COP27 Round-up

After two weeks of heavy negotiations, high-level statements, thematic sessions, and informal talks, COP27 came to a delayed end on November 20, 2022. This year was branded as “implementation COP,” and was supposed to offer an opportunity for global leaders to move beyond pledges and into concrete action on key topics. From the start, the outlook was clouded by strong geopolitical tensions, lack of progress in curbing greenhouse emissions and fulfilling previous climate agreements, as well as heavy skepticism from civil society organizations about world leaders’ true commitment to climate action. This skepticism is well founded: According to the 2022 Nationally Determined Contributions Synthesis Report of the United Nations Framework Convention on Climate Change (UNFCCC), even if all current climate change-related commitments are met, the world will still see warming of 2.5 degrees Celsius by the end of the century. Similarly, the $100 billion climate finance goal (which donor countries were meant to deliver each year, starting in 2020 and until 2025) will not be reached until next year — two years too late.

Despite the trepidation in the leadup to COP27, friction between world leaders, and concerns about the non-attendance of major carbon emitters (such as China, India, and Russia), COP27 still also offers some hope for the future of our planet and its most vulnerable people. Negotiators were in the end able to agree on a joint political declaration: The Sharm el-Sheikh Implementation Plan, or COP27 cover decision. The event made progress in getting loss and damage on the policy agenda, featured a variety of leading voices from countries and civil society, and showed that countries could overcome major disparities in times of energy crisis, high inflation, and war.

What were the five key takeaways from COP27 that all global development advocates should know?

1. World leaders finally agreed to set up a funding facility to address loss and damage. After three decades of calls from low- and middle-income countries, the idea of creating a loss and damage funding facility was finally brought to the negotiating table at this year’s COP. Although several leaders (e.g., the U.S. and EU) initially did not want the issue on the agenda, political negotiations resulted in an unexpected agreement. In the coming months, leading up to next year’s COP28, a transitional committee will prepare a proposal for the implementation of a new loss and damage funding facility.
   
   While COP27 was characterized by moderate pledges that observers say fall far short of climate funding goals, we have already seen about US$ 250 million worth of pledges on loss and damage coming from 7 countries (for an overview of all commitments, refer to the COP27 commitment tracker). Some of these funds will likely be geared toward the new facility. Other commitments will be targeted towards the “Global Shield Initiative,” a new G7-driven insurance scheme for countries that face damage from climate disasters. The feasibility of this insurance system remains unclear, especially given the extraordinarily high cost of climate disasters in vulnerable countries and the vague design of the initiative.

2. Donors reiterated their commitment to double adaptation finance from 2019 levels by 2025. Alongside large-scale discussions on biodiversity and food security, climate adaptation remained one of the most important topics on the agenda at COP27. The final cover decision, which features buy-in from all attending parties, outlines the urgent need for more adaptation finance as well as explicitly integrating water conservation into adaptation efforts.
   
   The COP27 Egyptian Presidency also launched the ‘Sharm el-Sheikh Adaptation Agenda,’ which sets out 30 adaptation goals to be met by 2030. It is the first holistic international plan for adaptation coordination. This plan touches on necessary actions in the field of biodiversity and reforestation, green energy sources for food security, and private sector engagement to advance climate risk adaptation. Countries agreed to develop a framework to guide the delivery of the agenda and to track progress against it. This is an important step towards greater climate finance accountability.
   
   The most important outcome on resilience for food security was the establishment of a four-year Sharm el-Sheikh ‘joint work on implementation of climate action on agriculture and food security,’ which outlines key actions to promote sustainability of, strengthen climate adaptation for, and mitigate emissions from agriculture. The largest commitment to agricultural development came from the Bill and Melinda Gates Foundation, with US$1.4 billion targeted towards smallholder farmers.
3. Development finance architecture reforms made it into the cover decision. Calls for reform of the development finance architecture, which has historically been unsuccessful in best leveraging available funding to address the climate crisis, gained traction during the conference. The Bridgetown Initiative, spearheaded by Prime Minister of Barbados Mia Mottley, calls for an increase in the amount of climate finance made available to partner countries from major finance institutions, such as the International Monetary Fund (IMF).
   
   The cover decision calls on Multilateral Development Banks (MDB) and International Finance Institutions (IFI) to align and scale up funding, as well as to improve access to financing – an issue that low-income countries, in particular, are facing in building their climate resilience. The cover decision also mentions the need to transform funding delivery by reforming the financial system and its structures and processes. Many observers noted this as a surprising outcome of the talks as the UNFCCC has no explicit mandate to ask for reforming MDBs. The UN Development Programme (UNDP) has warned that more than 50 countries are at risk of defaulting their debt, so reform of development finance delivery, in addition to providing more grants and better loan conditions could not be more timely.
4. Countries agreed not to abandon the 1.5-degree target, but fell short of renewing the momentum. The cover decision does not include any new agreements on curbing fossil fuels, meaning that the “implementation COP” fell short of delivering concrete plans. It was also not until the G20 released a statement, that there was a resolution to keep 1.5 degree Celsius benchmark. The focus is now on countries implementing their nationally-determined contributions (NDCs). Next year, the Global Stocktake, required under the Paris agreement, will assess whether countries have fulfilled their promises to date – and heated debate is expected. Current NDCs imply a temperature rise of about 2.5 degrees, and reaching net zero in the next 30 to 40 years is still out of reach.
5. There was significant discussion around financing energy transition in Africa. World leaders unveiled ‘The Breakthrough Agenda,’ a 12-year plan which includes agreements for participants to scale up production of green energy sources, such as hydrogen; coordinate the phase-out of combustion-engine automobiles; and provide funding to build up markets for green and sustainable products. This includes supporting African countries in their national energy transitions, building up African carbon markets, and securing adequate finance for critical energy infrastructure.
   
   There were also many notable clean energy financial commitments from bilateral donors (such as the EU, Germany, France, and the Netherlands; for an overview of all commitments, refer to the COP27 commitment tracker) to MDBs and recipient countries. In fact, most of the pledges made at COP27 related to climate change mitigation were targeted toward the "clean energy transition." The cover decision echoed these demands by calling to accelerate a just and clean energy transition.

With COP27 behind us, where should advocates turn their attention next?

Although the overall progress of COP27 did not match the scale of ongoing challenges posed by climate change, strong pressure from climate champions ensured that progress already made was not lost.

Looking ahead, advocates should focus on:

• Securing new momentum for the 1.5-degree target: Financial targets are important, but no climate action is sustainable without limiting climate change.
• Ensuring that financial and political commitments are met: This can be done, for example, by establishing appropriate accountability mechanisms for funding.
• Pushing for a clearer climate finance definition: This will support credible progress assessment and limit double counting.
• Continuing a strong push throughout the year to influence the progress of major milestones: These include the Global Goal on Adaptation and New Collective Quantified Goal on Climate Finance (NCQG), both of which are expected to play a larger role at next year’s COP.
• Using key high-level events such as the G7 and G20 for advocacy: These convenings are key to reaching agreements on sticky issues, as demonstrated with the G20’s support for the 1.5-degree goal.