COP27: Deal on loss and damage fund saves climate conference from debacle

After two weeks of talks at the COP27 summit and the concerns that they may fail, the agreement to work on the establishment of a loss and damage fund saved the climate summit in Egypt. The idea is for rich states to financially assist the countries that suffer the most from the climate change impact. The average global temperature has risen by 1.2 degrees, but there is still no agreement on reducing emissions and abandoning fossil fuels. 

More than 45,000 participants from around 200 countries attended the 2022 United Nations Climate Change Conference – COP27 in Egypt. The two-week debate on the climate crisis was organized at the Sharm el-Sheikh resort.

The conference has been driven from the start by two overriding themes: justice and ambition, UN Secretary-General Antonio Guterres said.

In his view, justice refers to establishing a new fund for the most vulnerable regions and countries. The ambition is to maintain the 1.5-degree limit and pull humanity back from the cliff, as Guterres described.

Developed world failed to keep its promises so far

Even though it wasn’t on the agenda, one of the summit’s achievements was a deal to work on the establishment of a loss and damage fund, which is crucial to demonstrate solidarity among countries necessary to meet climate goals.

For nearly three decades, developing countries have sought financial compensation for the losses and damages that they suffered from climate change.

Back in 2009 in Copenhagen, developed countries committed to contributing at least USD 100 billion a year to help developing countries reduce emissions and prepare them for extreme weather events by 2020. They didn’t keep the promise, which has deepened the gap and further weakened trust.

I delivered this poem at the 11th hour of the conference of parties. Loss and damage means unbelievable loss. We can not come back from the loss of culture. There will come a time when no amount of dollars will be able to bring back what we’ve lost and broken. pic.twitter.com/Q5gU1iYJfa

— Ayisha Siddiqa (@Ayishas12) November 20, 2022

Rich countries have gained an advantage from fossil fuels and left the developing world facing the consequences of climate change.

However, a global agreement to provide the funds for loss and damage has yet to be made. The rules on how the mechanism will work will be discussed at COP28 in the United Arab Emirates next year.

After this year’s summit, the developed world will continue to focus on measures to help underdeveloped countries switch from fossil fuels to renewable energy. Developing countries that are facing the burden of climate change will need stronger financial assistance and compensation from the developed ones.

Promoting low-emissions energy without fossil fuel phaseout

A group of countries led by India proposed a phaseout for all fossil fuels. However, only the commitment to exit coal remained in the final resolution. The calls to gradually end the use of oil and gas as well have been rejected by many oil-exporting countries.

The COP27 agreement failed to raise the ambition for emission reductions.

The increase in the average global temperature from the pre-industrial period has already reached 1.2 degrees Celsius last year, according to scientific reports.

Over 14 days, the world’s eyes were on Sharm El-Sheikh, as #COP27 brought together 112 heads of state, over 46,000 delegates including ministers, scientists, policy-makers, members of civil society, IGOs, activists and youth. pic.twitter.com/uHZ9tfEwDO

— COP27 (@COP27P) November 20, 2022

The final text calls for increasing “low-emissions energy.” The Guardian wrote it could refer to anything from wind or solar power to nuclear reactors or even coal-fired power plants with carbon capture and storage systems or natural gas.

International financial institutions are ignoring climate woes of developing countries

Numerous countries have pointed out that the World Bank, the International Monetary Fund, and other creditors have failed to provide financial resources for developing countries to reduce emissions or adapt to the climate crisis, the Guardian reported.

The delegates discussed the need for reforms that include the recapitalization of development banks and creditors to enable them to provide stronger financial assistance to developing countries. The climate impacts are becoming macroeconomic risks, analysts said.

Climate impacts are also becoming macroeconomic risks

The multilateral development banks and international financial institutions need to change their business models, and they must accept more risk and systematically leverage private finance for developing countries at reasonable costs, Guterres commented.

The delegates also outlined a more detailed framework on how the global carbon credit market could function. It would enable corporations to buy carbon credits from governments and trade them.

In the conclusions, governments were urged to set clear goals, plans, and metrics for calculating the reduction of greenhouse gas emissions to meet the set climate goals. So far countries have used different criteria and standards for their goals. A common measurement system should provide stronger guarantees for actual emission reductions, the officials agreed at COP27.

The need to drastically reduce emissions

The decisions from this year’s COP were mainly focused on the consequences of climate change, adaptation measures, and the fund for vulnerable countries. But they did not sufficiently cover the causes – fossil fuels and greenhouse gas emissions, analysts said.

“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. Clearly, this will not be enough, but it is a much-needed political signal to rebuild broken trust. The voices of those on the frontlines of the climate crisis must be heard,” Guterres said.

Guterres: The decision to establish a loss and damage fund is a much-needed political signal to rebuild broken trust

The world needs to drastically reduce emissions now, but COP27 did not address that, according to Guterres. The summit ended with much homework and little time, said the secretary-general.

“The world still needs a giant leap in climate ambition. The red line we must not cross is the line that takes our planet over the 1.5-degree temperature limit. To have any hope of keeping to 1.5, we need to massively invest in renewables and end our addiction to fossil fuels,” Guterres said.