COP27 Recap: Wins and Losses
Read Time: 6 minutes
COP27, the largest global climate conference in the world, brought leaders and other stakeholders together to design and commit to climate solutions to limit global warming
A deal on loss and damage funds for developing countries and 150 countries signing on to reduce methane emissions are considered wins for the conference
No commitments made to phase out all fossil fuels or peak emissions by 2025, and controversial carbon market rules raise concerns about future corporate greenwashing
The 27th Conference of the Parties to the United Nations Framework Convention on Climate Change – COP27 – brought leaders from across the globe to Sharm el-Sheikh, Egypt to discuss climate solutions from November 6-18. In typical COP fashion, the conference ran over until early Sunday morning.
Deal on Loss and Damage
Developing nations that produce smaller amounts of emissions are usually disproportionately affected by the negative impacts of climate change. Loss and damage funds would help low-emitting countries deal with the consequences of climate change. Many of these countries have been asking for “loss and damage funds” for 30 years, and this year the Parties finally came to an agreement.
Long-time hold-outs like the US were afraid that agreeing to the creation of the funds could open them up to legal liability for their emissions. The agreement includes a clause stating that countries cannot be held legally liable for payments into the fund. Many of the details of the fund are still undetermined. Representatives from 24 countries will spend the next year determining who should pay in, who should receive payments, and other important details.
150 Countries Have Now Signed Methane Pledge
Methane is a greenhouse gas that is more than 80 times more potent than carbon dioxide in the first 20 years after it’s released into the atmosphere. Its warming potential makes methane a big issue in the climate space. 150 countries have signed a pledge to reduce methane emissions. The two top emitting countries, China and India, have not signed the pledge. However, China has stated that they have created a methane strategy.
No Commitment to Phase Out Fossil Fuels
Last year’s COP26 final agreement included a provision to phase out the use of coal. Many nations pushed for extending that promise to include all fossil fuels, but that was blocked by oil-producing states. Instead the agreement encourages "efforts towards the phasedown of unabated coal power and phase-out of inefficient fossil fuel subsidies." Saudi Arabia, the world’s largest oil producer, said it would continue to produce oil but would invest in carbon capture technology. Many experts in opposition to this plan have said that carbon capture technology is nowhere near where it would need to be to allow for the continued use of fossil fuels.
No Commitment to Peak Emissions by 2025
A report released earlier this year by the UN stated that “emissions have to peak before 2025 and drop sharply to keep even the more conservative Paris treaty warming goal of two degrees Celsius in play.” Unfortunately, no promise to reach this goal was made at COP27.
Controversial Carbon Market Rules
A framework for carbon trading was established at COP26, but the details were supposed to be worked out during COP27. There are two tiers that have distinct rules depending on what type of entity is buying the credits. In the first tier if a country, say the US, wants to pay for forests in Madagascar not to be cut down they would receive those credits and “wipe” the equivalent emissions from their books. Madagascar would not be able to claim that credit amount towards their emissions reduction goal.
In the second tier, credits are called “mitigation contributions,” which can be bought by companies. In this case, the host country can still count the credit amounts in their reduction goal. The company is not supposed to claim the credits to offset their emissions, but there is currently nothing in place to stop them. Many worry this scheme will result in “double-claiming” and corporate green-washing.
Final Thoughts
The deal on loss and damage funds seems to be the shining achievement of COP27. The implementation of the funding program is going to determine if it's a long-term success. Who will pay into the funds? How much will countries be expected to contribute? Who will receive funding and how much? All of these questions currently remain unanswered.
Businesses will likely be most affected by the carbon market rules. As this international scheme develops, businesses should be cognizant of the fact that claiming “mitigation contributions” as offsets to their emissions will raise greenwashing questions. This isn’t to say that businesses should not participate, but careful consideration and clear communication to all stakeholders will be a major factor in whether it would be a PR win or nightmare.
