Written by Büşra Uçan,
MarComm Assistant, Mazars in Turkey
Though the negotiations should have been concluded on Friday November 18, the talks were extended until Sunday due to disagreements over funding. The dual issues of Ukraine and rising global inflation distracted international attention. Countries, headed by India, drew attention to the fact that the final agreement needed to reduce the use of all fossil fuels instead of just coal. Fossil fuel-rich countries in Africa did not warm to this suggestion.
The biggest win at COP27 was the Loss and Damage Fund
In the lead up to COP27, developed countries presented solutions with alternatives such as insurance and early warning systems. But developing and vulnerable countries were determined to win a new fund for their loss and damage. During the last few days of the summit, the establishment of a Loss and Damage fund was approved by consensus of all parties after the EU stepped forward to agree followed by the US and China. This decision went down in history as the biggest win of COP27. However, the controversial details of who should pay for and who will benefit from the fund, were left to next year's COP28. The delegates welcomed this climate justice breakthrough, on the basis that the carbon emissions of richer countries have contributed to the disasters that poorer nations are now facing.
Mitigation and 1.5 Degree Target
To limit global warming to 1.5 degrees by the end of the century, we need to mitigate emissions by 45% by 2030. Current global policies are estimated to lead to warming of about 2.7 degrees above pre-industrial levels by the end of the century. Even if successfully implemented, the latest round of Nationally Determined Contributions (NDCs) commitments will only limit warming to 2.4 degrees. To hit the 1.5-degree target, countries need to incorporate binding, long-term net zero targets into their climate action policies. According to the text of the decision from the COP27, 1.5 degrees is still the official target, but the announced emission mitigation plans are not enough to reach it. Thanks in large part to the latest global fuel crisis the discussions have only been able to result in an outcome where Parties agreed not to backtrack on the current target instead of increasing efforts to hit the target. Failure to agree on the phasing out of fossil fuels puts the 1.5-degree target at notable risk. COP26 President Alok Sharma spoke about the stress of trying to keep to commitments agreed last year and around countries attacking their achievements, stating, 'We had to work tirelessly to maintain the lines we had drawn. We have struggled to add to Glasgow's wins.' Delegates were disappointed with the delayed steps on mitigation and by the presence of lobbyists blocking a phased exit from fossil fuels. Jennifer Morgan, Germany's Special Envoy for Climate, explained why they agreed to the final version of the agreement despite the absence of a clause for stricter emission reductions in the agreement, noting that they '...wanted to be on the side of the most vulnerable countries.'
Adaptation and Resilience
Last year, we witnessed the disasters caused by climate change in our daily news feed from every corner of the globe. Unfortunately, as global warming continues to increase, disasters will continue to increase exponentially. Countries that are particularly vulnerable to the effects of climate change must build resilience, developing tools to adapt and cope.
The issue of adaptation has thus disconnected from Loss and Damage as a key issue discussed COP27. Experts warn that mitigation targets alone will not be enough to combat climate change. COP27 called on governments and the business community to adapt and avoid the cost of inaction. The development of a framework for monitoring progress on global adaptation measures and to double the funding for adaptation were agreed in the final text of the COP27 conference.
Energy Transition and Fossil Fuels
The demands of India and other countries that the COP27 final text include a phased reduction of the use of 'all fossil fuels' were not met. Instead, it called on countries to take further steps to 'phase out any coal power that lacks carbon sequestration technology, and inefficient fossil fuel subsidies,' which was the same language agreed at the previous Glasgow summit. In short, the text did not move beyond the COP26 rhetoric of phasing out coal. The text of the COP27 agreement also refers to 'energy with low carbon emissions', i.e., natural gas, and the concern is that this will lead to an increased use of natural gas which emits both carbon dioxide and methane. The use of green hydrogen was highlighted an opportunity for some developing countries to export on the path to decarbonization. However, the pipelines have yet to be developed.
At COP27, countries agreed that a 'fair and equal energy transition' should be based on national development priorities and include social protection and solidarity measures, such as providing retraining programs and support for coal workers affected by the transition. Another key decision taken was to create a work program founded on a just transition and to hold an annual round table meeting at ministerial level as part of this process.
Sheikh Mohammed bin Zayed al-Nahyan, the leader of the United Arab Emirates, which will host next year's COP28 climate summit, said his country would continue to provide oil and gas 'as long as the world needs it.'
Maldives Climate Minister Aminath Shauna said, 'I appreciate the progress we have made at COP27. However, we have failed at mitigation. We need to phase out fossil fuels.'
Developed countries made more commitments on climate finance at COP27 including multilateral agreements for loss and damage, adaptation, coal transition, but they have been unable to deliver on promises to provide US$ 100 billion annually for vulnerable and developing countries.
The idea that public financing should be deployed in a way that complements and paves the way for private financing has gained traction. There is now growing pressure for the reform of global financial institutions such as the World Bank and IMF, to respond to the climate crisis. The need to fund climate adaptation has moved to the center stage, but there is still a serious funding gap as only 10% of the US$410-560 billion financing needs were met in 2020. As public scrutiny increases and recommendations for net-zero commitments become more stringent, there are significant transitions in planning for the implementation of commitments.