IMF relief, known as special drawing rights (SDRs), to fund carbon-cutting projects doesn’t feature in the text, the countries have shown some response to the essential calls.

The countries now agreed that funding will require “a transformation of the financial system and its structures” as they called on multilateral development banks (MDBs) and international financial institutions to scale up and simplify access to climate finance and ensure their activities contribute to “significantly increasing climate ambition.”

The spring meetings of IMF and WB in April next year will take the baton for an agreeable path ahead.

#4 Small Step Toward Mitigation

Last year, countries noted that emissions were projected to be 14 per cent above 2010 levels in 2030, and concluded that the levels needed to fall 45 per cent to limit global warming to 1.5 degrees Celsius. For this, the parties earlier agreed to set up a mitigation work programme.

Taking baby steps, nations now debated how to structure this work programme in this version of the annual event. Emerging economies, like China, wanted the talks to be short, weak, and broad until only 2023 or 2024. On the other hand, the developed and vulnerable countries wanted the talks to be long, strong, specific, and to continue until 2030. As a compromise, 2026 was agreed upon by the parties.

#5 The Importance of Just Energy Partnerships is Realized

At the moment, the world is in an energy crisis. This triggered several countries to ramp up their coal, oil and gas production to deal with the short-term supply crunch. The Egypt conference rightly recognised that the crisis underlines the need to “rapidly transform energy systems,” including by accelerating renewable energy roll-out.

Just Energy Partnerships got mentioned at CoP27 to speed up emissions reduction worldwide. The concept involved deals between rich and emerging economies to accelerate the shift away from coal.

At Cop27, countries agreed that a “just and equitable energy transition” must be based on national development priorities and include social protection and solidarity measures. This may include measures such as providing retraining programmes and support for coal workers affected by the transition. Cop27 decided to establish a work programme on “just transition” and convene an annual ministerial roundtable as part of this process.

Meanwhile, on the sidelines of the G20 leaders’ summit in Bali, rich countries announced a $20 billion deal with Indonesia. Similarly, two days before the start of the summit, South Africa published details of an $84 billion investment plan to transition from coal clean energy.