COP 27 has begun – What has happened so far?
“We are on a highway to climate hell with our foot on the accelerator”António Guterres, UN Secretary General, COP 27 opening ceremony
With the beginning of COP 27, global governments in Sharm-el-Sheikh, Egypt, have started negotiations on climate change under the United Nations banner. It lands in a year where we have seen rising climate chaos, from devastating floods in Pakistan leaving millions homeless, to record-breaking heatwaves in the UK and wildfires across Europe and beyond.
In this COP 27 update, we draw on the UN Climate Change Executive Secretary’s call to governments to focus on three critical areas at the negotiations.
A transformational shift to implement the Paris Agreement
On Monday 7 November, the COP negotiations kick-started with the Implementation Summit, where World Leaders gathered to express their views on implementing climate action. Just ahead of the conference, a UN Climate Change report1 showed that countries are slowly bending the global emissions curve downwards, but not by enough and stronger global decarbonisation action is required. Stakeholders are now looking for countries at the COP 27 negotiations to provide more detail on the ‘how’.
Advancing the individual workstreams
Progressing the critical workstreams of mitigation, adaptation, finance, and loss and damage remain front and centre. In a significant shift from the European position, the Netherlands announced its support for loss and damage for vulnerable countries, and also acknowledged that the African continent is on the frontline of a climate emergency it did not create. Meanwhile, a select group of countries including the UK, launched the new ‘Forests and Climate Leaders’ Partnership to deliver forest and climate ambitions, in an accountable and innovative way. President Biden announced that the US would tighten its new methane rules, proposing a new “super-emitter response programme” that would require companies to respond to “credible” reports of high-volume methane leaks.
Delivering transparency and accountability
The UN Climate Secretary noted that emphasis is required on the principles of transparency and accountability. As, since COP 26 in Glasgow, just 24 of the 194 countries which committed to the Paris Agreement came forward with more ambitious Nationally Determined Contributions2. Expect to hear more about Special Drawing Rights (SDRs) and beneficial debt terms or debt-for-climate swaps as ways to finance the net zero transition, with the Barbados Prime Minister calling for the IMF to earmark $5bn of its SDRs for climate-related projects. Further, the US said they would double their pledge to the “adaptation fund” for poorer countries to $100m from the $50m it committed at last year’s COP 26.
Negotiation outcomes across these three areas remain very much up in the air, so we will continue to monitor the negotiations closely. We have already seen some hiccups, with the supervisory body responsible for carbon market recommendations delivering a report considering offsetting but not methodologies, which may stall progress in this area3.
At COP 26, we know that negotiations went down to the wire, and we expect much the same to happen at COP 27. Early signs look promising, but we are also aware that (almost in support of Guterres’ statement) 600+ fossil fuel lobbyists are attending COP 27, representing a rise of 25% since COP 26, and outnumbering all other stakeholder groups4. We are keeping a close watch and at the end of COP 27, we will provide a wrap-up on the conference’s key events and take-aways for investors.
Sources and notes
Note: country reporting is taken from available news sources