COP27 will be a memorable episode in the saga of multilateral climate action for reasons both good and bad
The roller coaster that was COP27 was marked by fraught and contentious negotiations through its two-week duration. Right up to the last minute of the conference, which was extended by over 36 hours, the fate of the talks hung in the balance as parties grinded it out through endless huddled negotiations. The conference was ultimately salvaged with many of the most important decisions seeing progress, even if “dissatisfaction all around” was the overall expressed sentiment, along with overwhelming exhaustion that had swept across the venue in Sharm el Sheikh. The COP27’s Egyptian Presidency managed to save face as the historic verdict on the setting up of a dedicated loss and damage fund was delivered and minimum common agreements were ultimately hammered out in many other negotiation tracks.
This hardly seemed the case going into the last day of the extended conference, when disaster seemed certain, with very little consensus on the vast majority of the texts on the agenda. After dramatic twists and turns, and intense disagreements that raged through the two weeks in Egypt, COP27 will be a memorable episode in the saga of multilateral climate action for reasons both good and bad. While the decision to establish a fund to address loss and damage is indeed historic, the matter is far from closed.
Battle fronts are likely to open up again at COP28 when countries are tasked with working out the modalities and responsibilities toward this fund. On both adaptation and mitigation, new work programmes are now set to continue over coming years where principles of equity and CBDR-RC enshrined in the convention and the Paris Agreement will likely continue to be challenged. The potential of setting these principles against the urgency to accelerate emission cuts and enhance financial flows, in order to strain the developing countries coalition, is something that the developing world must be wary of and prepare for in the run up to COP28.
Cover decision: A good deal is when everybody involved is unhappy?
As negotiations dragged on with track after track deadlocked, attention shifted to the COP27 cover decision. The cover decision is essentially a document developed by consensus between all parties that sets out the core political goals and targets from the meeting. The document is typically a reflection of commonly agreed priorities for action, and serves as an umbrella document that sets the context for and introduces decisions taken under the main frameworks and agreements adopted under the UNFCCC. The Egyptian presidency had its work cut out, with parties all around refusing to budge on their priorities.
For developed countries, the brief was clear. The cover decision had to show an increase in ambition over last year’s Glasgow pact. This meant it had to include language that prioritised the 1.5°C warming limit of the Paris Agreement, timelines for global emissions peaking and the shared burden of climate action explicitly stated. For developing countries, these were a no-go and priority remained securing the right to pursue developmental objectives in line with the principles of equity and CBDR-RC. For the subset of developing countries that are confronted with immediate and existential threats from climate change impacts, the priority was to include decisions that clearly stated the urgency of stepping up action.
Ultimately, the gavel came down on a watered-down text that showed neither ambition nor conviction. The ‘Sharm el Sheikh Implementation Plan’ barely matches the ambition expressed in last year’s Glasgow Pact and contains only references to the guiding principles of the climate change convention and no clear defence of them. Kicking off the final day of negotiations as the draft of the decision text was being circulated among parties, COP27 President Sameh Shoukry, clearly deflated by that point, told press, “The Presidency has done all it could and has tried to reflect the views of all parties in creating this decision. Now it is up to the parties to agree. Although the feeling is one of dissatisfaction all around, we urge parties to show flexibility and willingness to compromise in the spirit of collaboration.”
For India, the cover text offers some solace in that it includes some language on sustainable production and consumption to lead climate action, which has been the stated objective of LiFE— the climate movement launched by PM Narendra Modi last month, and the theme of India’s Pavilion at COP27.
Geopolitical contexts meets disorganisation
COP27 was held under challenging circumstances, perhaps more so than any moment in the 30-year history of the collaborative forum. The world remains rattled and scrambling to respond to a poly-crises that has seen convergence of insecurities in energy, economy, food and public health and topped off with an especially bad year in terms of climate change impacts.
Geopolitically, the environment was hardly fertile or conducive for easy consensus among parties. But the COP27 presidency did itself no favours as confusion and disorganisation left strong imprints on the two-week conference. Complaints over accommodation costs, high food prices, sanitary concerns and an inconvenient layout of the venue flew hard and fast in the first week. The big issue in terms of the negotiations, however, came from organisational matters. The first week saw several scheduling clashes with last-minute changes and cancellations, which was a cause for frustration among negotiators who had to navigate the maze that was the venue, often at a minute’s notice. While schedules often saw several negotiation tracks planned for the same slot, which is a challenge for countries that come with small delegations, there were also long periods of time where no negotiations were planned, despite it being clear from the beginning that achieving consensus would require several rounds of consultations.
“Everything has been a challenge with the presidency this year. It has been quite a nightmare to schedule and plan negotiation sessions smoothly, or expect their inputs in a timely fashion,” said one high-ranking member of the UNFCCC secretariat, which is tasked with working with the COP presidency on organisational and procedural matters.
As things heated up toward the end of the conference, the presidency took charge of producing draft versions of texts with a view to force through consensus. Several delegates from both developed and developing countries found the way this was done problematic as well. Many complained of the lack of transparency in the process, claiming that inputs would often not be reflected in the drafts, or worse still, inexplicably disappear between versions of texts that the presidency was preparing. “There were too many changes in drafts that were coming in very fast. Several times, they were circulated through unofficial channels to parties and we often got no more than minutes to go over the drafts before having to give our inputs,” said one African negotiator. The sentiment was echoed throughout the corridors of COP27.
Adversarial politics makes a nasty comeback
It was clear from its onset that the conference was going to be a hard trudge rather than an easy walk. But while exigent circumstances made for a challenging backdrop, few would have guessed that it would result in the kind of Machiavellian tactics that were ultimately witnessed.
Throughout negotiation rooms, it was clear from the get-go that the fight would be over the status of the guiding principles of equity and CBDR-RC as they were articulated in the UN climate convention and reiterated in the more recent Paris Agreement. Negotiations saw clear, coordinated and systematic attacks on these principles from developed countries (including but not limited to the US, EU, the UK, Switzerland, Japan, Australia and Norway), which sought to deny, minimise, dilute and reframe these principles. The agenda was to erase the developing-developed dichotomy that has thus far been used to frame and allot responsibilities for climate action.
Interestingly, there was not one common frame of reference that was used to challenge these principles, but rather a range of framings that were used depending on the area of negotiation. So, while tracks on mitigation saw the attempted insertion of “major emitters” instead of developed countries, those on finance saw attempts to introduce language specifying “parties with capacity” and “major economies”. Across tracks, “national circumstances” (which would include short-term circumstances such as the ongoing energy crisis in Europe) were being used to evade established lines of responsibility.
There was a palpable push to include language on peaking global GHG emissions by 2025 in pursuit of the 1.5°C warming limit. While this was played up in the media as an attempt to avert disastrous climate impacts, in reality it also serves as a red herring to several developing countries. With most developed countries already having peaked their emissions, the inclusion of such language implies a shift of the onus of reducing emissions to developing countries in contravention with the right to pursue equitable development. Behind the scenes, in closed-door negotiations, the denial of these rights was allegedly even stronger and bordered on outright denial of the principles of equity, per observers and negotiators present.
While the matter has been framed as a subject of whether or not emissions should be reduced, this is hardly the question. In fact, it is perhaps one of the only questions where there is consensus— of course they must. But which should be the countries that take on primary responsibility to do so? Who should pay for reductions in geographies that cannot afford to do so? How must the remaining carbon budget be divided-up among countries in order to ensure maximum parity in terms of standards of living? Which are the countries that must go net negative in their emissions so that equity can be pursued for those who have not benefited from historic emissions? These are the real questions of relevance here, but there was practically no space for such reflections in decisions made at COP27. It was, after all, India, a developing country that first made the demand to bring in all fossil fuels under the ambit of reductions, before the narrative was hijacked and twisted by the countries of the Global North.
“We agreed to 1.5°C in Paris and have no problem pursuing this goal. Our problem stems from the attempt to shift the burden of responsibility for doing so. For years now, developed countries have underdelivered on their promises and now they seek to renegotiate the terms of the convention to suit their purposes with scant regard for the norms and rights. How can we in good faith agree to new terms for a contract when the old terms were not met and always blocked, and that too at the cost of developmental priorities in poor parts of the world where energy and resource access continues to be a scourge. Is this a fair expectation?” asked one G77 negotiator when asked about the assault on the principles of the convention.
Following the EU’s “deal” for a L&D facility that sought to link it to global mitigation imperatives and pit developing countries against each other, yet another ploy to weaken developing countries’ resolve to protect their interest came in the form of dragging negotiations and reopening closed texts late hours into the night. For those countries that can afford to send large delegations, this was a minor inconvenience as they could use their substantial bench strength to grind out suitable language. For poorer countries with small teams, such tactics amount to little more than an attempt to slowly and gradually erode resolve through sheer exhaustion.
“We are very concerned that developed countries do not see the means of implementation for developing countries as a considerant part of the goal. We have been given the impression that it is unfashionable to talk about equity and CBDR. Unfulfilled commitments of $100 billion per year and unfulfilled pledges to the Green Climate Fund and Adaptation Fund. But these are lost in the din of optics and applause. It is time to leave optics aside and focus on real ambition,” said Diego Pacheco, Bolivia’s negotiator, and the Like-Minded Developing Countries (LMDC) spokesperson.
Ominous signs for the future
COP27 is now done and dusted. While no party can claim to have gotten what they were gunning for, one group definitely lost more than the other. Developing countries must take lessons from the outright attack on their rights and the potential fractures that were exposed this year. In the game of narratives, big developing economies are going to continue to be painted as villains, particularly in western media, while equity and CBDR-RC will be increasingly used as strawmen to justify the lack of climate action. The responsibilities for accelerating action will be increasingly sought to be redistributed and redefined, even if it comes at the cost of developmental objectives of resource- and access-poor geographies of the world. These are things that developing countries must be wary of and for which they must prepare accordingly.
Coordinated attacks require coordinated defences, in the absence of which developing countries will remain on the backfoot, losing ground inch by inch until very little remains of which to protect. Developing countries will also have to coalesce around a fresh way to view equity, the old focus on historic emissions to draw lines of responsibility are no longer solid foundations and articulations must be developed around remaining carbon budgets and equitable shares of the same. For this, strategies must be prepared jointly and well in advance so that they can be sharpened over the course of the year in the run up to COP28, when the attacks are bound to become louder and more difficult to fend off.
Although the threats and what must be done to protect against the erosion of the principles seem clear, past experience provides little hope of coordination among the poorest, most vulnerable people of the world, who have the most to lose. The erosion of the rights to develop in an equitable manner will not guarantee success on the climate action front. If anything, it would only guarantee a reduced ability to absorb the shocks of impending climate impacts.
Clarity on the financing mechanisms, avenues and responsibilities to be etched out over the next year, but window opened to expand donor base beyond developed countries
Working overnight, the conference of parties (COP27) of 134 countries made history on African soil when they decided to establish a “funding arrangement” for the loss and damage caused by climate change. The Global North agreed, in principle, to set up a separate loss and damage fund for the Global South. The demand for a fund was raised in the run-up to COP27 by several developing and vulnerable countries after a year of brutal climate impacts worsened financial conditions and indebtedness across the world.
Link to 1.5°C: ‘Rich continue to colonise carbon budget of the poor’
The decision adopted in the early hours of Sunday links the 1.5°C warming limit as “essential to limiting future loss and damage”, raising the question of equity, a word completely missing from the document.
The issue of how and where such warming limits should be placed in any text on the matter was an issue of contention that persisted through two weeks of fraught negotiations following the adoption of the agenda for the conference. Disagreements prominently included the fixing of responsibilities for financing the fund, the channels that would be used for disbursement and how beneficiaries would be identified.
As the deadlock showed no signs of loosening in the second week, a flurry of draft proposals were submitted by groups, including the G77+China, the Environment Integrity Group and the EU to the UNFCCC Secretariat. The EU proposal, in particular, created waves around Sharm el Sheikh as it linked the L&D fund to global emissions peaking—a red line for many developing countries that are yet to achieve their developmental objectives and claim a fair share of the remaining carbon budget in order to meet them. Parallelly, with no resolution in sight, ministers from Chile and Germany put together an alternate text that sought to crystallise contentious issues into three separate options.
While some headway was made with this version, an agreement was still not in sight. This is when a new proposal endorsed by members of negotiating blocs the Umbrella Group and the EIG, which borrowed elements from all proposals that had been submitted before was circulated among parties. This was the proposal that the COP Presidency finally borrowed heavily from in order to break the deadlock and force an agreement. The link with 1.5°C without an explicit mention of equity can be viewed as an attempt by the Global North to shift the burden of finance and climate action to developing countries, who have historically had a miniscule share of the emissions that are primarily responsible for global warming.
Fund for “particularly vulnerable”
The adopted L&D fund now refers to recipients as developing countries that are “particularly vulnerable” to climate change. This is a departure from the draft decision that kept open the possibility for all developing countries to access the fund. The wording change is worrisome because it is hard to define which countries are “particularly vulnerable”. All countries are particularly vulnerable, but the wording is vague enough to work around. The EU and the US initially rejected the demand for a new fund arguing that existing funds, including humanitarian aid, should be used. Then the EU demanded that China and India be excluded, which was seen as an attempt to divide the developing countries.
The EU and the US also wanted to expand the list of countries contributing to loss & damage finance to include high-income developing countries such as China and Saudi Arabia. While this ultimately did not make the final cut, the text does contain important language around reforms that shall be pursued at international development banks the IMF and World Bank early next year.
Parties decided to set up the Santiago Network, which will provide technical assistance in averting, minimising and addressing loss and damage.
Who pays for the fund?
The proposal acknowledges “many institutions and stakeholders” involved in financing and welcomes the EU’s Global Shield initiative. Developing countries see the Global Shield as a distraction that diverts resources away from loss and damage. An estimated three-fourth of “loss and damage” funds so far are for the Global Shield. Experts see them as Global North countries subsidising northern insurance corporations in the name of loss and damage finance. By 2050, the economic costs of loss and damage could exceed $1 trillion annually. UNEP estimates adaptation costs between $280-570 billion dollars by 2050 (in 2012 dollar value) for developing countries, for a temperature scenario of about 2°C degrees.
Without identifying who exactly will pay, the proposal seeks to mobilise new and additional resources, including sources, “under and outside the Convention and the Paris Agreement”. The proposal seeks to expand sources of funding to “a wide variety of sources”, as a window to include developing countries as funders. The proposal seeks “innovative sources” which could mean taxes on fossil fuels, aviation or shipping, but the proposal also “urges” private sources to provide support, which comes in the form of debt financing, allowing the private sector to profit from the debt of developing countries.
The process of operationalisation
The proposal is seen as a political signal to restore broken trust, but a lot depends upon how it is operationalised next year. It will be subject to consensus from the Transition Committee. The 24-member panel (10 from developed countries and 14 developing countries) will hold at least three meetings per year starting next year. The panel is tasked with the crucial work to decide who requires funding and what will be the source of that funding. The committee has the tough task to actually identify “vulnerable” recipients of funds and new donor countries, other than the rich countries and report to COP28.
At present, the fund is only assured, but the quantum of finance and sources are yet to be determined. Any finance that exists at the moment to address loss and damage in vulnerable nations exists outside the UNFCCC process and is woefully inadequate relative to expense sheets that seem to be rapidly expanding year after year as impacts of climate change worsen, particularly for those who have contributed the least to global warming.
More fossil fuel lobbyists had registered for this year’s COP than representatives of the 10 countries most impacted by climate change
They say fear and self-doubt leads to overcompensation. This held true for oil and gas lobbyists who doubled down on their presence at this year’s COP as calls for this sector to be wiped out permanently continue to grow. The sector still has a firm grip over richer nations, who fought to keep any ambitious language out of any finalised text. In fact, 19 deals were sealed in the run-up to and even during COP27, including ones for new fossil fuel exploration. The United States Council for International Business, in fact, refused to hear any criticism on limiting corporate interest at COP27. The only saving grace here was that there were even more clean energy deals that were signed during the COP.
In full attendance
According to observers, COP27 was teeming with fossil fuel lobbyists—over 100 more this year than previous years. They were mainly from Russia and the UAE. In fact, more fossil fuel lobbyists had registered for this year’s COP than representatives of the 10 countries most impacted by climate change.
Language is key
There were no surprises in the story regarding changing the language surrounding oil and gas. Much like other UN climate meets, Saudi Arabia, Russia and Iran, the world’s biggest oil producers, continued to deny the science linking fossil fuels to climate change. During negotiations on cover text, all three refused to entertain any mention of energy sources. They wanted the text to focus on emissions. There was resistance to any reference to the ‘phasing down’ of fossil fuels and any mention of the 1.5°C target as well. The Saudi climate envoy even went as far as to say that they intend to pump oil “and at the same time reduce emissions.” Russia saying “COP isn’t about energy it’s about climate” only illustrated further oil producers’ reluctance to deny the truth. India’s suggestion of phasing down “all” fossil fuels also did not find any mention in the final cover text.
“The text makes no mention of phasing out fossil-fuels and scant reference to science and the 1.5 degree target. The Egyptian Presidency has produced a text that clearly protects oil and gas petro-states and the fossil-fuel industries. This trend cannot continue in the United Arab Emirates next year,” said Laurence Tubiana, CEO European Climate Foundation.
UAE comes full circle
A display at COP27 promoted a CCS project that pumped gas right back into oilfields to extract more oil. Even President Zayed al-Nahyan said in Egypt that the UAE plans to keep supplying oil and gas “for as long as the world is in need.” This despite the country’s recent net-zero pledge and updated NDC.
The Africa Energy Chamber grabbed headlines at the COP for peddling fake information such as fossil gas is a “necessary” for prosperity and welfare, especially for Africa. Other oil and gas representatives pushed anti-renewable claims that the clean energy agenda is a form of “neo-colonialism” to control and exploit African nations and inhibit progress and welfare on the continent. The UN Economic Commission for Africa (Uneca) even cancelled an initiative to mobilise private energy investments in Africa. Team Energy Africa was scrapped after it was found that the group included the African Energy Chamber, a trade group headed by oil and gas lobbyist NJ Ayuk, who has a criminal record.
“The text needs to incorporate the voice of Africans who have been calling out the fossil fuel investment that remains well above investments in climate solutions, thereby slowing progress on the delivery of climate justice,” said Wanjira Mathai, vice-president and regional director for Africa, World Resources Institute.
No oil and gas in the final cover decision
Despite calls from various countries, both in the developing and developed world, the language around fossil fuels, in particular oil and gas, remained weak in the final cover decision prepared by the COP27 Presidency and agreed by all parties. While it retains the language used in the Glasgow Pact calling for a “phase down of unabated coal power and phase-out of inefficient fossil fuel subsidies”, it does leave the door open for abatement technologies and low-emission energy systems, which can be seen as a euphemism for fossil-fuel-derived hydrogen and gas.
“Historically big emitters” vs “big emitters”: Push from Global North risks fracturing principles of Paris accord, instead of implementing it
The COP27 text for Mitigation Work Programme (MWP) also turned out to be quite a struggle as developing countries battled numerous attempts by their developed counterparts, responsible for the bulk of historic emissions, to shift the burden of cutting emissions to the former and dilute the principles of equity and common but differentiated responsibility (CBDR) in the text.
The MWP was set up at COP26 when countries decided to “establish a work programme to urgently scale up mitigation ambition” through 2030, after several reports warned that the current climate pledges, known as Nationally Determined Contributions (NDCs), were inadequate to limit global warming to 1.5°C, and for that emissions need to fall 45% by 2030. During COP27, countries decided on the programme’s structure, principles and the timespan.
No “reiteration” of CBDR, principles of equity
Developing countries didn’t want the MWP to alter the norms of the Paris Agreement and shift the burden on developing countries, nor did they want it to duplicate the Global Stalk Take (GST), the first formal assessment of progress on the Paris Agreement’s goals, also aimed at enhancing ambition in the NDCs. Their demand was that the MWP should “reiterate” and be guided by the UNFCCC’s principles of CBDR and equity, which rich countries at COP27 did not agree with. The text “recalls” but does not reiterate requests to “revisit & strengthen” NDCs.
Global North shifts burden of cutting emissions to the poor
The difference emerged at the June 2022 climate conference in Bonn, but on Day Two of COP27, Switzerland demanded equity to either be dropped from MWP or the introduction of a clause requiring “major emitters”, including India and China, to have a “special responsibility” to scale up their mitigation efforts, as opposed to historic emitters such as the US, UK, and the EU, whose historic emissions outpace those of the “major emitters”. Switzerland’s per capita emissions were twice that of India in 2020.
Instead of reducing its own emissions, Switzerland has been accused of delaying climate action by going to Ghana, which has low emissions, and paying the country to install cleaner stoves to cut greenhouse gas emissions, and claiming credits for the same under provisions of Article 6.2 of the Paris Agreement. This has delayed climate action in the Global North while the global poor cut emissions for them.
No new targets: What will scale in the “critical decade” of 2030
The fig leaf for the Paris principles of differentiated responsibility was offered in the final MWP text, which says the process should be “non-prescriptive, non-punitive, facilitative, respectful of national sovereignty and national circumstances” and “not result in new targets or goals”. The text could work both ways, and could also be used by developed countries to cite exigent short-term circumstances to shirk responsibilities of scaling mitigation.
The rich countries wanted discussions on MWP to continue until 2030, while developing countries wanted it to end by 2024. Both settled for MWP talks to conclude by 2026. The four-year work programme decided to come up with recommendations based on broad thematic areas and include all sectors covered in the 2006 IPCC Guidelines for National Greenhouse Gas Inventories, and thematic areas in the contribution of Working Group III to the Sixth Assessment Report of the IPCC.
The many themes of MWP
Countries struggled over whether the MWP should include sectoral/thematic timelines, targets or benchmarks. The text lists 51 possible themes, including 2030 emissions gap for specific sectors, fair carbon budget shares, finance, 1.5°C mitigation gaps, pre-2020 pledges, 2030 “real zero” for developed countries, carbon colonialism, domestic carbon markets, renewable energy auction design, energy efficiency standards etc.
Some countries found common objectives of mitigation prescriptive. Japan wanted all countries to be a part of mitigation ambition in the cover text.
The MWP identifies no new targets beyond Paris, which basically means that the MWP will only help in identifying sectors on which work can be done and how those are reported through 2026. It was decided that at least two global dialogues shall be held each year as part of the work programme.
Carbon budget fair shares remain a no-go
One way of ensuring equity in mitigation is to first assess the remaining carbon budget in line with warming limits of 1.5°C and 2°C and then divide it relative to the budget that has been expended thus far by countries. This approach would provide a clearer picture of which countries deserve greater space to pursue equitable development, and which need to pursue urgent emission cuts in order to make up for past emissions. While the timeframe for the application of such a methodology would have to be subject to discussions and arrived at through consensus, it at least offers a somewhat equitable solution to the question of which parties should be required to take up cuts and by how much. The issue was raised during discussions on the Second Periodic Review (PR2), which is a two-year science-based process to review the sufficiency of long-term temperature goals. It remained a sticky issue with earlier versions of the text containing an option on the inclusion of the evaluation of fair shares of the remaining carbon budget based on equity and the right to pursue development for developing countries. But it was removed in the final version of the PR2 decision text and replaced with weak language that simply notes the role of national circumstances and differing capabilities in pursuing long-term climate action.
Developed countries prefer instead to use low-emissions pathways compliant with 1.5°C and 2°C as ascertained by the IPCC, which have been shown to not include variables that would effectively reflect equity in development scenarios.
Developed countries took multiple potshots at the definition of climate finance and their obligations to deliver on it, even attempting to shift the burden to private sources and larger developing countries such as India and China
The technical and political discussions on long-term finance (LTF) elements, including the $100 billion delivery, the New Collective Quantified Goal (NCQG) and Article 2.1(c), remained hot topics at COP27 with several attempts by developed countries, including the EU and the US, to renegotiate the understanding of ‘who will pay’.
Under the United Nations Framework Convention (UNFCCC) of 1992 and the Paris Agreement, developed countries are obligated to provide resources in terms of climate finance and technology to help developing countries mitigate and adapt to climate change. This is based on the principle of equity, common but differentiated responsibilities and respective capabilities (commonly known as CBDR-RC).
In an attempt to dilute their historical responsibilities, developed countries at COP27 took multiple shots at the definition and obligations of developed and developing countries and attempted to shift the burden of climate finance to private sources along with asking that large developing countries like India and China to pay.
Broadly, LTF refers to a decision at COP15 in Copenhagen in 2009 wherein developed countries committed to a goal of jointly mobilising $100 billion per year by 2020 to address the climate needs of developing countries. At later talks, it was decided that developed countries will continue to provide $100 billion per year through 2025. And simultaneously negotiations will ascertain a new number–known as NCQG–by 2024 to replace $100 billion after taking the needs of developing countries into account.
$100 billion goal: So near, yet so far
Thirteen years later, the $100 billion goal of climate finance still remains unmet. Not only that, there is no mutually agreed definition of what ‘climate finance’ means. In the absence of a definition, countries use their own methodology for the assessment of the goal. The UN’s Standing Committee on Finance (SCF), which has been mandated to work on the definition of climate finance–does not do its own assessment of climate finance flows, CarbonCopy explained. While developing countries demand a clear definition, their developed counterparts are not very keen on it. During the discussions on the definition at COP27, Australia and the UK expressed positions calling for an end to discussions on setting definitional conditions, and to continue with divergent and disparate interpretations. This position was opposed by developing countries for whom a clear definition also sets accountability. The emphasis of developed countries on not clearly defining what is climate finance is helpful to them in the obfuscation of climate finance that they are obligated to provide.
Developing countries, especially Like-Minded Developing Countries (LMDC), China, and Cook Islands for the Alliance of Small Island States (AOSIS) expressed their frustration over the long-standing calls for a common definition of climate finance, which hinders the tracking of progress of the $100 billion goal and often results in double counting. Most developing country groups called for an annual progress report on the $100 billion goal, which was not supported by the US.
At the high-level ministerial roundtable on LTF at COP27, Oxfam, a global non-profit that has been tracking the delivery of $100 billion highlighted, said that developed countries’ claim of reaching $83.3 billion in 2020, of which 68.3 billion is public finance, should not be taken as face value. Oxfam estimated that the real value, that is climate-specific net assistance, is between $21-24.5 billion–a third of what developed countries are claiming. The 70% of the public finance that developed countries are claiming is in the form of loans, pushing developing countries further into debt. More concerning is the fact that the percentage of non-concessional instruments went up from 30% to 40% of the total. This figure is even higher for multilateral development banks (MDBs). Even the Green Climate Fund (GCF), despite its mandate, is providing 51% of its total climate finance using non-concessional loans.
Many developing countries echoed the sentiments raised by Oxfam, while developed countries maintained that they are on track to mobilising the $100 billion.
On the delivery of this goal, Ecuador for G77 and China expressed several concerns over the critical dilution in language from “developed” countries to “donors” stating that climate finance is a commitment and not a donation by developed countries. There was also opposition by developing countries to the mention of the Climate Finance Delivery Plan, initiated by Germany and Canada in Glasgow at COP 26 for the $100 billion, stating that it is outside of the UNFCCC process.
The US conveyed its unhappiness that there was very little information on the efforts of developed countries to mobilise climate finance and too much focus on the fact that they haven’t mobilised the $100 billion.
During the discussions on reporting on progress on the $100 billion goal, developed countries–such as the UK and Canada–introduced all kinds of concepts that in essence attempt to shift focus onto developing countries, saying that their limited capacity obstructed finance flows. Both countries implied that it was developing countries’ failure to translate their priorities into investment plans and not incentivising the private sector, an African delegate said.
While another matter of concern for developing countries remains that there is no clear text on continuing the assessment of the goal till 2025.
The final text adopted under the Long-Term Finance agenda item is replete with weak language that provides little clarity on these matters. The text is peppered instead with simple recognition and acknowledgement of the inadequacy of the promised funds and the non-delivery of the same.
What will the new goal be?
NCQG will replace the $100 billion goal. However, in the process of discussing what the number should be, developed countries at COP27 attempted to also renegotiate ‘who will foot the bill’ using Article 2.1(c) of the Paris agreement.
Article 2.1(c) of the agreement reads, “Making finance flows consistent with a pathway towards low greenhouse gas emissions and climate-resilient development”.
Using their skewed interpretation of such a vaguely worded article, developed countries are trying to use Article 2.1(c) to do away with their obligation to provide finance to developing countries. As per developed countries, Article 2.1(c) is ‘everyone’s goal’ and ‘everyone’s commitment’ and they are using this interpretation to say that the NCQG is also “a collective goal” and “a global effort” and all the funds mobilised using Article 2.1(c) will form the basis for NCQG.
Developed countries are also using words like ‘parties’ and ‘all sources of financing’ to include large developing economies also as donors and push the responsibility on to private sources. The final decision text pertaining to NCQG at COP27 seeks to establish a workplan over 2023, the details of which are to be decided by March 2023, following inputs by parties. The text includes a decision to continue deliberations on the NCQG in November 2024 when parties will take stock of the progress made in the matter and provide further guidance to the work programme toward setting the new goal for long-term finance post 2025.
Developing countries such as India vehemently opposed any references to mitigation language saying rich nations were looking to push responsibility for their own emissions on to poor, small-scale farmers
Another hot topic at COP27 was agriculture and food systems. While some progress was made, the issue of mitigation remained a bone of contention. This was true for developing countries such as India, especially in the context of Koronivia Joint Work on Agriculture, a work programme established at COP23 in 2017, which looks at mitigation and adaptation in the agricultural sector to tackle climate change.
Initiatives launched at COP27
Forty-two countries pledged $8 billion to an initiative that looks to help farmers combat and adapt to climate change. This is double of what was pledged last year. The initiative, called the Agriculture Innovation Mission for Climate, was launched last year, and focuses primarily on agricultural technology, such as robotics and nanotechnology. Around $1 billion will be allocated to small-scale farmers in developing countries in order to ease their access to such technology.
Another initiative looked to eliminate deforestation because of the food industry. A total of 14 agricultural commodity companies, which produced palm oil, beef, cacao and soy, announced their plan to reduce the number of trees felled. These companies include major players such as Cargill, Archer Daniels Midland and JBS. Critics, however, pointed out that the policy had too many loopholes and was not strict enough.
The UN launched a new climate finance initiative as well called the Food and Agriculture for Sustainable Transformation (FAST). The initiative aims to transform the quantity and quality of climate finance contributions towards agriculture and food systems by 2030.
Some progress on the Koronivia work programme
Member countries had their work cut out for them this year with regards to this work programme. A decision needed to be taken on how to operationalise the inputs received from the work programme last year. But a deadlock meant this had to be taken up at COP27, so pressure to deliver was high. While recommendations from this work programme have been included in the cover text, there was a lot of back-and-forth regarding the introduction of mitigation language in the text especially from India.
The country accused rich nations of not wanting to reduce their own emissions through lifestyle changes, and instead looking for cheaper solutions aimed at disrupting the traditional practices of poor, small-scale farmers. India called emissions arising from agriculture “survival emissions” and not luxury emissions as seen in richer countries. India did not succeed in removing the mitigation language entirely, although negotiators did manage to get the language watered-down substantially and heavily caveated in the final text, bringing national and local circumstances into the frame as being key determinants of how climate action would be carried out within the agricultural sector.
The final text adopted on agriculture now includes a few mentions of terms that could be interpreted as being aligned with mitigation outcomes such as “sustainable agriculture” and “climate action” as well as one direct reference to mitigation. The decision landed in COP27 details yet another four-year work programme— the Sharm el-Sheikh joint work on implementation of climate action on agriculture and food security, which is tasked with figuring out how to update and operationalise the information that has thus far been gathered on the climate impacts of agriculture and reducing the contributions of the sector toward future climate change. In his closing speech at COP27, India’s environment minister Bhupendra Yadav once again reiterated the country’s stand on mitigation in agriculture. “We note that we are establishing a 4-year work program on climate action in agriculture and food security. Agriculture, the mainstay of livelihoods of millions of smallholder farmers, will be hard hit from climate change. So, we should not burden them with mitigation responsibilities,” he said.
But developed countries, particularly the US and the UK, fought hard to get mitigation-centric language included in the text. The US, in particular, showed scant regard for millions of farmers worldwide struggling to cope with worsening extreme weather and slow-onset climate impacts. In closed room consultations, negotiators from the world’s largest historical emitter allegedly even went as far as stating that they view climate action in agriculture as primarily an issue of mitigation and not adaptation, according to a delegate from the G77+China bloc involved in negotiations on the agriculture work programme. Interestingly though, neither the US, nor the UK would have any decision that addressed the wastefulness of food systems or consumption patterns.
Decisions on carbon markets at COP27 could open the door for greenwashing and double counting of emission reductions
Last year’s hot topic, ‘Article 6’, which refers to market and non-market approaches to emission reduction (technical speak for emissions trading), made a comeback this year. Although the “rulebook” for the emissions trading under the Paris Agreement was completed last year, procedural issues, including those around definitions, were outstanding and had to be carved out this year at COP27. The climate conference delivered a partial decision on these matters, leaving questions of “emissions removals” and “avoidance” to be tackled in future sessions. The earliest possible timeframe now for the operationalisation of the Paris Agreement’s Article 6 regime is 2024, while voluntary carbon trading is already operational in several geographies, including Europe and China. In India, the government laid the grounds for emissions trading infrastructure earlier this year through the Energy Conservation Amendment Act.
Article 6.2: Greenwashing Certified
The subsection of Article 6, which deals with international trade of carbon emissions, commonly referred to as 6.2, saw significant movement this year as parties decided what kind of information they would need to share and report while dealing in “internationally traded mitigation outcomes” (ITMOs). The most contentious aspects, observers warn, open the doors to certified greenwashing.
The confidentiality clause included in the final decision text on Article 6.2 grants control over information to participating parties. There is of course a fig leaf included in the form of an expectation to provide basis for keeping the information secret, although this is not binding.
The decision adopted this year has asked for technical guidance in the next intersessional of the technical bodies in June 2023 to develop modalities that would limit the use of the confidentiality clause. Questions around what shape-reporting infrastructure for global trading of carbon credits will also be a part of the agenda in meeting over the next year. Another outstanding issue left for future meetings was the question of the circumstances that could justify ITMOs being revoked.
Article 6.4: A brave new world (of offsets)
Article 6 also deals with the creation of a new international market to trade emissions for use in national emissions inventories towards meeting climate goals. This section, referred to as Article 6.4, also saw some progress in Sharm el Sheikh. Interestingly, and much to the chagrin of observers, the final text on Article 6.4 adopted at COP27 removed references included in earlier draft versions of the decisions that stated explicitly that carbon trading through Article 6.4 “shall contribute to global efforts on climate change for scaling up mitigation ambition and implementation”.
The agenda at COP27 included defining what constitutes carbon removals, which are essentially processes that take carbon out of the atmosphere. After failing to reach consensus following lengthy discussions on the applicable definition of removals, COP27 ended with negotiators sending back text to the UNFCCC technical body for further deliberation.
Another contentious issue that has plagued discussions around a trading regime has been the potential for “double counting”. This was one of the big problems that emerged from the failed CDM regime of carbon trading that was borne out of the Kyoto Protocol.
The issue of potential double counting came to the fore at COP27 as parties negotiated the use of a special subset emissions reductions (ERs) under 6.4 called non-authorised ERs. While COP26 ended with the agreement that host countries should make “corresponding adjustments” for ERs sold abroad, non-authorised ERs were excluded from this agreement. This opened the possibility for the reductions to be counted at both the host’s and recipient’s end. This confusion was somewhat put to rest as the COP27 decision said such emission reduction units (called mitigation contribution ERs in the final text) should only be used toward the host country’s targets. Interestingly, this still leaves open some room for double counting of ERs as it does not contain definitive language (“shall’) but rather uses suggestive language (“should”).
Non-market approaches: Lack of clarity continues
The final part of Article 6, termed Article 6.8, covers “non-market approaches” or NMAs, which essentially deal with non-traded emissions reductions or removals and the monetary value of these. NMAs are yet to be defined clearly, with the UNFCCC Secretariat publishing a detailed report on the kind of NMAs in the run up to COP27 that currently exist with view to help negotiators define modalities and rules to deal with such reductions. The specifics of the work programme and priorities for the “Glasgow Committee” established last year at COP26 emerged as a point of disagreement among parties. Also a point of contention was the function of the UNFCCC-hosted web portal for NMAs where some parties argued for it to be used as service that linked these approaches with funding agencies while others insisted that such a portal should simply be used to feature existing and planned work.
Ultimately, the final decision that emerged from COP27 left the function of the portal up to parties to use as they desired, while the Glasgow Committee has been asked to continue its work for the next two years with provisions to dynamically include its findings into established practice.