COP27 Agrees on Key Milestones and Historic Consensus on Funding for Loss and Damage

(SHARM EL-SHEIKH, Egypt) The annual United Nations climate talks (COP27) concluded Sunday in Egypt with some progress on technical issues and agreement on funding arrangements for loss and damage, including the creation of a loss and damage fund that will, in time, provide financing for developing countries that have been hit with irrevocable damages from climate change. Countries also reiterated they should strive to limit global warming to 1.5 degrees Celsius. 

Environmental Defense Fund’s Executive Vice President for Impact, Angela Churie Kallhauge, issued the following statement:

“We’re not walking away from Sharm El-Sheikh empty handed. Despite moments in the two weeks where it seemed consensus was not possible, parties overcame political and organizational challenges and agreed on key milestones. 

“The new fund for loss and damage established in the Sharm El-Sheikh Implementation Plan is historic, and a testament to the unwavering efforts of so many people focused for decades on supporting countries particularly vulnerable to climate change. But the work is not done. 

“It takes time to stand up a new fund and resource it, meaning it may be years before those countries see a dollar from the new fund. Political will is needed to shorten the timeframe for when countries actually receive money from this fund. The decision acknowledges that other funding arrangements can support loss and damage.

“To get to the levels needed to address loss and damage, countries should not lose sight of opportunities already at hand that can build the much-needed fiscal space and leverage funding at scale. There are things governments can already do now to alleviate fiscal pressure on particularly vulnerable countries. This means the new fund must be complemented by systemic changes that will help countries restructure their finances and economies to be more resilient to climate change. 

“On carbon markets (Article 6), countries were able to reach a compromise on the decision text that provides some additional clarity on how countries can use cooperative approaches to meet their emissions targets under the Paris Agreement. Nevertheless, many issues are left to be decided at upcoming COPs. These additional details to be resolved should not delay the timely operation of international carbon market mechanisms. In the meantime, countries should continue to move ahead with bilateral trading approaches, confident that rules are in place for a robust, transparent and accountable carbon market that promotes more and faster climate ambition and creates a further avenue for finance flows from developed to developing countries. We look forward to the remaining details on Article 6 being agreed to next year.

“We welcome that the COP decision encourages the use of nature-based solutions, calls for action on deforestation, and establishes a work program on climate action and agriculture and food security. This underscores the importance of comprehensive solutions that address more than one challenge at a time.

“Though it can be tempting to question the value of the global climate negotiations after this measured progress, in this time of war and economic disruption, the value of these talks goes beyond the written outcome. There’s inherent benefit in countries sitting down with each other, being transparent and being held accountable to their commitments. 

“Outside the negotiations, we saw significant creativity and enthusiasm around solutions and new initiatives. We also saw an unwavering commitment to ensure that progress is robust and real and that commitments are followed through with real action.

• The UN High-Level Expert Group on the Net Zero Emissions Commitments of Non-State Entities gave guidance to business to ensure net zero pledges and action are rigorous. This includes establishing goals in line with limiting warming to 1.5 degrees; using high-integrity carbon credits; and investing in protecting nature beyond a company’s value chain.
• There were vibrant conversations on how to protect nature and advance climate-smart solutions to food, water and agriculture. 
• The Energy Transition Accelerator announced by U.S. Special Presidential Envoy for Climate John Kerry is a promising initiative that uses the power of carbon markets to support a just energy transition away from fossil fuels in developing countries in a way that helps workers and communities. 
• The Indonesian Just Energy Transition Partnership (JETP), announced at the G20 Summit in Bali, aims to support the country’s transition away from coal and toward a clean and just power sector. Public financing will help de-risk and pave the way for scaled-up private sector financing.
• The Africa Carbon Market Initiative will significantly expand Africa’s engagement in the voluntary carbon market, and drive investment into areas including clean energy and reducing deforestation. 
• Countries under the Forests and Climate Leaders’ Partnership committed to holding each other accountable on their pledge to end deforestation by 2030. Adopting natural climate solutions, mobilizing financing for nature, and collaborating with Indigenous People and local communities will be crucial to meet this goal. 
• The Global Methane Pledge has grown to 150 countries committed to reducing methane emissions, which is the fastest way to slow warming this decade. 

“With the outcome from Sharm El-Sheikh, we still have a monumental challenge ahead, but also have clarity on next steps and some new tools to help turn commitments into concrete action. We need to continue to find solutions that address more than one problem at the same time – climate and energy poverty, water and food scarcity, clean energy and energy security, limiting pollution and adapting to the warming we can’t avoid.”

• Angela Churie Kallhauge, Executive Vice President for Impact