COP27 redraws the map for the global climate responsibility

A historic win for climate finance was tempered by a disappointing outcome on fossil fuels
COP27 president Sameh Shoukry greets German climate envoy Jennifer Morgan during the closing hours of the summit.
COP27 president Sameh Shoukry greets German climate envoy Jennifer Morgan during the closing hours of the summit.
Photo: Mohamed Abd El Ghany (Reuters)
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In the end, COP27 struggled over the oldest battle lines in climate diplomacy: rich countries v. poor. This time, the dispute was whether it is time to redraw those lines, expanding the number of nations contributing to help poor nations weather rising temperatures.

For a few tense hours on the evening of Nov. 19, any deal seemed out of reach. But around 6am Egypt time on Nov. 20, after all-night negotiations, nearly every country on earth agreed to an unprecedented plan to fund climate reparations for developing countries, expanding the number of contributors, fulfilling the long-sought hope of climate activists and the world’s most vulnerable countries. But the other major ambition at COP27, a global commitment to phase down the use of all fossil fuels, fell short, instead targeting only “unabated coal” but ignoring oil and gas.

That leaves the world with the promise of a more just climate finance system, but still at high risk of blowing past the global warming targets set under the Paris Agreement.

Countries agreed to create a fund for loss and damage

In the past, tensions in climate summits largely centered on a perceived failure by developed countries, especially the US, to take responsibility for their historic emissions by reducing their own carbon footprints and giving developing countries cash to reduce theirs as well as adapt to and cover the costs of climate impacts.

That tension hasn’t receded at all. But in COP27 more than any previous climate summit, it was buttressed by a more pragmatic question of whether it’s time to expand the list of countries on the “developed”—and therefore financially responsible—side of the equation beyond what was laid out in the original 1992 UN climate treaty.

That debate played out most pointedly in negotiations over who to fund loss and damage payments, sometimes called “climate reparations.” In the months leading up to COP27, developing country diplomats had made clear that they demanded the creation of a dedicated loss and damage fund, administered by the UN, through which loss and damage payments could be collected and distributed. Leaving Sharm El-Sheikh without such a fund, many argued, would be an unambiguous indictment of the summit and of the overall good faith of developing countries in holding up the core principles of Paris Agreement.

On Nov. 19, they got their fund. Although it won’t take effect for at least a year and came with no specific fundraising target, the agreement “decides to establish new funding arrangements for assisting developing countries in responding to loss and damage.”

Who pays for climate change?

But more contentious than the fund’s existence was who the payers and beneficiaries should be. Developing countries, led by the European Union, had pushed to expand the number of climate donors and reduce the number of recipients. Any loss and damage fund, they argued, should expand the contributor pool to include countries whose current levels of per-capita income and emissions should put them in the ranks of the responsible—for example Singapore, South Korea, Gulf nations, or Israel. (China is sometimes implied in this list as well, although a June analysis by the Overseas Development Institute, a UK think tank, concluded its per-capita income and emissions are still far lower than most countries on the traditional “developed” list.)

“If you freeze time in 1992, there are some countries that now have huge potential to support climate finance who will be off the hook, which is unacceptable,” Frans Timmermans, executive vice president of the European Commission and the bloc’s top climate negotiator, told reporters on Nov. 17.

Development banks and the private sector should also be on the hook, he argued. The deal does not place a specific burden on developed countries, and calls for “new and additional resources...from other sources, funds, processes and initiatives, including outside the Convention and the Paris Agreement”—language that implies voluntary contributions from a wide range of countries, development banks, and the private sector.

On the receiving end, the agreement says the money is meant to support “developing countries that are particularly vulnerable” to climate impacts, language that some civil society groups have cautioned could be interpreted to limit which developing countries can qualify—Timmermans specifically cited Pakistan and island nations as potential recipients in his closing speech. More detailed rules will be under development before next year’s COP28 summit.

The text lays out the philosophy that will influence the next several years of climate finance discussions and fundraising. But like everything else in the Paris Agreement process, it is non-binding—meaning ultimately it remains up to donors to give the fund its substance. And that is much more easily said than done: If the example of previous climate finance goals is any guide, it will still be a long and excruciating process to get this fund up and running—especially as the impacts of climate change continue to raise the cost of damages.

“Addressing loss and damage with a dedicated fund is a historical move,” said Julie Segal, senior manager for climate finance at the Canadian advocacy group Environmental Defence. “But we need to stop making the problem worse.”

There’s still no agreement to phase down the use of fossil fuels

The deal fell short on another key priority: an agreement to phase down the use of all fossil fuels. Instead, the deal essentially copies language from last year’s COP26 in Glasgow that “calls upon signatories to “accelerate efforts towards the phase-down of unabated coal power,” with no mention of oil or gas, which has always been a red line for Saudi Arabia and some other major fossil fuel producers.

That outcome was disappointing for a COP that had billed itself as all about “implementation” of climate plans, given that phasing down the use of all fossil fuels is ultimately the one measure that would have to be the chief aim of any science-based implementation plan. A new target for total global emissions to peak by 2025, which had been backed by the UK and others, also did not make it into the final agreement.

“There was a lot of running back and forth furiously to stay in the same place,” said Nat Keohane, president of the Center for Climate and Energy Solutions, a US think tank.

Egypt barely held things together

One surprise in the COP’s final hours was that any of this came as a surprise. Most countries’ positions on both compensating climate damages and phasing out fossil fuels have been well-known for months or years. Many observers were frustrated that the Egyptian presidency didn’t do more to broker a consensus from an earlier stage.

“The presidency has muscle to move things forward, but they never flexed it,” a developing country diplomat said in a text message.

The fossil fuel issue is sure to dominate again at next year’s COP28, which will be hosted in the United Arab Emirates, one of the world’s top oil and gas exporters. COP is the only diplomatic process, on any subject, that requires unanimous consent from nearly every country. So it’s hardly surprising that the most ambitious aims of activists and vulnerable countries remain out of reach.

But, Keohane said, the summit shouldn’t be judged exclusively on jargon in the final agreement. On the sidelines, while negotiations puttered along or petered out, billions of dollars in clean energy deals were struck, activists and community leaders directly addressed ministers and heads of state, and the broad, messy coalition of people across the global economy had a chance to coalesce around a shared vision.

For a problem of such reach and complexity as climate change, COP is still the best available forum.

“If you didn’t have COP, you would need to invent it, because you need people to come together every year and talk about climate,” Keohane said. “We won’t see the whole picture when the gavel falls. Fundamentally the success or failure of the COP will show up over the coming years as we see how well individual countries are taking action in their own capitals and actually mobilizing these collaborative efforts.”