'Step towards justice': COP27 ends with pledge from rich nations to fund poorer ones for climate change losses

A placard is displayed at an informal session of the U.N. Climate Change Conference in Sharm el-Sheikh, Egypt.
A placard is displayed at the U.N. Climate Change Conference in Sharm el-Sheikh, Egypt, on Nov. 18. (Mohamed Abd El Ghany/Reuters) (REUTERS)

The world’s wealthiest nations signed on to a landmark agreement Sunday at the United Nations Climate Change Conference in Sharm el-Sheikh, Egypt, to help compensate poorer ones for the devastating effects of rising global temperatures.

More than 200 countries, including the United States, attending the conference known as COP27, signed the agreement, which calls for the formation of a committee to hammer out details such as how much funding each country will contribute, which financial institutions should contribute and how the money will be distributed.

“This COP has taken an important step towards justice,” U.N. Secretary-General António Guterres said in a video message from the conference venue upon the event’s conclusion. “I welcome the decision to establish a loss and damage fund.”

Long one of the most divisive issues when it comes to addressing climate change, payments for “loss and damage” have been a key demand from developing nations that disproportionately suffer the effects of rising temperatures even though they have contributed least to the problem. The United States, the world’s biggest emitter of greenhouse gases since the start of the 19th century Industrial Revolution, had previously balked at committing to such a pledge, but the text of the new agreement specifies that it does not constitute an admission of liability.

United Nations Secretary-General António Guterres
U.N. Secretary-General António Guterres addressing attendees at COP27. (Mohamed Abd El Ghany/Reuters) (REUTERS)

But the conference failed to make significant progress on another main agenda item: cutting the greenhouse gas emissions that are causing global warming in the first place. In the run-up to the conference, leaders of the U.N. climate diplomacy process had called for action on both fronts, and left declaring victory on only one.

“But let’s be clear,” Guterres added. “Our planet is still in the emergency room. We need to drastically reduce emissions now — and this is an issue this COP did not address. A fund for loss and damage is essential, but it’s not an answer if the climate crisis washes a small island state off the map — or turns an entire African country to desert.”

In the wake of recent climate-change-related disasters, such as floods that submerged one-third of Pakistan, negotiators from 190 countries agreed to create a fund that will gather and distribute aid to lower-income nations after they suffer losses and damages from extreme weather events. Accepting a loss and damage fund was a shift for the U.S. and the 27-member European Union, one that — as some of the world’s largest economies and biggest emitters of greenhouse gases — they will be expected to financially support.

John Kerry, the U.S. special presidential envoy for climate change, praised the breakthrough on compensation, while a State Department spokesperson noted on background that the agreement creates no acceptance of liability for climate change or mandatory financial contributions from the United States.

“The United States welcomes the decision at COP27 to establish arrangements to respond to the devastating impact of climate change on vulnerable communities around the world, including through a fund that will focus on what the world can do now to support particularly vulnerable countries in managing the impacts of changing climate,” Kerry said in a statement.

John Kerry
U.S. climate envoy John Kerry at COP27. (Joseph Eid/AFP via Getty Images) (AFP via Getty Images)

“The fund, which will be one among many available avenues for voluntary funding, should be designed to be effective and to attract an expanded donor base,” he added.

The fund’s creation is a huge win for the small island states that are most at risk from rising sea levels and stronger storms. Those states have been lobbying for compensation for decades.

“So many people all this week told us we wouldn't get it,” Kathy Jetñil-Kijiner, the climate envoy from the Marshall Islands, told Reuters. “So glad they were wrong.”

But island nations have also been calling for steeper, faster emissions cuts that would lower the future trajectory of global warming and give them their best chance for survival from rising seas and intensifying tropical cyclones. Previous climate change agreements that were struck in Paris in 2015 and Glasgow, Scotland, last year committed to the goal of limiting warming to 1.5 degrees Celsius (2.7 degrees Fahrenheit), the threshold that the Intergovernmental Panel on Climate Change has identified as triggering catastrophic climate change.

Since average global temperatures are already 1.1 degrees Celsius (2 degrees Fahrenheit) above the pre-Industrial Revolution average, the IPCC estimates that global emissions must be cut in half by 2030 and reach net zero by 2050 to stay below 1.5°C. But the national commitments to reduce emissions made in Paris and Glasgow come nowhere near those targets. A U.N. report released late last month estimated that the world is on course for 2.1°C to 2.9°C of warming by 2100.

This year some of the most vulnerable countries, such as those in the Pacific Island Forum, called on big emitters to submit plans for larger emissions reductions. But only a handful of countries updated their pledges, and even those were not necessarily in keeping with the IPCC’s targets. For example, after a more left-leaning government took power in Australia this summer, the major fossil fuel producer boosted its emissions reduction goal from 26%-28% by 2030 to 43% by 2030 — still less than the 50% demanded by the IPCC.

Australian Prime Minister Anthony Albanese
Australian Prime Minister Anthony Albanese is committed to have a greenhouse gas reduction target enshrined in law. (Lukas Coch/AAP Image via AP) (AP)

The U.S. has promised to halve emissions by 2030, and the recently passed Inflation Reduction Act is projected to cut emissions by 40% this decade. Closing the remaining gap may prove difficult, as Republicans have recently taken control of the House and are unlikely to vote for further climate action.

At the start of the conference, experts said it was unlikely that China — now the world’s largest annual greenhouse gas emitter — would improve upon its current commitments to peak its emissions by 2030 and reach net zero by 2060. China did not announce new emissions targets at COP27, although last week did bring a sign of potential future progress. After a year of tension between the two great powers, President Biden and Chinese President Xi Jinping met in Bali, Indonesia, and jointly pledged to resume cooperation on climate change.

In a separate statement marking the end of COP27, Kerry pledged to keep up the pressure on countries that haven’t committed to cutting emissions in half by 2030 or to reaching net zero by 2050. “As we continue to lead along with our allies and partners in the fight to protect our planet, the United States will also continue to press major emitters like China to significantly enhance their ambition to align with what science says is necessary,” Kerry said.

In a setback for climate activists and some developing nations, the text of the final agreement at COP27 did not include an overarching statement that the world will move away from reliance on fossil fuels. Instead, it reiterated language from Glasgow that countries should make “efforts towards the phasedown of unabated coal power and phase-out of inefficient fossil fuel subsidies.”

A bulldozer moves piles of coal in Lianyungang, China
A bulldozer moves piles of coal in Lianyungang, China. (VCG via Getty Images) (VCG via Getty Images)

Alok Sharma, the British politician who served as president of COP26 in Glasgow, expressed frustration with the shortfall in ambition in Egypt this year.

“Emissions peaking before 2025 as the science tells us is necessary? Not in this text,” he said in a speech in Sharm el-Sheikh. “Clear follow-through on the phasedown of coal? Not in this text. A clear commitment to phase out all fossil fuels? Not in this text."

On Wednesday, Kerry said that, for the first time ever, the U.S. would agree to calling for a “phasedown” of “unabated” fossil fuels, meaning the burning of oil, coal and gas without technology that captures the carbon dioxide emissions. But other major fossil fuel producers such as Russia and Saudi Arabia reportedly lobbied successfully to keep that language out of the text.

Despite modest commitments from the United States and some European countries to aid the transition to clean energy in a few developing nations, including Mexico and Indonesia, developing country diplomats and climate justice activists expressed disappointment that the conference wrapped up without any firm plan for wealthier countries to fully deliver on their prior commitment to mobilize $100 billion per year by 2020 for international climate finance. The U.N. estimates that global climate finance flows reached $83 billion in 2020.

“Rich countries have broken their $100 billion climate finance promise and successfully blocked language at COP27 that would have required them to compensate for earlier shortfalls through increased climate finance in subsequent years,” said Gabriela Bucher, Oxfam International’s executive director, in a statement. “Climate finance is needed in the trillions for adaptation and mitigation. Given their responsibility for the climate crisis, rich countries at least could have provided a clear roadmap on how to deliver the $600 billion they had promised between 2020 and 2025.”

Women push wheelbarrows atop the coal-powered Duvha power station east of Johannesburg, South Africa
Women push wheelbarrows atop the coal-powered Duvha power station east of Johannesburg, South Africa. (Denis Farrell/AP) (AP)

Many developing states say they cannot make stronger emissions reduction pledges without the financial means to build up their renewable energy sector.

Like Guterres, U.S. climate change activists called the outcome of COP27 a partial success that, they hope, lays the groundwork for stronger action in the future.

“Though it makes some important advances, the final COP27 decision falls well short of what the science shows is needed,” said Rachel Cleetus, policy director for the climate and energy program at the Union of Concerned Scientists, in a statement. “The global emissions trajectory is dangerously off course.”

Still, Cleetus ended on a positive note. “While an imperfect document, the COP27 decision represents a hopeful step forward and gives room for more ambition in the years to come,” she said.