COP27 Midway Commentary

How did COP27 start?

COP27 began on November 6, 2022, against a backdrop of continued greenhouse gas emissions increases, unfulfilled climate financing commitments, and ongoing disagreement between key players on who should shoulder the responsibility for a rapidly changing climate. The conference was expected to be the “implementation COP,” focused on goals, strategies, and responsibility for future climate action

From the beginning, concerns arose that some key players were not at the negotiating table. Attendees and observers alike commented on the absence of large-scale producers of carbon emissions, namely China, India, and Russia. Newly appointed UK Prime Minister Rishi Sunak was hesitant to attend the conference and left mid-session, and US President Joe Biden was not present at the 'World Leaders Summit' due to the US midterm elections, only attending for the length of his address on Friday.

Despite the absences, voices calling for concrete changes to the current implementation of climate action and climate finance were loud and clear: leaders from Barbados to Ghana and representatives of small island developing states called for more climate justice and reform of the climate finance landscape to deliver on an equitable climate deal. The calls were echoed by a large number of young people, who were prioritized by the Egyptian COP Presidency, which sought to take youth climate engagement to a new level.

What have we seen so far?

After eight days of high-level interventions and technical deliberations, COP27 has been characterized by a wait-and-see atmosphere, largely focused on implementation issues and with modest results in both political commitments and financial pledges. During the week of November 14, 2022, negotiators will try to hammer out drafts on issues such as a work program on climate change mitigation, loss and damage, and climate finance, which are expected to yield results by the end of the week. However, concrete progress remains to be seen. Low- and middle-income countries and youth representatives have been very vocal about the responsibility of donor countries to step up and meet their responsibility – with nearly every statement from representatives of low-income countries highlighting the need for more finance.

Progress varied across the core issues on the agenda.

For the first time – and despite historic resistance by some government leaders – donor countries put the topic of finance for loss and damage on the agenda. Discussions regarding work programs, needs, gaps, and possible funding sources are ongoing. The agenda item was accompanied by modest financial pledges, coming from the regions of Scotland, the UK, Wallonia, Belgium, Germany, and Austria. While advocates and observers heralded these first commitments, they also noted the small amounts compared to the scale of the challenge.

Current progress on climate commitments stands in stark contrast to the ever-growing needs that have been identified. The much-discussed 'Finance for Climate Action' report indicated that even if the US$100 billion target is met by 2025, even higher targets are likely to be needed from 2025 onward. The report outlined that the cost of energy transition, adaptation, resilience, loss and damage, and sustainable agriculture for low- and middle-income countries would amount to US$2 trillion – with half of the need likely to be met only through funding from high-income countries and multilateral development banks. Key to meeting climate targets will be the shape and definition of finance for combatting climate change.

Currently, the majority of climate finance is composed of loans, and counting issues impede a clear progress assessment. According to commentators, little consensus has been reached regarding what counts as finance flows, how to assess them, and what a long-term climate finance goal would look like beyond 2025. Discussions on the New Collective Quantifiable Goal (NCQG) are ongoing and expected to conclude in 2024.

Apart from growing the pot of climate finance, discussions regarding development architecture to deliver climate finance gained traction at COP27. Notably, Barbados Prime Minister Mia Mottley announced the 'Bridgetown Initiative,' which aims to reform and increase the amount of climate finance made available to partner countries from major finance institutions such as the International Monetary Fund (IMF). Many participants during COP27 picked up the central demands of the Initiative, including major donor countries such as the US and France. Both formal and informal reform discussions are expected to continue throughout the conference.

This COP has emphasized that private sector investment will be vital to climate adaptation. In order to boost private sector funding, the US and EU announced work on a proposal to increase blended finance packages with multilateral development banks and private sector institutions. Taking on more responsibility for their advocacy role, about 200 private sector institutions joined the call of climate researchers and UN representatives by signing a written appeal to governments to uphold their climate commitments. While their involvement in pushing a greener economic agenda is notable, criticism has hung heavy over the increased participation of fossil fuel lobbyists during COP27.

What can we expect this week?

For the week of November 14, 2022, countries are hoping that negotiations will bring progress in a number of core issues, among them:

• Substantial progress on the commitment to loss and damage, as well as the establishment of a viable finance mechanism;
• Concrete roadmaps and financial commitments to achieve climate finance goals from donors;
• Progress updates on the 'Global Goal for Adaptation,' the 'New Collective Quantifiable Goal' climate finance definition, and roadmaps for setting finance targets; and
• Discussions of potential reform of multilateral development bank financing mechanisms.