TODD MICKLETHWAITE: COP27 loss and damage fund: too little, too late?

The UN Framework Convention on Climate Change (COP27) saw delegates from almost 200 countries gather in Egypt earlier in November to take action towards achieving the world’s collective climate goals.

In what was initially scheduled to be the closing plenary session late on November 17, the EU offered the breakthrough that had long eluded all parties involved. That is, the establishment of a loss and damage fund for the countries most vulnerable to the effects of climate change. This decision was a welcome relief for developing countries that had been fighting for this outcome for more than three decades.

With this fund now expected to be backed up by developed country finance, an important, if somewhat contentious, question is on which side of the equation China should fall.

The Group of 77 (G77), a coalition representing the world’s developing countries, counts China as one of its members — a country only second to the US in cumulative historical emissions since the industrial revolution. The definition of “developing”, formulated back in 1992, not only includes China but also the petro-states of Saudi Arabia and Russia.

According to John Kerry, the US special presidential envoy for climate: “Reducing emissions in time is about maths, not ideology. That’s why all nations have a stake in the choices China makes in this critical decade.”

While extensive dialogue took place at COP27 and momentous commitments were made, sceptics will point to unfulfilled breakthroughs in previous iterations, most notably the collective promise made in Copenhagen in 2009 to mobilise $100bn per year for climate action in developing countries, a commitment yet to be brought to reality.

Developed countries are now opening the door in effect to underwrite major climate risks in vulnerable countries without taking sufficient action to mitigate the risks which, ultimately, will be felt by developed and developing countries alike.

In the plenary when the Loss & Damage Response Fund was proposed, parties were at pains to point out that if adaptation and mitigation efforts are not scaled up as a matter of urgency we will pass the tipping point and no amount of loss and damage funding will be enough. The fund is ground-breaking and necessary, but as succinctly articulated by the UK’s Guardian newspaper, it is “equivalent to a whip-round to buy a neighbour new clothes after watching as their house burnt down — because you dropped a lit match”.

Disproportionately

COP27, dubbed the “Africa COP”, put the spotlight on a continent that suffers disproportionately from the effects of climate change while accounting for less than 3% of the world’s total greenhouse gas emissions.

Significant African-centric initiatives announced included the establishment of the African Carbon Market Initiative and the Africa Climate Risk Facility; and significant commitments were made to the African Development Bank’s Africa Adaptation Acceleration Programme. Substantial progress was also made by the African Green Hydrogen Alliance, a pioneering body of which SA is a part.

More notably, COP27 also called for the reformation and recapitalisation of international financial institutions and multilateral development banks such as the World Bank. This was a motion backed by the SA delegation, which recognises the potential to access further concessional aid that will ultimately support the plight of the country’s poor and unemployed. Climate economists predict that such reform could provide Africa and its developing peers with at least half the finance needed each year to decarbonise their economies.

A cornerstone of the COP27 presidency’s agenda was headway on finance for adaptation to climate change, supported by other African proponents such as SA, which wanted to see a doubling of commitments by 2030. In the end it was a battle to just reaffirm the commitment made in Glasgow.

It seemed to be a theme of what was also dubbed the “Implementation COP” to have to fight to maintain existing commitments, let alone progress with them. This was affirmed by COP26 president Alok Sharma, who highlighted the areas where key progress was expected but not delivered in Egypt. This includes targeting peak emissions before 2025; a clear follow-through on the phase-down of coal and a commitment to phase down all fossil fuels. It remains astonishing that the overarching cause of our world’s potential pending demise has not yet made it into the final decision in 30 years of UN climate negotiations.

While criticised for possibly prolonging the path to net zero, the concession of COP27 to accommodate “low-emissions energy” is a fillip to countries with large gas reserves that might now be able to strike lucrative deals to boost their prospects of local industrialisation, provide access to electricity for millions of people, and ensure a just energy transition.

If anything, COP27 has shown that the world’s agendas are not aligned, and small steps forward were made at a time when the world should be taking giant leaps. The world will eagerly monitor progress on the initiatives announced at COP27, much like it had been awaiting the investment plan that will support the ground-breaking partnership heralded in Glasgow to aid SA’s just energy transition. The plan unveiled at COP27 was well received, with the country seen to be leading the way for others to follow.

• Micklethwaite is head of strategy & impact at Sanlam Investments (Alternatives).