COP27 ends with pledge from rich nations to fund poorer ones for climate change losses

Nakeeyat Dramani Sam holds up a placard at an informal stocktaking session during the COP27 climate summit, in Sharm el-Sheikh, Egypt, November 18, 2022. (Mohamed Abd El Ghany/Reuters)

The world’s wealthiest nations signed onto a landmark agreement Sunday at the United Nations climate change conference in Sharm-el Sheikh, Egypt, to help compensate poorer ones for the devastating impacts of rising global temperatures.

More than 200 countries gathered at the conference known as COP27, including the United States, signed the agreement, which calls for the formation of a committee to hammer out details such as how much funding each country will contribute, which financial institutions should contribute and how the money will be distributed.

“This COP has taken an important step towards justice,” U.N. Secretary-General António Guterres said in a video message from the conference venue upon the event’s conclusion. “I welcome the decision to establish a loss and damage fund.”

Long one of the most divisive issues when it comes to addressing climate change, payments for “loss and damage” have been a key demand from developing nations that disproportionately suffer the effects of rising temperatures even though they have contributed the least to the global problem. The United States, the world’s biggest emitter of greenhouse gases since the start of the industrial revolution, had previously balked at committing to such a pledge, but the text of the new agreement specifies that it does not constitute an admission of liability.

United Nations Secretary General Antonio Guterres delivers statements on progress made on the penultimate day of COP27, during the COP27 climate summit in Red Sea resort at Sharm el-Sheikh, Egypt, November 17, 2022. (Mohamed Abd El Ghany/Reuters)

United Nations Secretary General Antonio Guterres delivers statements on progress made on the penultimate day of COP27, during the COP27 climate summit in Red Sea resort at Sharm el-Sheikh, Egypt, November 17, 2022. (Mohamed Abd El Ghany/Reuters)

But the conference failed to make significant progress on another main agenda item: cutting the greenhouse emissions that are causing global warming in the first place. In the runup to the conference, leaders of the U.N. climate diplomacy process had called for action on both fronts, and left declaring victory only on one.

“But let’s be clear,” Guterres added. “Our planet is still in the emergency room. We need to drastically reduce emissions now – and this is an issue this COP did not address. A fund for loss and damage is essential – but it’s not an answer if the climate crisis washes a small island state off the map – or turns an entire African country to desert.”

In the wake of recent climate change-related disasters, such as floods that have submerged one-third of Pakistan, negotiators from 190 countries agreed to create a fund that will gather and distribute aid to lower-income nations after they suffer losses and damages from extreme weather events. Accepting a loss-and-damage fund was a shift for the U.S. and the 27-member European Union, which — as some of the world’s largest economies and biggest emitters of greenhouse gases — they will be expected to financially support.

U.S. special presidential envoy for climate change John Kerry praised the breakthrough on compensation, while a State Department spokesperson noted on background that the agreement creates no acceptance of liability for climate change or mandatory financial contributions from the United States.

“The United States welcomes the decision at COP27 to establish arrangements to respond to the devastating impact of climate change on vulnerable communities around the world, including through a fund that will focus on what the world can do now to support particularly vulnerable countries in managing the impacts of changing climate,” Kerry said in a statement on the compensation question specifically.

US climate envoy John Kerry delivers a speech during a discussion about oceans and water at the US pavillon in the Sharm el-Sheikh International Convention Centre, in Egypt's Red Sea resort city of the same name, during the COP27 climate conference on November 15, 2022. (Joseph Eid/AFP via Getty Images)

US climate envoy John Kerry delivers a speech during a discussion about oceans and water at the US pavillon in the Sharm el-Sheikh International Convention Centre, in Egypt’s Red Sea resort city of the same name, during the COP27 climate conference on November 15, 2022. (Joseph Eid/AFP via Getty Images)

“The fund, which will be one among many available avenues for voluntary funding, should be designed to be effective and to attract an expanded donor base,” he added.

The fund’s creation is a huge win for the small island states that are most at-risk from rising sea levels and stronger storms, which have been lobbying for compensation for decades.

“So many people all this week told us we wouldn’t get it,” Kathy Jetnil-Kijiner, the climate envoy from the Marshall Islands, told Reuters. “So glad they were wrong.”

But island nations have also been calling for steeper, faster emissions cuts that would lower the future trajectory of global warming and give them their best chance for survival from rising seas and intensifying tropical cyclones. Previous climate change agreements struck in Paris in 2015 and Glasgow, Scotland, last year committed to the goal of limiting warming to 1.5 degrees Celsius (2.7 degrees Fahrenheit), which is the threshold the Intergovernmental Panel on Climate Change has identified as triggering catastrophic climate change.

Since average global temperatures are already 1.1 degrees Celsius (2 degrees Fahrenheit) above the pre-Industrial Revolution average, the IPCC estimates that global emissions must be cut in half by 2030 and reach net-zero by 2050 to stay below 1.5°C. But the national commitments to reduce emissions made in Paris and Glasgow come nowhere near those targets. A U.N. report released late last month estimated that the world is on course for 2.1°C to 2.9°C of warming by 2100.

This year, some of the most vulnerable countries, such as those in the Pacific Island Forum, called on big emitters to submit plans for larger emissions reductions. But only a handful of countries updated their pledges, and even those were not necessarily in keeping with the IPCC’s targets. For example, after a more left-leaning government took power in Australia this summer, the major fossil fuel producer boosted its emissions reduction goal from 26%-28% by 2030 to 43% by 2030 — still less than the 50% demanded by the IPCC.

Australian Prime Minister Anthony Albanese speaks in during the opening of the 47th Federal Parliament at Parliament House in Canberra on July 26, 2022. Australia's Parliament sits for the first time since May elections with the new prime minister determined to have a greenhouse gas reduction target enshrined in law. (Lukas Coch/AAP Image via AP)

Australian Prime Minister Anthony Albanese speaks in during the opening of the 47th Federal Parliament at Parliament House in Canberra on July 26, 2022. Australia’s Parliament sits for the first time since May elections with the new prime minister determined to have a greenhouse gas reduction target enshrined in law. (Lukas Coch/AAP Image via AP)

The U.S. has promised to halve emissions by 2030, and the recently passed Inflation Reduction Act is projected to cut emissions by 40% this decade. Closing the remaining gap may prove difficult as Republicans have recently taken control of Congress and are unlikely to vote for further climate action.

At the start of the conference, experts said it was unlikely that China — now the world’s largest annual greenhouse gas emitter — would improve upon its current commitments to peak its emissions by 2030 and reach net-zero by 2060. China did not announce new emissions targets at COP27, although last week did bring a sign of potential future progress. After a year of tension between the two great powers, President Biden and Chinese President Xi Jinping met in Bali, Indonesia and jointly pledged to resume cooperation on climate change.

In a separate statement marking the end of COP27, Kerry pledged to keep up the pressure on countries that haven’t committed to cutting emissions in half by 2030 or to reaching net-zero by 2050. “As we continue to lead along with our allies and partners in the fight to protect our planet, the United States will also continue to press major emitters like China to significantly enhance their ambition to align with what science says is necessary,” Kerry said.

In a setback for climate activists and some developing nations, the text of the final agreement at COP27 did not include an overarching statement that the world will move away from reliance on fossil fuels. Instead, it reiterated language from Glasgow that countries should make “efforts towards the phasedown of unabated coal power and phase-out of inefficient fossil fuel subsidies.”

A bulldozer moves piles of coal at Lianyungang Port on July 29, 2022 in Lianyungang, Jiangsu Province of China. (VCG via Getty Images)

A bulldozer moves piles of coal at Lianyungang Port on July 29, 2022 in Lianyungang, Jiangsu Province of China. (VCG via Getty Images)

Alok Sharma, the British politician who served as president for COP26 in Glasgow expressed frustration with the shortfall in ambition in Egypt this year.

“Emissions peaking before 2025 as the science tells us is necessary? Not in this text,” he said in a speech in Sharm-el Sheikh. “Clear follow-through on the phase down of coal? Not in this text. A clear commitment to phase out all fossil fuels? Not in this text.”

On Wednesday, Kerry said that, for the first time ever, the U.S. would agree to calling for a “phase down” of “unabated” fossil fuels, meaning the burning of oil, coal and gas without technology that captures the carbon dioxide emissions. But other major fossil fuel producers such as Russia and Saudi Arabia reportedly lobbied successfully to keep that language out of the text.

Despite modest commitments from the United States and some European countries to aid the transition to clean energy in a few developing nations, including Mexico and Indonesia, developing country diplomats and climate justice activists expressed disappointment that the conference wrapped up without any firm plan for wealthier countries to fully deliver on their prior commitment to mobilize $100 billion per year by 2020 for international climate finance. The U.N. estimates that global climate finance flows reached $83 billion in 2020.

“Rich countries have broken their $100 billion climate finance promise and successfully blocked language at COP27 that would have required them to compensate for earlier shortfalls through increased climate finance in subsequent years,” said Gabriela Bucher, Oxfam International’s executive director, in a statement. “Climate finance is needed in the trillions for adaptation and mitigation. Given their responsibility for the climate crisis, rich countries at least could have provided a clear roadmap on how to deliver the $600 billion they had promised between 2020 and 2025.”

Women push wheelbarrows atop a coal mine dump at the coal-powered Duvha power station, near Emalahleni east of Johannesburg, South Africa on Nov. 17, 2022. (Denis Farrell/AP)

Women push wheelbarrows atop a coal mine dump at the coal-powered Duvha power station, near Emalahleni east of Johannesburg, South Africa on Nov. 17, 2022. (Denis Farrell/AP)

Many developing states say that they cannot make stronger emissions reduction pledges without the financial means to build up their renewable energy sector.

Like Guterres, U.S. climate change activists called the outcome of COP27 a partial success that, they hope, lays the groundwork for stronger action in the future.

“Though it makes some important advances, the final COP27 decision falls well short of what the science shows is needed,” said Dr. Rachel Cleetus, policy director for the climate and energy program at the Union of Concerned Scientists, in a statement. “The global emissions trajectory is dangerously off course.”

Still, Cleetus ended on a positive note. “While an imperfect document, the COP27 decision represents a hopeful step forward and gives room for more ambition in the years to come,” she said.