What happened at COP27?

Introduction

This is the COP where negotiators accepted that keeping alive the aim of limiting temperature rise to 1.5 degrees requires a shake-up of the global financial system, so trillions of dollars flow to tackling climate change and supporting the world's poorest countries.

The political declaration that has emerged from COP27, known as the Sharm el-Sheikh implementation plan, is blunt about the costs involved.

About US$4 trillion each year needs to be invested in renewable energy up until 2030 in order to reach net zero emissions by 2050, it says.

Furthermore, a global transformation to a low-carbon economy is expected to require an investment of at least US$4 trillion to US$6 trillion per year, it says.

In addition, it notes ‘the growing gap’ between the support provided so far to help developing countries implement the actions in their nationally determined contributions, which are estimated to require between US$5.8 trillion and US$5.9 trillion for the pre-2030 period.

In contrast, the COP26 Glasgow pact didn't use the word trillions at all. It referred only to the $100 billion annually, which was promised to developing countries in 2009 for delivery from 2020 onwards (and which has yet to be fully delivered).

However, while the Glasgow pact referred to a politically-determined allocation of $100 billion annually, pledged to be delivered each year from 2020 to 2025, Sharm el-Sheikh's references to trillions are based on research and analysis of what will actually be required.

The COP27 declaration has agreed that a new fund will be established to partly deliver the money for loss and damage. Although, the amount of money to be pledged into this fund – and details of where it will come from - are yet to be worked out.

But the new fund is specifically only one part of new financing arrangements that will be put in place.

As the final decision text says, delivering the required funding ‘will require a transformation of the financial system and its structures and processes’ involving governments, central banks, commercial banks, and institutional investors.

The implementation COP?

Was this the ‘implementation COP’ as promised? Perhaps the answer is yes and no.

In terms of the COP27 ‘side-events’ stream (a term that barely does justice to the huge number of countries, think tanks, businesses, groups, and city and regional governments that organise and participate in them), it was definitely about implementation.

The side-events COP saw the launch of numerous new alliances, the release of influential new policy and science reports, the making of new pledges, the advance of crucial policy discussions, and many new business announcements and deals.

In terms of the formal negotiations, the answer is less clear-cut.

For example, in terms of deciding many aspects of the supporting infrastructure for Article 6 of the Paris Agreement, which is necessary to activate the market mechanisms fully, the formal talks made little headway (although Japan convened an important new Article 6 Implementation Partnership on the sidelines).

Perhaps it is more accurate to say that the formal talks clarified that implementation depends on redirecting large amounts of money.

It's a point that, while not exactly new, has never before been spelt out so precisely and forcefully in terms of the scale of investment required.

Leaving aside implementation, a number of delegates made it clear they were disappointed with the COP's final statements on emissions mitigation, which did not advance on wording that emerged from COP26 on limiting temperature rise to 1.5 degrees.

Those expressing concern that stronger wording on mitigation action did not emerge from the COP included the EU, the UK, the Alliance of Small Island States, and New Zealand.

The lack of progress on this front was also acknowledged by UN Secretary-General Antonio Guterres, who said, "we need to drastically reduce emissions now – and this is an issue this COP did not address".

Implications for COP28

What does the COP27 result mean for COP28, which will take place in Dubai at the end of next year?

Given the strong criticisms from several quarters of insufficient progress on mitigation – in particular, the absence of wording on peaking global emissions before 2025 and phasing out all fossil fuels – the issue is bound to be a dominant concern at COP28.

In other respects, the prospects for COP28 will depend on meetings that are yet to be held.

Next year's G7 meeting (under Japan's presidency) and G20 meeting (under India's presidency) offer important opportunities to make decisions that help unlock financial flows.

Similarly, the COP27 decisions spell out that multilateral banks should assess their potential to contribute more climate finance – which is likely to occur when they hold their Spring 2023 meetings.

If G7 and G20 leaders take those decisions and banks identify ways to boost their contributions, it will help to rebuild trust among developing countries at next year’s COP, which have been frustrated by the failure of developed countries to meet their US$100 billion pledge.

If they do not do so, the UAE COP28 presidency will face a difficult task as it attempts to take forward the new loss and damage response fund agreed at Egypt.

Another development to watch out for immediately post-COP27 is a UN vote on seeking an International Court of Justice (ICJ) advisory opinion on the climate change responsibilities of states – a proposal originally instigated by students from the Pacific island of Vanuatu.

A core team of 18 countries expects to release the proposed wording of a UN resolution seeking the ICJ referral very soon, with a vote likely in December. They told a COP27 briefing that they already have in-principle support from 86 countries.

Those involved in advancing the ICJ proposal say it is intended to clarify the climate responsibilities of governments, with ramifications for the UN climate talks process and other forums.

The conclusion of COP27 in Egypt means that for 27 years, the world has been meeting to negotiate on climate change under the auspices of the UN.

In another 27 years, it will be 2049 – whether we have succeeded or failed to achieve net-zero will by then be starkly clear.