Despite meaningful gains on loss and damage, the feeling after COP27 is that of another year slipping by without the necessary action being taken to avoid the worst consequences of climate change.
Reflections on COP27 – one step forward, three steps back
The overarching feeling as the dust settles on a turbulent two weeks in Sharm El-Sheikh is that of another year slipping by without the urgent, holistic action being taken to keep the climate within the 1.5C temperature boundaries set out in the Paris Agreement. Termed the 'Implementation COP' in the build-up, the reality was that, despite meaningful gains on Loss and Damage, COP27 was a failure when it came to increasing ambition on emissions reduction, mitigation and adaptation, and phasing out fossil fuels. With controversy around the impact of fossil fuel representatives on COP27 outcomes, the fear is that COP28 in the United Arab Emirates will be more of the same.
Momentous Loss and Damage agreement
In the final hours of an extended COP27, delegates agreed on the creation of a loss and damage fund. This fund, heralded by NGOs, recognises that developed countries, as those chiefly responsible for driving climate change, are financially liable for the effects of climate change in poorer countries. The issue of Loss and Damage, long pushed to the side by developed countries, was only added to the agenda at the last minute, making the agreement on a loss and damage fund even more significant and surprising. In the end, the turning point came when the EU dropped its opposition, supposedly in return for commitments from other countries to reduce emissions and phase down fossil fuels. These concessions, unfortunately, were not made, with the EU threatening to remove its loss and damage support, before eventually supporting the creation of the fund regardless.
Failure to capitalise on Glasgow
Alok Sharma, who presided over COP26 in Glasgow,encapsulated the frustration felt by many at the end of negotiations in the small hours of Sunday morning, arguing that many of the wins achieved in Glasgow were either omitted or watered down in the final text in Egypt."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. Clear commitment to phase out all fossil fuels? Not in this text. The energy text? Weakened in the final minutes."
The influence of fossil fuel representatives overshadowed the event from start to finish. Laurence Tubiana, CEO at the European Climate Foundation argued that "The influence of the fossil fuel industry was found across the board... The Egyptian Presidency has produced a text that clearly protects oil and gas petrostates and the fossil fuels industries. This trend cannot continue in the United Arab Emirates next year."
Those hopeful of the introduction on strict rules on carbon markets were underwhelmed, as were delegations who advocated, ultimately unsuccessfully for more ambitious emissions reductions, including the EU, the U.S. and India. Major oil exporters including Saudi Arabia blocked language that would have called for a plan to phase out oil and gas.
COP27 raises serious questions about the format for setting the climate agenda. As mentioned in our article 'COP27 - who calls the shots?' , we talk about how multistakeholder governance opens the door for vested interests to take a seat at the table alongside states in climate negotiations. This combined with a seeming lack of consensus on the urgency of required action means that many leave COP27 feeling less hopeful than when they arrived.
Looking forward to COP28
The gravity of the steps taken on loss and damage, as well as other successes including redefining the mandates of multilateral institutions such as the IMF and World Bank to better align with climate goals, should not be underestimated. Nonetheless, the creation of a loss and damage fund, in the absence of a broader plan to ensure the minimisation of loss and damage in the future, is anachronistic.
Much soul-searching is required if COP28 is to deliver the necessary action to get us back on track. The hope is that it won't take further climate disasters, like those seen in Pakistan and Nigeria, to make these realities unignorable. The reality, however, is that it might. Either way, market actors should not see this as an opportunity to capitalise on lenient climate restrictions, but instead work towards improving their own practices and holding governments to account in steering the global community towards a sustainable future. Getting sustainable investing right, is more important now than ever.