Nov 21, 2022
The two-week long international climate summit has at last concluded in Egypt, with the gavel going down on a final agreement on Sunday, 20 November 2022.
The ‘Sharm el-Sheikh Implementation Plan’ creates a loss and damage fund for countries vulnerable to the effects of climate change. Seen as an important win for climate justice, the plan was described as a landmark moment in global climate politics, one that acknowledges that the world’s richer countries – and biggest carbon emitters – are responsible to the developing world for the harm caused by global warming.
Speaking about the agreement, Ireland’s Minister for Transport, the Environment, Climate and Communications, Eamon Ryan, TD, who led the loss and damage negotiations for the EU, admitted that while the outcome was not perfect, it was both historic and progressive:
“This is not perfect. The EU would have liked it to have gone further and faster. However, what makes this a good deal is that it is an agreed deal. It is a signal of trust between the 198 parties to the UNFCCC that we are serious about climate change and that we are serious about protecting the most vulnerable countries and communities.”
The wording in the agreement is that countries will “establish new funding arrangements for assisting developing countries that are particularly vulnerable to the adverse effects of climate change, in responding to loss and damage”.
A transnational committee with representatives from over 24 countries will be established to decide which countries are vulnerable, where the money is to come from (i.e. which countries, and which sources – existing funding arrangements like debt relief or ‘innovative sources’ like taxes on fossil fuels). The committee, which have a co-chair from a developing country and a co-chair from a developed country, will report back at COP28, and the Santiago Network will provide technical assistance on how loss and damage can be addressed.
“We have struggled for 30 years on this path and today, in Sharm El-Sheikh, this journey has achieved its first positive milestone,” said Pakistan Climate Minister Sherry Rehman. “The establishment of a fund is not about dispensing charity. It is clearly a down-payment on the longer investment in our joint futures.”
Pakistan suffered monsoon flooding in 2022 that left more than 1,700 dead and caused at least $30 billion in losses. The disaster prompted Pakistan’s Prime Minister Shehbaz Sharif to warn world leaders at the UN General Assembly in September 2022 that “what happened in Pakistan will not stay in Pakistan,” a stark acknowledgement that climate change will not spare other countries the sort of disaster that left up to one third of his country underwater and millions of its citizens at risk from water-borne diseases.
Although attempts at a row-back of commitments made at Glasgow at COP26 last year were resisted, a phase down of fossil fuels was not included in the agreement, much less a ‘phase out’, as had been called for. No new targets on emissions reduction targets were introduced in the agreement.
Nor did the text include any references to IMF relief to fund carbon-reduction projects to help fund the $4 trillion required for investment in renewable energy annually until 2030, or the $5.6 trillion needed by developing countries to meet their climate goals, or any credible roadmap to double adaptation finance. The latter would require changing the business models of multilateral development banks and international financial institutions, according to UN secretary general António Guterres. “They must accept more risk and systematically leverage private finance for developing countries at reasonable costs.” However, the agreement included the statement “[The world’s nations] call on the shareholders of multilateral development banks (MDBs) and international financial institutions to reform practices and priorities, align and scale up funding … and encourage MDBs to define a new vision that [is] fit for the purpose of addressing the global climate emergency.”
The agreement also created a two-tier carbon market, which has drawn criticism from campaigners who accuse it of creating a risk of greenwashing by countries wishing to purchase credits to fulfil net zero pledges but without making any substantial reductions to their own emissions. Further criticism centres around the fact that governments can designate as ‘confidential’ any information about carbon trades between countries.
The agreement also made official that a decision on a new climate finance goal will be delayed until 2024. Rich countries have delayed delivering the $100 billion promised by 2020 to help developing countries reduce emissions and adapt to the effects of climate change.
Countries agreed to develop a work programme on the global goal of adaptation set out in the Paris Agreement. This goal specified enhancing capacity, strengthening resilience and reducing vulnerability to climate change and ensuring an adequate adaptation response. However, there was concern felt at the low levels of finance available for adaptation.
Round-Up of COP27 Achievements
- High-Level Expert Group on the Net-Zero Emissions Commitments of Non-State Entities: launched first report, Integrity Matters: Net Zero Commitments by Businesses, Financial Institutions, Cities and Regions: focusing on greenwashing and weak net-zero pledges; roadmap to bring integrity to net-zero commitments by industry, financial institutions, cities and regions and to support a global, equitable transition to a sustainable future.
- CDP (formerly the Carbon Disclosure Project) the not-for-profit which runs the global environmental disclosure platform for corporations, will incorporate the International Sustainability Standard Board’s (ISSB) IFRS S2 Climate-related Disclosures Standard [IFRS S2] into its global environmental disclosure platform. This is a major step towards delivering a comprehensive global baseline for capital markets through the adoption of ISSB standards.
- Executive Action Plan for the Early Warnings for All initiative: calls for initial new targeted investments of $3.1 billion between 2023 and 2027, equivalent to a cost of just 50 cents per person per year.
- Climate TRACE Coalition: new independent inventory of greenhouse gas emissions, combining satellite data and AI to show the facility-level carbon and methane emissions of over 70,000 sites around the world, including companies in China, the United States and India.
- The Breakthrough Agenda: a ‘master plan’ to accelerate the decarbonization of five major sectors – power, road transport, steel, hydrogen, and agriculture – through 25 new collaborative actions to be delivered by COP28.
- Food and Agriculture for Sustainable Transformation initiative or FAST: to improve the quantity and quality of climate finance contributions to transform agriculture and food systems by 2030. This was the first COP to have a dedicated day for Agriculture, which contributes to a third of greenhouse emissions and should be a crucial part of the solution.
- The Sharm El-Sheikh Adaptation Agenda: outlines 30 Adaptation outcomes to enhance resilience for 4 billion people living in the most climate vulnerable communities by 2030.
- Action on Water Adaptation and Resilience Initiative (AWARe): an initiative that will champion inclusive cooperation to address water-related challenges and solutions across climate change adaptation.
- African Carbon Market Initiative (ACMI): aims to support the growth of Africa’s voluntary carbon markets and create jobs in Africa.
- The Insurance Adaptation Acceleration Campaign: part of the Race to Resilience, this is a campaign to an effort to mobilise 3,000 insurance companies (equal to 50 percent of the market) by COP28 in 2023.
- The Global Renewables Alliance: an alliance to help accelerate the uptake of renewables globally by industry bodies and associations representing key low-carbon technologies such as hydrogen, energy storage, wind and solar.
- The First Movers Coalition (FMC) Cement & Concrete Commitment: a collection of global companies committing $12bn to decarbonize the heavy industry and long-distance transport sectors.
- COP15 Part 2 will take place 7-19 December. At this COP – officially titled Conference of the Parties (COP 15) to the Convention on Biological Diversity (CBD) – the parties will review the achievement and delivery of the CBD’s Strategic Plan for Biodiversity 2011-2020.
Articles of interest
- COP27 closes with deal on loss and damage: ‘A step towards justice’, says UN chief (UN News)
- What was decided at Cop27 climate talks in Sharm el-Sheikh? (Climate Home News)
- UN Adopts Historic Pact on Payments for Climate Damages (Bloomberg)
- Cop27: Deal reached to set up fund for developing countries hit by climate crisis (Irish Times)
- Cop27 scores on cutting carbon and aiding climate-vulnerable states (Irish Times)
You can find all our COP27 updates, information, guidance and supports to help members understand sustainability and meet the challenges it presents in our online Sustainability Centre.
This article was first published by Chartered Accountants Ireland at the following link: https://www.charteredaccountants.ie/News/news-item/cop27—the-sharm-el-sheikh-implementation-plan-a-down-payment-on-climate-justice