COP27 Agrees to Create a ‘Loss and Damage’ Fund; but Falls Short on Mitigation Ambition
Pakistan’s Minister for Climate Change Sherry Rehman took a lead in loss and damage negotations at COP27.

SHARM EL SHEIKH, EGYPT – In a historic first, delegates to the 27th UN Climate Conference, COP27, agreed Sunday to create a “loss and damage” fund to assist countries suffering from the impact of the climate crisis, concluding a meeting that went into two days of overdrive, with negotiations day and night.

They also added back in language about “the right to a clean, healthy and sustainable environment” into the final outcome text, which had been dropped from an earlier version.  That reference to a UN resolution approved only in July, was a precedent-setting victory for the World Health Organization and civil society advocates that had campaigned heavily for a more central role for health in climate frameworks.

“History was made today at #COP27 in Sharm El-Sheikh as parties agreed to the establishment of a long-awaited loss and damage fund for assisting developing countries that are particularly vulnerable to the adverse effects of climate change,” tweeted the COP27 Secretariat at 4 a.m. Sunday morning as delegates from the nearly 200 countries gathered at the meeting regrouped in a long-delayed closing plenary to approve a series of hard-fought agreements.

However, most of the details of how to fund the new mechanism and which countries will be prioritised for receiving the money have still not be finalized and will have to be worked out over the next two years.

Instead of a ‘burning bush, a burning planet’

“COP27 took place not far from Mount Sinai, a site that is central to many faiths and to the story of Moses, or Musa,” said UN Secretary-General António Guterres at the close of the event. “It’s fitting. Climate chaos is a crisis of biblical proportions. The signs are everywhere. Instead of a burning bush, we face a burning planet.”

Guterres said the conference had been driven by two overriding themes – justice and ambition. And along with loss and damage, progress had been made on other fronts as well, he noted: including clarity and a credible roadmap to double adaptation finance; and changing the business models of multilateral development banks and international financial institutions; among others.

EU: Stalled mitigation ambition will lead to heavier loses and more damage

Frans Timmermans, the EU climate negotiator, in closing plenary remarks

While developing countries celebrated the decision to create the fund, the European Union, Australia, Canada and other developed countries, as well as the Alliance of Small Island States, lamented the lack of progress at this year’s conference on mitigation targets that are woefully inadequate to the task of slowing the harm climate change is doing.

Countries seeking more “ambition” on mitigation gave up several battles on the mitigation front, including initiatives to incorporate oil and gas into the language about a “phase down” of coal fossil fuels.  Language about the need to ensure that global emissions peak by 2025 at the latest, and then decline after that, was also rejected by countries that want to keep expanding fossil fuel-based development.

The EU and its allies had sought to link the creation of the loss and damage fund more directly to stronger action on mitigation targets, but ultimately gave that battle up.

“The European Union came to get stronger ambition and we didn’t achieve that,” lamented Frans Timmermans, the lead EU negotiator at the closing plenary, “What we have before us is not enough for people and the planet, to address the yawning gap between climate science and our policies.

“This is a make or break decade,” he added. “To tackle climate change, all financial flows need to go to support low carbon transition. We need far more rapid reductions of climate change.  That is how you reduce loss and damage from climate change. The EU came here to make that happen.  But too many parties are not ready to step up. The mitigation programme allows parties to hide from their responsibilities. There were even attempts to roll back what we did in Glasgow [COP26].  We have all fallen short of our obligations to limit loss and damage from climate change.”

“The deal is not enough on mitigation so we were faced with a dilemma, do we walk away?” Ultimately, he said, the bloc decided not to bloc the historic creation of the loss and damage fund. But now that it has been approved, preparations for a mitigation programme in COP28 “begin today.”

Egyptian bridging proposals finally helped break the ice

Sunday’s early morning agreement on the loss and damage formula came after Saturday’s release of a series of bridging proposals by Egyptian Foreign Minister Sameh Shoukry, who holds the COP Presidency. Those proposals signaled a breakthrough in talks that almost ended in failure.

Speaking to media Saturday morning, and just before the text of the Egyptian proposals was released, Egyptian Foreign Minister and COP President Sameh Shoukry said he believed that the proposals were “balanced” and constituted “a potential breakthrough.”

Egyptian Foreign Minister Sameh Shoukry announces his new bridging initiatives at press conference Saturday morning,

Finalization of an overarching draft agreement was still going on at press time, with parties expected to agreeing on a final version late Sunday morning.

The new draft text states concretely that the COP27 “decides….to establish a fund for responding to loss and damage whose mandate includes a focus on addressing loss and damage.”  The text stipulates that the loss and damage fund would be complementary to existing funding arrangements for mitigation and adaptation.

The draft also sets forth a pathway for operationalizing such a fund, based on the creation of a “transitional committee on the operationalization of the new funding arrangements”, which would make recommendations regarding the precise institutional arrangements, modalities, governance and structures.

That transitional committee would make its recommendations based upon:  a) the development of a synthesis report by the UN Climate Secretariat; b) workshops in 2023 and c)member state and UNFCC inputs.  The transitional committee would review gaps in the current funding landscape, and “the most effective ways in which to address the gaps, especially for the most vulnerable populations and the ecosystems on which they depend,” according to the draft text.

Right to clean, healthy and sustainable environment

The new text also kept in important language stipulating that people have a “right” to a clean, healthy and sustainable environment, an unprecedented move that is seen as having great importance among the health community.

Release of the new texts brought shouts of jubilation from some civil society groups. The texts were also welcomed by delegates from developing nations such as Pakistan, a bellwether for opinions in the #G77 group of developing nations.

“We have pushed very hard until the last minute for a loss and damage fund,” tweeted Pakistan’s Sherry Rehman, “a positive outcome is close. Not perfect or optimal, but one that addresses the basic demand of developing nations. I believe if we stick to our positions, stay united, we will make landfall.”

But remained to be seen exactly how developed countries would react to the new texts and formulas, as COP27 delegates headed into an evening plenary session. On Friday, top EU negotiators Frans Timmermans had said that China and other oil-rich economies need to kick into the funding pot.  Even if they were considered developing countries in 1992, they are key emitters now and thus part of the problem.

Text emphasizing that the funding facility would look especially at solutions for “the most vulnerable populations”, was reportedly inserted into the draft to assuage those EU concerns, some observers said. But EU negotiators were also seeking a higher level of ambition on climate mitigation and the 1.5C target, as part of the package deal on loss and damage.  “We cannot accept that 1.5C dies here and today,” tweeted top EU negotiators Frans Timmermans earlier Saturday morning.

That followed Timmerman’s statements on Friday that no deal at COP27 would be better than a bad deal. See related story;

Loss and Damage Negotiations in Overdrive; Right to ‘Healthy Environment’ Drops Out

No progress on fossil fuel phase out or 1.5C

Indeed, there was little in the way of new commitments to keeping warming to the 1.5C target – even as a slew of scientific reports say that the goal is now virtually unattainable.

And the latest draft of the outcome text still fails to refer explicitly to a fossil fuel phase out or phase down for oil and gas. That was something that the EU bloc had reportedly sought to incorporate into the COP27 outcome, building upon the COP26 reference agreed to at Glasgow for a “phasedown” of coal.

Until today, the only language on fossil fuels ever incorporated into a COP document, talks about removing “inefficient” fossil fuel subsidies, but not the fuels themselves. That is despite the fact that combustion of fossil fuels is the main driving force behind climate change.  The current draft only preserves the terms agreed to at Glasgow:

28. Calls upon Parties to accelerate the development, deployment and dissemination of technologies, and the adoption of policies, to transition towards low-emission energy systems,including by rapidly scaling up the deployment of clean power generation and energy efficiency measures, including accelerating efforts towards the phasedown of unabated coal power and phase-out of inefficient fossil fuel subsidies, while providing targeted support to the poorest and most vulnerable in line with national circumstances and recognizing the need for support towards a just transition;

But bold new language on transformation of the global financial system

On a more positive note, however, this version of the text does include some bold new language on the need for a “transformation” of the global financial system in order to muster the estimated $4 trillion annually that would be needed for economies to transition to cleaner energy and other low carbon technologies.

As compared to past COP decisions focused on the so far unsuccessful efforts to create a mitigation fund of just $100 billion, this year’s text highlights: “that about USD 4 trillion per year needs to be invested in renewable energy up until 2030 to be able to reach net zero emissions by 2050, that, furthermore, a global transformation to a low-carbon economy is expected to require investment of at least USD 4–6 trillion per year.

It furthermore adds that, “delivering such funding will require a transformation of the financial system and its structures and processes, engaging governments, central banks, commercial banks, institutional investors and other financial actors.”

Those words echo powerfully back to the opening days of COP27 when leaders such as Barbados Prime Minister Mia Mottley, hearkening back to her Bridgetown agenda, called for a complete revamp of loan terms for highly indebted low and middle income nations so that they could afford to finance an energy transition.

COP27 Ending tonight?

In light of the progress made over the day, some observers were predicting that COP27 delegates would finally manage to come to an agreement tonight – instead of dragging things out into the next week, as some had predicted on Friday.

But that was by no means certain, either, in light of warnings earlier in the day by the EU’s top climate negotiator Frans Timmermans, that “no deal would be better than a bad deal”.

Meanwhile, the Alliance of Small Island States, issued it’s own warnings against moving too hastily on the sensitive issue of climate loss and damage, which represents an existential threat for low-lying, weather vulnerable nations.

“We’re in for a long night ahead at COP27,” tweeted Arthur Wyns, of the Global Climate and Health Alliance.


Image Credits: @sherryrehman.

Combat the infodemic in health information and support health policy reporting from the global South. Our growing network of journalists in Africa, Asia, Geneva and New York connect the dots between regional realities and the big global debates, with evidence-based, open access news and analysis. To make a personal or organisational contribution click here on PayPal.