COP27 fails to improve on COP26 but loss and damage fund the saving grace

The quantum of contributions, assessment of economic losses, and disbursement are still unclear.

At a camp for displaced people on the outskirts of Dollow, Somalia, on September 20. The fund is expected to support countries suffering from the devastating effects of climate change, such as Somalia, where over seven million people are facing hunger due to famine caused by an ongoing drought. | Photo Credit: Jerome Delay/AP

Some 30 years ago, in 1991, the Pacific island nation of Vanuatu put the term “loss and damage” on the table of the UN climate negotiations, which finally saw some tangible progress at the 27th session of the Conference of the Parties (COP27) to the UN Framework Convention on Climate Change (UNFCCC). The conference, which was held from November 6 to November 20 at Sharm el-Sheikh in Egypt, resolved to establish a fund to compensate countries vulnerable to the adverse impacts of a warming climate for the costs they have borne to recover and rebuild from the loss and damage they have already suffered (see Frontline, “Feeling the heat”, December 2). Given the pulls and pushes from different quarters over the wording of the final text of the declaration, the conference, which was to have concluded on November 18, was extended by more than a day.

At COP26, in Glasgow last year, though developing nations pushed for such a fund to facilitate loss and damage finance, the conference only managed to set up the so-called Glasgow Dialogue among the parties over a three-year period (until the COP in 2024) to establish a suitable mechanism. That the decision for the creation of the fund was taken two years early is being seen as a breakthrough and a major victory for poor and developing countries. In fact, US climate envoy John Kerry had opposed such a fund saying that existing funds could be used for climate-related losses and damage. The EU, too, had resisted but eventually agreed, and the US then followed suit.

The fund is expected to support countries suffering from the devastating effects of climate change, such as Somalia, where over seven million people are facing hunger due to famine caused by an ongoing drought, and Pakistan, where extreme flooding has led to damage estimated at around $30 billion. However, the exact mechanism for operationalising the fund is far from clear. Its target amount (we will return to this later), who all are liable to contribute, how the economic losses claimed are to be assessed and verified, and the process of delivery—all this will be discussed at COP28 in Dubai.

Besides the above, the response of the summit to averting the impending climate crisis and its disastrous consequences, particularly for the developing world, has been grossly inadequate. It was hoped that the summit would result in renewed commitments for finance flow to the developing world, new commitments on emissions reduction, and strong signals for a rapid transition away from fossil fuels while respecting the core UNFCCC principle of common but differentiated responsibilities and respective capabilities (CBDR-RC). CBDR-RC is aimed at accommodating the developmental imperatives of poor and developing countries, which translates basically into energy equity. But all these hopes were belied

Victims of heavy flooding waiting to receive relief aid from the Pakistan Army, in Qambar Shahdadkot district of Sindh Province, Pakistan, on September 9. | Photo Credit: Fareed Khan/AP

The net outcome of the summit fell well short of the decarbonisation that is required of the developed countries, which are historically and primarily responsible for the carbon emissions that have led to the observed climate change, to rein in the warming to sustainable levels by the end of the century. Many of the declarations made at COP27 were virtually the same as those made at COP26. In fact, in some sense, COP27 was less ambitious than COP26, a reflection, as some would argue, of the fuel crisis caused by the ongoing Ukrainian war, which has led to disruptions in natural gas supply and thereby increased other fossil fuel consumption.

The Glasgow declaration had resolved to limit global warming to 1.5°C through “rapid, deep and sustained reductions in global GHG [greenhouse gas] emissions, including reducing global CO₂ emissions, by 45 per cent by 2030 relative to the 2010 level and to net zero around mid-century, as well as deep reductions in other greenhouse gases”. The Global GHG emissions in 2021, estimated at 52.8 giga or billion tonnes of CO₂ equivalent (GtCO2eq), actually mark a substantive increase, not reduction, in emissions.

The Sharm el-Sheikh resolution, while retaining much of this wording, made some significant changes that are clearly less ambitious. It says: “[L]imiting global warming to 1.5 °C requires rapid, deep and sustained reductions in GHG emissions of 43 per cent by 2030 relative to the 2019 level” (emphasis added). The base year for the GHG reduction fraction has been pushed by nearly a decade—between 2010 and 2019, the atmospheric CO₂ concentration has shot up from about 385 ppm to 410 ppm—and there is no mention on the time frame to achieve net zero, which had been touted as a major achievement at COP26.

Phasedown and phase out

Since Glasgow, the focus seems to be on “low emission energy systems”, which actually is a euphemism for continued natural gas (a fossil fuel, though less GHG intensive) based energy generation, with no clear time-bound commitment on an actual phasedown, and ultimately phasing out, of fossil fuels, which was a widely expected outcome of COP27. In fact, India led the call at COP27 demanding commitments from developed countries on this, but it did not result in any forward movement in the declaration’s final text, which retained verbatim the Glasgow text. But this failure could impact the new fund as well because more fossil fuel means more loss and damage.

According to the Emissions Gap Report 2022 (EGR2022), which the UN Environment Programme (UNEP) released on October 27, the international community is falling well short of the Paris Agreement goals, with no credible pathway in place to limit global warming to below 2 °C, preferably 1.5 °C, by 2100. It found that the updated nationally determined contributions (NDCs), or pledges, since COP26 to limit predicted GHG emissions by 2030 make a negligible difference, only by about 0.5 GtCO2eq. Countries are off track to achieve even the highly insufficient NDCs, the report said.

Global GHG emissions in 2030 based on current policies are estimated at 58 GtCO2eq, the EGR2022 said. The emissions gap in 2030 is 15 GtCO2eq annually for a 2 °C pathway and 23 GtCO2eq for a 1.5 °C pathway. “Policies currently in place,” it said, “point to a 2.8 °C temperature rise. Implementation of current pledges will only reduce this to 2.4 – 2.6 °C temperature rise for conditional and unconditional pledges respectively.”

On October 26, the World Meteorological Organization (WMO) issued its GHG Bulletin 2022, which was like an ominous warning to the upcoming COP27 summit. It said atmospheric levels of the three main GHGs—CO₂, methane, and nitrous oxide—had reached record heights in 2021 (Fig. 1). This was the biggest year-on-year jump since systematic measurements of GHG concentrations began about 40 years ago. “The reason for this exceptional increase,” it said, “is not clear, but seems to be the result of both biological and human-induced processes.”

The increase in CO₂ levels from 2020 to 2021 was larger than the annual growth rate over the past decade. The WMO noted that global emissions had rebounded since the COVID-related lockdowns in 2020, and the atmospheric CO₂ concentration in 2021 was 416 ppm, which is 48 per cent of the total accumulation of CO₂ emitted by human activities in the atmosphere, oceans, and land. It also expressed concern that the ability of land ecosystems and oceans to act as CO₂ “sinks” might become less effective in the future, thus reducing their ability to act as a buffer against larger temperature rise. “In some parts of the world,” it said, “the transition of this land sink into CO₂ source is already happening.”

Warmest eight years

The WMO also issued its Provisional State of the Global Climate Report 2022 on October 27, according to which, the past eight years were on track to being the warmest eight years on record fuelled by ever-increasing GHG concentrations and accumulated heat. The WMO estimated the global mean temperature in 2022 to be about 1.15 °C above the 1850-1900 pre-industrial average. It observed: “A rare triple-dip cooling La Nina means that 2022 is likely to be only the fifth or the sixth warmest. However, this does not reverse the long-term trend.”

The EGR2022 further stated that to get on track to limit global warming to 1.5 °C, global annual GHG emissions must be reduced by 45 per cent in just eight years, and they must continue to decline rapidly after 2030 to avoid exhausting the limited remaining atmospheric “carbon budget”. According to an analysis by the Global Carbon Project, the world is projected to emit 40.6 GtCO2 (Fig. 2) from all anthropogenic activities in 2022, leaving 380 GtCO2 as the remaining carbon budget. With this level of emissions, there is a 50 per cent chance that the planet will reach the 1.5 °C global average temperature rise in just nine years (Fig. 3). But none of these alarming scenarios seem to have had enough of an impact on the developed countries at COP27 to make them commit to any enhanced ambition or action towards substantial emissions reduction.

Agriculture and food security

A couple of issues that had not been deliberated on at earlier COPs were introduced in the final COP27 text, most notably the declaration on agriculture and food security. It was decided to establish both a four-year Sharm el-Sheikh joint work, called the Koronivia Joint Work on Agriculture, on the implementation of climate action on agriculture and food security and an online portal for it. India made a noteworthy intervention on the issue, which is indicative of the direction in which this joint work is going.

At the closing plenary of COP27, Union Minister for Environment, Forest and Climate Change Bhupender Yadav said: “Agriculture, the mainstay of livelihoods of millions of smallholder farmers, will be hit hard from climate change. So, we should not burden them with mitigation responsibilities. Indeed, India has kept mitigation in agriculture out of its NDCs.”

A detailed statement India issued to the media on the joint work programme said: “The world is facing a climate crisis today because of the excessive historic cumulative emissions by the developed nations. These nations are unable to reduce their emissions domestically by any worthwhile changes in their lifestyles. Rather, they are searching for cheaper solutions abroad…. By seeking to extend the scope of mitigation to agriculture, the developed countries are wanting the world agriculture, lands and seascapes, to become a site of mitigation for their profligate, excessive emissions. There are no additional finances offered on the table… and the existing interim operating entities like GEF [Global Environment Facility] and GCF [Green Climate Fund] are being coaxed to handle the excessive emissions of the developed countries by turning the agriculture into a site of mitigation… [which actually is] predominantly a site for adaptation.”

Another issue that was part of the Glasgow text and has now been accorded renewed emphasis is “nature-based solutions” for mitigation and adaptation actions. The final declaration urges Parties to “halt and reverse forest cover and carbon loss” and emphasises “the importance of protecting, conserving and restoring nature and ecosystems to achieve the Paris Agreement temperature goal, including through forests and other terrestrial and marine ecosystems acting as sinks and reservoirs of GHGs and by protecting biodiversity, while ensuring social and environmental safeguards”.

An Indian climate expert observed: “While this sounds good and desirable, it is contradictory given the current situation on climate action by the developed countries. If they continue unabated carbon emissions, which are destroying green cover and ecosystems, and their carbon-absorbing capacity is getting severely impacted, how can this be achieved?” In fact, projects in developing countries that are being financed by external fund flow are mainly of this kind and, therefore, cannot really achieve the objective of mitigation.

Let us return to the main success of COP27, namely the setting up of the loss and damage fund. What is the present ground reality of external fund flows to developing countries for climate action, both mitigation and adaptation? What are the odds that developed countries will make pledges and fulfil them? If the other funds—such as the GCF, the Adaptation Fund, the Special Climate Change Fund, and the Least Developed Countries Fund—that have been created at various times since climate negotiations began three decades ago are any guide, it is rather unlikely, especially given the amount of money that this would entail.

The COP27 declaration noted with concern: “[T]he growing gap between the needs of developing country Parties, in particular those due to the increasing impacts of climate change and their increased indebtedness, and the support provided and mobilized for their efforts to implement their NDCs, highlighting that such needs are currently estimated at $5.8–5.9 trillion for the pre-2030 period… the goal of developed country Parties to mobilize jointly $100 billion per year [into GCF set up in 2010 during COP16 at Cancun] by 2020 in the context of meaningful mitigation action and transparency on implementation has not yet been met and urges developed country Parties to meet the goal.”

It further emphasised that “accelerated financial support for developing countries from developed countries and other sources is critical to enhancing mitigation action and addressing inequities in access to finance, including its costs, terms and conditions, and economic vulnerability to climate change for developing countries”. The declaration further noted that global climate finance flows were small relative to the overall needs of developing countries. According to the declaration, such flows in 2019-20 were an estimated $803 billion, which is 31-32 per cent of the annual investment needed to keep the global temperature rise well below 2 °C or at 1.5 °C.

One of the issues that COP26 had focussed on was finance for adaptation. Although the Paris Agreement states that the provision for scaled-up financial resources should aim to achieve a balance between adaptation and mitigation, the support for mitigation remained greater than that for adaptation, the latter remaining at 20-25 per cent of committed finance across all sources, according to the Fourth Biennial Assessment and Overview of Climate Finance Flows report.

Adaptation gap

Along with EGR2022, the UNEP also released the Adaptation Gap Report 2022 (AGR2022), which has dealt specifically with finance flows into adaptation measures in developing countries. According to it, combined adaptation and mitigation finance flows in 2020 were at least $17 billion short of the pledged $100 billion annually, even by climate finance providers’ own accounting. “If the annual increase from 2019 persisted in the coming years,” the report said, “the $100 billion target would not be met until 2025.” The AGR2022 further stated that the estimated annual adaptation costs/needs are in the range of $160 billion to $340 billion by 2030 and $315 billion to $565 billion by 2050, which is five to 10 times higher than international adaptation finance flows, and the adaptation finance gap continues to widen.

Natural disasters in 2022 alone cost the global economy about $227 billion. Poor countries have borne the brunt of such losses in recent years as climate change has exacerbated the severity of natural disasters. This is the basis for the continued call at climate negotiations for compensation through a loss and damage fund.

A few nations have reportedly already pledged contributions towards this fund, but the amount on the table is peanuts compared with what even a conservative estimate says is required. An estimate that was floated during the negotiations at COP27 was $1 trillion-$1.8 trillion by 2050, but this figure was challenged (see alsoFrontline, December 2). According to a report presented at the summit, loss and damage compensation would be around $2 trillion each year from 2030. According to media reports, Denmark has pledged $13.5 million, Germany $170.4 million, Ireland $10 million, New Zealand $11.8 million, Austria about $50 million, and Belgium $2.5 million.

As mentioned earlier, the plan for implementing this fund is expected to be in place only in 2024. “This world looks, still, too much like when it was part of an imperialist empire,” observed Barbados Prime Minister Mia Mottley. She called upon oil and gas companies to contribute to the fund and said: “How do companies make $200 billion profit in the last three months and not expect to contribute at least 10 cents in every dollar to a loss and damage fund?... If COP cannot deliver on the promise on loss and damage… 40 per cent of world’s population and more will wonder what the point of it is.”

The Crux

• At COP27, held from November 6 to November 20 at Sharm el-Sheikh in Egypt, it was decided that a fund would be set up to compensate countries vulnerable to the adverse impacts of climate change to help them recover and rebuild from the loss and damage they have already suffered .
• The decision to create the fund was taken two years ahead of schedule, which is being seen as a major victory for poor and developing countries.
• However, the exact mechanism for operationalising the fund is far from clear: Its target amount, who all are liable to contribute, how the economic losses claimed are to be assessed and verified, and the process of delivery will only be discussed at COP28 in Dubai.
• At COP27, it was decided to establish both a four-year Sharm el-Sheikh joint work on the implementation of climate action on agriculture and food security and an online portal for it.
• But overall, COP27 was less ambitious than COP26, with many of its other declarations being virtually the same as those made at COP26.
• Its response to averting the impending climate crisis and its disastrous consequences, particularly for the developing world, was grossly inadequate, and there were no renewed/new commitments for finance flow to the developing world or on emissions reduction, or on rapidly transitioning away from fossil fuels.
• The net outcome of the summit fell well short of the decarbonisation that is required of the developed countries to rein in the warming to sustainable levels by the end of the century.