The United Nations climate conference in Egypt limped over the finish line Sunday morning with a commitment to launch a fund to compensate poor countries suffering from catastrophic climate-change events. The last-minute breakthrough spared the COP27 event from total collapse.

Agreeing to put together a “loss and damage” fund stood out because few other commitments related to the fight against climate change made it into the final statement, which was published a day and a half after COP27, held in the seaside resort of Sharm el-Sheikh, was supposed to close.

The countries made no fresh pledges to ramp up their carbon-reduction plans, nor did the statement call for the phasing down and eventual elimination of all fossil fuels. The upshot is that COP27 failed to build on the pledges made a year ago at COP26 in Glasgow to eliminate coal, triggering criticisms from environmental groups that oil and gas had, in effect, been given a new lease on life.

“COP27′s key steps toward a loss and damage fund are deeply marred by the lack of progress on fossil fuels,” said Collin Rees, the U.S. campaign manager of Oil Change International, an environmental group pushing for the end of fossil fuels. “Despite unprecedented discussion of equitably phasing out oil, gas and coal, the end result was yet another COP without formal recognition that Big Oil is driving the climate crisis.”

Ruth Townend, research fellow on the environment at the British think tank Chatham House, said COP27 squandered the opportunity to commit to intensified decarbonization efforts.

“World governments have, at most, three years to bend the curve on emissions, and nothing short of transformational change to energy, transport and food systems, the global financial architecture and the way individuals live their lives, can achieve this,” she said.

Developing countries and environmental groups fear that the goal of limiting average global temperature increases to 1.5C over preindustrial levels – made at the Paris Agreement in 2015 – will be harder, even impossible, to achieve since new oil and gas projects were not condemned in COP27′s final statement.

They noted that more than 600 oil and gas representatives and lobbyists attended COP27, where they pushed to keep their fossil-fuel development agenda alive as the West’s efforts to wean itself off Russian oil and gas sends energy prices soaring.

“The loss and damage deal is a positive step but risking becoming a fund for the end of the world if countries don’t move faster to slash emissions and limit warming to below 1.5C,” said Manuel Pulgar-Vidal of the WWF, a former environment minister of Peru who was the president of COP20 in Lima.

Still, the breakthrough on the loss and damage fund constitutes a big win for poor countries on the front lines of radical climate change.

The logjam was broken on Saturday, when the United States said it would not block such a fund. For decades, the U.S. has resisted the idea for fear of being on the hook for endless liability claims from hard-hit countries. The American move took place two days after the European Union, fearing a COP27 collapse, said it would support the fund. But it was the relentless Pakistan negotiating team that kept the developing countries united.

Loss and damage refers to payments required for reconstruction after climate-related disasters, such as the floods that inundated a third of Pakistan last summer. It is separate from climate-change mitigation and adaptation financing, which was launched at the Paris conference in 2015 and is supposed to pay out US$100-billion a year to vulnerable countries, but has always come up short.

Details of the loss and damage fund had yet to be worked out. A UN committee is to work on its technical design and funding mechanisms, all of which would have to be approved at the COP28 conference in Dubai this time next year.

Pushing for the creation of the fund became the developing countries’ crusade during the two weeks of fraught talks at COP27, whose outright failure appeared to go from possible to likely in the chaotic, frustrating final days. Near the end of the summit, UN Secretary-General Antonio Guterres made an emergency visit to plea for progress.

The key sticking point was determining which wealthy, or near-wealthy countries would pay for damages in which countries. The United States and the EU want China, the world’s biggest polluter, but not its biggest historical polluter, to contribute to the fund, all the more so since it has moved up the wealth curve quickly to become a manufacturing and technological superpower.

But China still considers itself a developing country, as do the World Trade Organization and the UN, which has not updated its definition of developing countries since the UN Framework Convention on Climate Change was signed in 1992.

At COP27, the head of the Chinese delegation, Xie Zhenhua, insisted that China had no obligation to provide financial assistance to poor countries. He said a “loss and damage fund, if there is any fund, the responsibility to provide funds lies with developed countries. It is their responsibility and obligation.”

He did not rule out making payments to hard-hit countries. “Developing countries can contribute on a voluntary basis,” he said.

Canada has supported the fund. African environmental groups and delegates praised the fund’s backing from developed countries but warned that going from concept to reality still faced potentially years of work and many hurdles.

“COP27 has done what no other COP has achieved and created a loss and damage fund to support the most impacted communities on climate change,” said Mohamed Adow, director of Power Shift Africa. “It is worth noting that we have the fund but we need the money to make it worthwhile. What we have is an empty bucket.”

There is no money in the fund and some developing countries fear that the wealthy countries who agreed to push the idea forward will bring it alive by diverting money from existing financial mechanisms, such as the US$100-billion adaptation and mitigation fund.

ERIC REGULY
EUROPEAN BUREAU CHIEF
The Globe and Mail, November 20, 2022