The outcome of COP27: the loss and damage fund and the text on fossil fuels

The Sharm el-Sheikh Climate Change Conference closed on the morning of Sunday 20 November 2022, about forty hours after its scheduled end[13]. The Parties, nearly 200 of them, adopted two texts[15]. The first is the Sharm el-Sheikh Implementation Plan, the cover decision of the Conference of the Parties[1]. The second is a decision on funding arrangements for responding to loss and damage, which the Egyptian presidency tabled on 19 November and the plenary adopted the next day[2]. We set both texts against the mandate the Union brought to Egypt. The Union won the argument on loss and damage and lost the argument on emissions.

A fund without money and a mandate without a phase-down

The loss and damage decision does three things. It calls for "new, additional, predictable and adequate financial resources" for developing countries that are particularly vulnerable to the adverse effects of climate change[2]. It decides to establish new funding arrangements and, within them, a fund whose mandate includes a focus on addressing loss and damage[2]. It creates a transitional committee, which must recommend to the twenty-eighth session of the Conference of the Parties how the arrangements and the fund will operate[2]. The decision names no amount, no contributor and no date of first disbursement; the committee must answer those questions by COP28 in late 2023[2].

Article 8(1) of the Paris Agreement provides that Parties recognise the importance of "averting, minimizing and addressing loss and damage" associated with the adverse effects of climate change[3]. Paragraph 52 of decision 1/CP.21 adds that Article 8 does not involve or provide a basis for any liability or compensation[3]. The Sharm el-Sheikh decision stays inside that frame. It speaks of funding and never of compensation. Vulnerable States obtained an institution. They did not obtain a right.

The cover decision tells a different story. Paragraph 11 recognises that limiting warming to 1.5 °C requires global emission reductions of 43 per cent by 2030 against the 2019 level[1]. Paragraph 13 then repeats the Glasgow formula on accelerating efforts "towards the phasedown of unabated coal power" and the phase-out of inefficient fossil fuel subsidies[1]. That formula comes from paragraph 36 of the Glasgow Climate Pact adopted in November 2021[4]. One year later it has not moved. The text adds a call for low-emission and renewable energy, a pairing that keeps gas inside the permitted mix[1]. The text contains no sentence on peaking global emissions before 2025[1]. Alok Sharma, who presided over COP26, said of the 1.5 °C goal that "it remains on life support"[13]. António Guterres said that "Our planet is still in the emergency room"[14].

What the Union did in the final night

The Union arrived with a Council mandate approved on 24 October 2022. That mandate asked all Parties to phase down unabated coal and to end inefficient fossil fuel subsidies, reaffirmed the goal of USD 100 billion a year in climate finance and supported the continuation of the Glasgow Dialogue on loss and damage, with no commitment to a new fund[5]. The European Parliament's resolution of 20 October 2022 went further and called for a loss and damage financing facility to be agreed at COP27[6]. The Commission's negotiator, Executive Vice-President Frans Timmermans, moved on both fronts during the second week.

On fossil fuels, India proposed that the conference call for a phase-down of all fossil fuels, oil and gas included. Timmermans said on 15 November, "We are in support of any call to phase down all fossil fuels", on condition that the Glasgow coal language stayed intact[7]. On loss and damage, the Union changed position on 18 November. Reuters reported that Timmermans proposed a fund for the most vulnerable countries, financed from a broad donor base, in exchange for stronger commitments on emission cuts and on fossil fuels[8]. The broad donor base meant China and the Gulf States, which were classed as developing countries when the Convention was adopted in 1992[13].

On 19 November the Union went public with its threat. Timmermans said, "We'd rather have no decision than a bad decision", and he said the ministers of the Union were prepared to walk away[9][10]. Annalena Baerbock, speaking for the Union, said it would not sign a text that buried the 1.5 °C goal[9]. The threat worked on one point only. The 1.5 °C goal and the Glasgow coal paragraph survived into the final text[11]. The phase-down of all fossil fuels did not. Euronews reports that Saudi Arabia and Russia blocked it, together with other producers[12]. The condition the Union attached to its fund, a commitment by all Parties to peak emissions by 2025, was not met[12]. The fund was agreed anyway, and the countries the Union wanted as donors may contribute on a voluntary basis[13].

Timmermans did not disguise the result. In the closing plenary he said the outcome was "not enough of a step forward for people and planet"[11]. A walk-away threat has one weakness. The Union could not walk away from a text that created the fund it had itself proposed two days earlier.

What our generation should ask for next

We were born after Maastricht and we will live most of our lives after 2050. The fund matters to us because it will be paid over decades. The missing phase-down matters more, because it decides how large the damage will be.

First, the Union should instruct its members of the transitional committee to seek a contributor base defined by current emissions and current income, and the committee's report to COP28 should say so in terms[2]. Second, the Union should submit its updated nationally determined contribution before COP28, as the Council undertook to do once the Fit for 55 negotiations conclude, so that the Union can demand of others what it has bound itself to do[5]. Third, the Union should table the phase-down of all fossil fuels at the first negotiating session of 2023, with India as co-sponsor, so that the text of 2023 starts where the text of 2022 stopped. Fourth, the Council should write the price of each concession into the COP28 mandate before the conference opens, so that the Union does not offer on a Friday what it must defend with a threat on a Saturday.