COP 27:
Political progress but
transformative climate
actions remain elusive
COP 27:
Political progress
but transformative climate
actions remain elusive
In November 2022, stakeholders gathered in Sharm el-Sheikh, Egypt, for the most recent meeting of the United Nations Framework Convention on Climate Change’s (UNFCCC) 27th Conference of the Parties (COP 27). COP 27 concluded with an “historic breakthrough to help vulnerable countries deal with losses and damages from the impact of climate change”1. While COP 27 witnessed several notable moments, including the resumption of discussions between the United States (U.S.) and the Peoples’ Republic of China with regard to climate issues, there was tangible disappointment on the part of various groups that wanted to see more significant progress in terms of curbing greenhouse gas (GHG) emissions. Nevertheless, publication of the Sharm el-Sheikh Implementation Plan supports the idea that actors can come together, cooperate and potentially agree on actions intended to address the dangers posed by climate change. What follows is our perspective on key takeaways and technical outcomes from COP 27.
In November 2022, stakeholders gathered in Sharm el-Sheikh, Egypt, for the most recent meeting of the United Nations Framework Convention on Climate Change’s (UNFCCC) 27th Conference of the Parties (COP 27). COP 27 concluded with an “historic breakthrough to help vulnerable countries deal with losses and damages from the impact of climate change”1. While COP 27 witnessed several notable moments, including the resumption of discussions between the United States (U.S.) and the Peoples’ Republic of China with regard to climate issues, there was tangible disappointment on the part of various groups that wanted to see more significant progress in terms of curbing greenhouse gas (GHG) emissions. Nevertheless, publication of the Sharm el-Sheikh Implementation Plan supports the idea that actors can come together, cooperate and potentially agree on actions intended to address the dangers posed by climate change. What follows is our perspective on key takeaways and technical outcomes from COP 27.
Loss and Damage Fund
The parties agreed to the creation of a Loss and Damage Fund, a significant political outcome that allocates money to assist low and middle-income countries’ efforts to respond to climate disasters. A transitional committee will make recommendations about how to operationalize the first tranche of these funds at COP 28. Initially, developed economies such as the U.S. and European Union (EU) will underwrite the Loss and Damage Fund, with higher-polluting, developing funds expected to make contributions in the future. Parties did not include admissions of liability in the finally announced framework for the Loss and Damage Fund and specified that loss and damage contributions were voluntary.
Loss and Damage Fund
The parties agreed to the creation of a Loss and Damage Fund, a significant political outcome that allocates money to assist low and middle-income countries’ efforts to respond to climate disasters. A transitional committee will make recommendations about how to operationalize the first tranche of these funds at COP 28. Initially, developed economies such as the U.S. and European Union (EU) will underwrite the Loss and Damage Fund, with higher-polluting, developing funds expected to make contributions in the future. Parties did not include admissions of liability in the finally announced framework for the Loss and Damage Fund and specified that loss and damage contributions were voluntary.
Climate Finance
Parties agreed to additional measures to support climate finance efforts for developing countries. These include the World Bank’s Global Shield Financing Facility2, which provides climate risk insurance to developing countries to recover from natural disasters and climate shocks, and a joint statement that proposed Multilateral Development Bank (MDB) reforms3. Developing countries noted that developed countries continue to lag behind announced commitments to fund these efforts. The U.S. initiated a new market-based financing mechanism, the Energy Transition Accelerator (ETA) program4, which is intended “to retire unabated coal-fired power and accelerate the buildout of renewables.” More broadly, parties also responded to the effects of GHG emissions on the maintenance of biodiversity. Several countries committed to a 10-point Plan for Financing Biodiversity5, which would increase financing for a variety of conservation-based activities.
Climate Finance
Parties agreed to additional measures to support climate finance efforts for developing countries. These include the World Bank’s Global Shield Financing Facility2, which provides climate risk insurance to developing countries to recover from natural disasters and climate shocks, and a joint statement that proposed Multilateral Development Bank (MDB) reforms3. Developing countries noted that developed countries continue to lag behind announced commitments to fund these efforts. The U.S. initiated a new market-based financing mechanism, the Energy Transition Accelerator (ETA) program4, which is intended “to retire unabated coal-fired power and accelerate the buildout of renewables.” More broadly, parties also responded to the effects of GHG emissions on the maintenance of biodiversity. Several countries committed to a 10-point Plan for Financing Biodiversity5, which would increase financing for a variety of conservation-based activities.
Mitigation
The parties reiterated their call from COP 26 to accelerate efforts to “phase down” unabated coal power and “phase out” inefficient fossil fuel subsidies, thereby ensuring that the majority of governmental energy transition policies will concentrate on reducing emissions from unabated coal. Parties also concentrated on mitigation efforts through the Global Methane Pledge, which now counts 150 signatories following COP 27. The U.S. initiated the Carbon Dioxide Removal (CDR) Launchpad in partnership with Canada6, the European Commission (EC), Japan, Norway and the United Kingdom (U.K.). The Launchpad will support public-private partnerships to build over 1,000 ton-a-year CDR projects by 2025, presenting new opportunities for direct air capture and other innovative removal technologies. The U.S. also announced the Green Shipping Challenge to spur the transition to clean energy across this sector7.
Mitigation
The parties reiterated their call from COP 26 to accelerate efforts to “phase down” unabated coal power and “phase out” inefficient fossil fuel subsidies, thereby ensuring that the majority of governmental energy transition policies will concentrate on reducing emissions from unabated coal. Parties also concentrated on mitigation efforts through the Global Methane Pledge, which now counts 150 signatories following COP 27. The U.S. initiated the Carbon Dioxide Removal (CDR) Launchpad in partnership with Canada6, the European Commission (EC), Japan, Norway and the United Kingdom (U.K.). The Launchpad will support public-private partnerships to build over 1,000 ton-a-year CDR projects by 2025, presenting new opportunities for direct air capture and other innovative removal technologies. The U.S. also announced the Green Shipping Challenge to spur the transition to clean energy across this sector7.
Article 6
Talks regarding the United Nations (U.N.) carbon market mechanism did not progress significantly at COP 27. Experts now predict that a global carbon trading mechanism will not be ready for launch until 2024 at the earliest8. That said, parties decided that countries would not be required to disclose confidential information about their internationally traded mitigation outcomes (ITMOs). However, at the same time, parties included a provision calling for further guidance on the issue for consideration at COP 28.
Article 6
Talks regarding the United Nations (U.N.) carbon market mechanism did not progress significantly at COP 27. Experts now predict that a global carbon trading mechanism will not be ready for launch until 2024 at the earliest8. That said, parties decided that countries would not be required to disclose confidential information about their internationally traded mitigation outcomes (ITMOs). However, at the same time, parties included a provision calling for further guidance on the issue for consideration at COP 28.
Environmental Integrity
The impact of civil society in holding parties and non-state actors accountable for pledges and commitments at COP 27 stood in stark contrast to the power that businesses wielded over the deliberations at COP 26 in Glasgow, Scotland. Several oversight organizations stressed the need for governments and businesses to strengthen the integrity of their emissions goals and reporting. The most important of these was the U.N. high-level expert group report that called for integrity in climate disclosure reporting for businesses, financial institutions, cities and regions9.
Environmental Integrity
The impact of civil society in holding parties and non-state actors accountable for pledges and commitments at COP 27 stood in stark contrast to the power that businesses wielded over the deliberations at COP 26 in Glasgow, Scotland. Several oversight organizations stressed the need for governments and businesses to strengthen the integrity of their emissions goals and reporting. The most important of these was the U.N. high-level expert group report that called for integrity in climate disclosure reporting for businesses, financial institutions, cities and regions9.
COP 28 Preview
COP 28 will be hosted by the United Arab Emirates (UAE) in December 2023. Dr. Sultan Ahmed Al Jaber, UAE’s Minister of Industry and Advanced Technology, has stated that he expects COP 28 to be a “COP of solutions that will follow inclusivity as a guiding principle.” Other “key pillars” of COP 28 are expected to include implementation of existing climate commitments and pledges and a focus on concrete means by which to take credible and concrete actions on climate issues. Areas of focus for the U.S. are expected to include updates on some signature international climate initiatives, including the Green Shipping Challenge10, the Global Methane Pledge11 and the Energy Transition Accelerator (ETA)12. We expect to write in more detail on COP 28 in advance of the event.
Authors
Kenneth J. Markowitz
Partner
kmarkowitz@akingump.com
Washington, D.C.
T+1 202.887.4513
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Christopher A. Treanor
Counsel
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