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COP27: Time for Implementation

Analysis - 4 November 2022

The 27th Conference of the Parties just kicked off in Sharm el-Sheikh in a particularly challenging environment that can only lead to pessimism about our ability to collectively tackle climate change. The current geopolitical situation is working against the ability of multilateralism to deliver much: the energy crisis, Russia's invasion of Ukraine, the remaining challenges of the COVID-19 pandemic, and the freezing of discussions between China and the United States on climate change after Nancy Pelosi's visit to Taiwan. The impending economic crisis is also changing the outlook for COP27, with many countries preferring to slow down their commitments in tough economic times. Against this backdrop, our Research Fellow for Climate in the Asia Program Joseph Dellatte outlines the challenges ahead for COP27.

Beyond the bad omens, COP27 also opens with some "positive" signs. Never before has the world been so convinced that climate action must be a top priority. The extreme weather events that have occurred since last year in every corner of the globe have been disastrous-millions of displaced people in Pakistan, dramatic forest fires in Europe, droughts in Africa, and so on. However, they are also helping to build a growing constituency for climate action, which increases the pressure on decision-makers to strengthen such efforts. 

Beyond the bad omens, COP27 also opens with some "positive" signs. Never before has the world been so convinced that climate action must be a top priority. 

Furthermore, recent studies on the impact of action against climate change also urge us not to despair. Only a decade ago, before the Paris Agreement, the most pessimistic models saw the world warming to a likely untenable +4 to 5 degrees (relative to the pre-industrial era). COP26 ended with far-from-sufficient global commitments to meet the goals of the Paris Agreement, creating a huge credibility gap between long-term promises and short-term implementation. However, if all commitments were met today, the world would be on a 2.4 to 2.8-degree warming trajectory

This figure could fall even further due to the dramatic drop in the price of renewable energy technologies, including photovoltaics and lithium-ion batteries. 

We are far, of course, from being able to declare that the battle against climate change is won. Even a warming of 2.5 degrees, compared to 1.2 today, represents a dramatic change for humans and their environment. However, it allows us to be-cautiously-much more optimistic than we were only a few years ago. This is thanks to both the soaring prices of fossil fuels and the efficiency of renewable energies: recent studies have shown that up to 90% of the world's population lives in an area where renewable energies would be cheaper than fossil fuels. The installation of renewable energy worldwide keeps increasing. China alone has installed more renewable energy capacity that the rest of the world combined. Beijing is followed by the EU (with an average annual growth of 44Twh in the EU over the last two years), and soon by the US, following the adoption of the historic Inflation Reduction Act.

In this mix of negative and positive signs, what can COP27 deliver? And what are the main challenges to be addressed by this conference? 

What is a COP and what is being discussed?

Conferences of the Parties have been held annually since the 1992 Rio "Earth Summit". Using a multilateral format, these conferences bring together countries (198) and non-state actors negotiating rules and measures to work toward solutions to climate change. In 2015, nations gathered in Paris for COP21 agreed to the first universal international agreement to tackle climate change, called the Paris Agreement

The Paris Agreement organizes a bottom-up structure, committing countries to self-determine their contribution (called Nationally Determined Contribution, NDC) to avoid exceeding 1.5 degrees-or much less than 2 degrees-of warming compared to pre-industrial times. The agreement set in stone the concept of common but differentiated responsibilities (CBDR), indicating that developed countries have more responsibility for the amount of GHGs already accumulated in the atmosphere than developing countries and, therefore, must do more and faster. 

The Paris Agreement is based on three pillars: climate change mitigation, climate change adaptation, and, finally, loss and damage:

Mitigation has always been the most debated topic at the COPs. It aims to adopt measures and find solutions to reduce GHG emissions and reach carbon neutrality by 2050. It is also about finding solutions to global warming through, for example, technologies (diffusion of clean energies, financing of access to clean energies), energy efficiency and sobriety, or by using market mechanisms (such as carbon credits, through Article 6).

The Paris Agreement is based on three pillars: climate change mitigation, climate change adaptation, and, finally, loss and damage.

Adaptation, on the other hand, is about finding ways for people and the environment to adapt to the inevitable impact of global warming that the world will and is already facing (e.g., increased risks of droughts or floods). Adaptation has also been widely discussed at the COPs, but much less so than mitigation. 

Finally, the third pillar of the Paris Agreement - by far the least discussed - is Loss and Damage, . It is about addressing unavoidable economic losses and non-economic losses (e.g., loss of life, culture, or nature) caused by climate change. This is a critical point of climate justice for many vulnerable countries, such as small island nations, which are not responsible for global warming but could see much of their territory covered by the sea before the end of the century. It is also a critical dimension for many African countries. It involves potentially explosive issues such as climate migration. 

From COP21 in Paris to COP26 in Glasgow, the Paris Agreement regime was in a rule-making period. During this period, the COPs focused on establishing the rules necessary to implement the Paris Agreement. In this regard, last year's COP26 was a notable success in finalizing these rules. This also implies that COP27 will be the first COP of a critical new period for the Paris Agreement regime: the era of implementation.

Four key issues at COP27

Climate finance and better support for Adaptation:

Strengthening support for adaptation and increasing climate finance will probably be the hottest topics at COP27. Will developed countries reach $100 billion in climate finance and double their adaptation funding? The success of the conference probably depends on the answer to this question. 

The rules of the Paris Agreement finalized in Glasgow provide that countries must produce a National Adaptation Plan (NAP) that describes their climate change adaptation policy. These plans must highlight countries specific needs in terms of financing and capacities (such as technologies, etc.) for adaptation. They will be used to define the Global Goal on Adaptation to be discussed at COP27. One of the main issues of the conference will be to find an agreement on the definition of these targets, in particular on the measurement and monitoring of the progress of adaptation by countries.

The main challenges discussed for adaptation at COP27 relate to the financing needs of developing countries. 

Nonetheless, the main challenges discussed for adaptation at COP27 relate to the financing needs of developing countries. The demands for climate finance from developing countries are enormous, with the latest WRI report on the state of NDCs tallying USD 4.3 trillion. Since the Copenhagen COP in 2009, developed countries have pledged to provide USD 100 billion per year for climate finance. In 2020, only USD 83.3 billion had been raised, primarily for mitigation and only about a third for adaptation.

This situation infuriates developing countries, which denounce a lack of support from developed countries. In addition, developing countries complain about the quality of the climate finance received, mainly in the form of loans, sometimes with high interest rates, and rarely in the form of grants.

In the Glasgow Climate Pact, countries committed to doubling adaptation funding by 2025 before moving to a new collective funding target after 2025. This issue will be widely discussed at COP27 as it is a central policy objective for many developing countries. It is also the main point of contention with developed countries. The Group of 77 (G77), the leading negotiation coalition of developing countries, has put climate finance at the top of its agenda. 

Finally, an emerging issue regarding climate finance at COP27 is the possible spread of minilateral cooperation formats (a type of Climate Club). Like the Just Energy Transition Partnership - between South Africa and partners like the United States, the European Union, the United Kingdom, and France-the G7 is now proposing similar agreements to large developing nations like India, Indonesia, Vietnam, and Senegal. These partnerships offer significant climate finance in exchange for faster decarbonization (including accelerating the phase-down of coal). This format allows for increased financing, including private financing, and better cooperation between developed and developing countries. COP27 could see some progress on this front. 

Loss and Damage: Agreeing on a financing mechanism

Developed and developing countries have not yet reached an agreement on loss and damage, particularly on implementing financing mechanisms to compensate for losses induced by climate change. This will be one of the critical issues at COP27. So far, countries have only agreed on establishing discussion frameworks such as the Santiago Network on Loss and Damage to discuss capacity building or the Glasgow Dialogue on Loss and Damage, which aims to discuss future financing mechanisms. 

For the first time in a COP, the issue of finance for loss and damage is proposed on the official agenda of COP27. Developing countries, led by the most vulnerable nations, agreed to leave Glasgow without an agreement on loss and damage, but this will not be the case in Sharm el-Sheikh. This represents both a risk and an opportunity. 

The primary demand from developing countries is for establishing a structural financing mechanism for loss and damage to provide the necessary funds to compensate populations affected by climate change-induced losses. Many developing countries insist that it is the "legal responsibility" of developed nations, historically the most responsible for accumulated GHG emissions, to provide funding for these losses. 

For the first time in a COP, the issue of finance for loss and damage is proposed on the official agenda of COP27. 

Developed nations, on the other hand, are wary of creating an entirely new financing mechanism for loss and damage, pointing out that the existing format for financing adaptation (such as, for example, the Green Climate Fund) could also be used to finance loss and damage. Most developed countries are also against any recognition of the hypothetical legal responsibility to compensate countries for their climate-induced losses. 

The path to an understanding at COP27 probably lies in agreeing on formats that allow for the progressive financing of loss and damage, but also on a clear and transparent accounting mechanism that would ensure that funds actually go to affected areas and populations. This requires benchmarks to assess needs and link losses to climate change. However, despite some positive statements from key players such as US climate envoy John Kerry, the issue of loss and damage is likely to be difficult to resolve at COP27. 

Strengthening mitigation commitments

Countries left Scotland with a commitment to better align their 2030 targets with the Paris Agreement's maximum 1.5-degree warming goal. Since COP26, 24 countries have already updated their NDCs (including India, Indonesia, and Australia), and more are expected to do so at COP27 (Turkey, Chile, Mexico, and Vietnam). The European Union plans to update its NDC after COP27, and the United States passed the massive Inflation Reduction Act that affects its NDC. The big question remains China, which has not yet announced any updates for COP27. 

Countries' mitigation commitments must now go beyond promises and involve concrete policies and investments for more significant mitigation. 

Countries' mitigation commitments must now go beyond promises and involve concrete policies and investments for more significant mitigation. Global fossil fuel subsidies doubled in 2021 compared to 2020. On the other hand, investments in renewable energy, energy efficiency, and sobriety, particularly in Europe, are finally increasing because of the effect of the Russian war in Ukraine. However, it is still insufficient. Much more is needed to close the gap between promises and actual actions. 

COP27 is unlikely to see any significant announcements in terms of mitigation targets. However, it will contribute to ongoing discussions on long-term mitigation strategies especially through a process called the Mitigation Work Programme. This process involves many clashes of views, particularly between the United States and China, which promise to be exacerbated in the current climate. COP27, as a multilateral arena, could also see big announcements from European countries linking the fight for emissions mitigation and the battle to alleviate fossil fuel dependence from Russia. In this sense, Vladimir Putin's war may indeed have accelerated the death sentence on fossil fuels. 

Preparing the Global Stocktake

Every five years, countries must submit and renew their NDC commitments, which are supposed to be increasingly ambitious. This is known as the NDC cycle. In the middle of this cycle, countries must now submit reports (also every five years) on what has been done and what remains to be done at the national level to achieve the goals of the Paris Agreement. 

Governments must now demonstrate what they have done. This includes all types of climate change mitigation and adaptation actions (data, technologies, financing, etc.). These reports will be used to build a global inventory called the "global stocktake". The first global stocktake was launched last year in Glasgow with a mandate to deliver its findings next year at COP28 in Dubai. 

The global stocktake is crucial to establishing the overall accountability of climate policies worldwide.

The global stocktake is crucial to establishing the overall accountability of climate policies worldwide. It is a vital mechanism created by the Paris Agreement to monitor international efforts to achieve its goals. It is also crucial for informing countries about their weaknesses and helps identify their remaining needs to be addressed in the next NDC cycle (the next one starting in 2025). Moreover, it serves to highlight shortfalls publicly in order to force increased ambition at the global level. COP27 will see further discussions on this important project. 

Genuinely moving from pledges toward implementation

COP27 will be a transitional COP that many analysts view with skepticism due to the current atmosphere of animosity between countries. Nevertheless, some critical understanding could be reached in the four key issues highlighted in this analysis. These challenges point to the need for COP27 to achieve greater accountability (for mitigation and adaptation), greater solidarity (adaptation financing and agreement on the loss and damage financing mechanism), better coordination among countries, and finally, to foster the shift to concrete implementation. This will ultimately be the ultimate factor in assessing the success or failure of the Sharm el-Sheikh conference. 

 

 Copyright: Martin SILVA / AFP

 

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