At COP27, an Historic Deal to Compensate Poor Nations for Climate Crisis Impacts

Developing countries, climate NGOs and activists celebrated a victory more than 30 years in the making on Sunday, as they welcomed the news that this year’s UN climate summit, COP27, has resulted in the establishment of a funding mechanism for loss and damage. 

It marks an important breakthrough in multilateral climate negotiations that will see countries that are historically responsible for emitting the majority of greenhouse gases compensate those from vulnerable countries, who are the hardest hit. For something that many activists argue is long overdue, it can’t come soon enough.

“The announcement offers hope to vulnerable communities all over the world who are fighting for their survival from climate stress,” tweeted Sherry Rehman, the minister for climate change from Pakistan — the country that’s been leading the call for a loss and damage fund on behalf of the G77 countries and China at COP27. Pakistan has suffered from intense flooding this year that’s killed more than 1,700 people and displaced over 2 million more. 

But the outcome of COP27 wasn’t a resounding success. In particular, many involved in the COP process were surprised and frustrated that the text countries adopted didn’t mention phasing down or phasing out fossil fuels. Climate talks often end this way — with some wins and some losses, but the lack of focus on limiting global warming to 1.5 degrees Celsius by transitioning away from fossil fuels to renewables is something many working on climate action consider a massive loss.

“Our planet is still in the emergency room,” said UN Secretary General Antonio Guterres in a speech following the close of COP27. “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.”

COP27 has been running for the past two weeks, starting Nov. 7, in Sharm el-Sheikh, a resort town on Egypt’s Sinai peninsula. Alongside the core negotiations, there’s been a whole program of events, with numerous protests and visits from heads of state thrown into the mix. The summit was set to close Friday, but it ran over as COPs usually do, dragging negotiations out into the weekend. After a tense day of negotiations on Saturday, which included a threat from the EU that it might walk away from the talks, parties managed to reach agreement on issues in the early hours of Sunday morning, while the dawn call to prayer echoed across Egypt. 

With people all over the world increasingly struggling to handle the fallout of extreme weather events exacerbated by climate change, the need to establish ways to mitigate the effects of the crisis, adapt to protect against further harms and provide relief to those suffering its worst effects has only become more urgent. Many people, activists in particular, feel UN summits are ineffective forums for building consensus and taking action on climate, due to the glacial pace of change. But the climate talks remain important, as they’re the only chance all countries have to gather in a room and decide how to jointly tackle the climate crisis, a problem that knows no borders.

The theme of this year’s summit was “the implementation COP,” which meant putting into action what had been agreed in Glasgow at COP26 last year, after the interim period had seen very little of what was promised there come to fruition. But on Friday, when the summit was set to close, negotiators were once again rehashing the same issues as in previous years, leading Greenpeace Southeast Asia Executive Director Yeb Saño to say it felt more like “the repetition COP.”

The Egyptian climate talks were beset with problems, which ranged from practical issues around lack of food and drink at the event site, overcrowded transportation, and sewage running through the venue, to procedural issues that delayed negotiations. In the middle of the second week, Guterres flew back to Egypt from the G20 summit in Bali to urge parties to rise to the occasion and work together in spite of what he identified as a breakdown in trust between developed and developing nations.

“The world is watching and has a simple message: stand and deliver,” he said in a speech Thursday. “Deliver the kind of meaningful climate action that people and planet so desperately need.”

Loss and damage

Securing a fund for loss and damage has been the defining issue of the summit. It was such a priority for vulnerable countries and activists, that many said they’d consider COP27 a failure if agreement on a funding facility wasn’t established.

For the first time after more than 30 years of activist campaigning, the issue made it onto the COP27 agenda this year. But even though financing garnered support from the G77+China and the EU, the contentious nature of compensation meant that this was one of two negotiating points that caused the negotiations to run late. 

The US, the world’s largest historical emitter of greenhouse gases, has been particularly concerned about making itself liable, leading it to resist the creation of a fund. It showed more willingness to talk about loss and damage at COP27 than in the past, but wanted to shift the responsibility away from governments, which it said would only be able to contribute billions, to industry, which would be able to cough up the trillions truly required.

In the end, the countries were able to reach agree that a fund should be established, which was seen as a win for climate justice — the movement to make the world safer, greener and more equal and fair. Saño described it as “a victory for people power.”

“The agreement for a Loss and Damage Finance Facility marks a new dawn for climate justice,” he said in a statement. “Governments have laid the cornerstone of a long overdue new fund to deliver vital support to vulnerable countries and communities that are already being devastated by the accelerating climate crisis.”

There is still anger from some corners that it took so long for governments in the developed world to acknowledge the importance of loss and damage and stood in the way of progress. “The EU should be ashamed of itself for blocking it for so long,” said Wiktoria Jędroszkowiak, a Polish activist from youth organization Fridays for Future. “This COP wasn’t ambitious — it was a fight to secure agreements that are still leading us towards the ongoing climate disasters.”

Fossil fuels

Securing funding for loss and damage is going to be more necessary than ever if the climate crisis continues to gather pace. Critics of the final deal argued that this would be the case due to the lack of focus on actually trying to reduce emissions by weaning ourselves off fossil fuels.

The language around phasing out fossil fuels was the other issue that held up the negotiations this year. Scientists and climate experts have consistently argued that the only way to keep global warming to within a 1.5 degree Celsius limit is to phase out all fossil fuels entirely, including coal, oil and gas. But some countries have resisted such rapid and all-encompassing decarbonization, leading to a tussle over how fossil fuel phaseout should be written in.

In the end, the language was excluded entirely.

“While the long-delayed progress on loss and damage is an important breakthrough, the latest draft of the cover text completely fails to address the fossil fuels that are driving the climate crisis and the escalating losses it is causing,” Carroll Muffett, president and CEO of the Center for International Environmental Law, said in a statement.

Muffett also expressed her frustration that parties were told to update their nationally determined contributions, or NDCs, which say how each country would meet its commitments under the Paris Agreement, without being told to increase their ambition and tackle the root causes of the climate crisis. She was one of a chorus of voices deeply frustrated at the lack of focus on fossil fuels and renewables.

“There is no time left for incremental change, every fraction of a degree matters,” May Boeve, executive director of 350.org, said in a statement. “We needed radical implementation of measures to keep to 1.5 degrees Celsius and avoid the worst ravages of climate chaos, we needed a swift, just and equitable phaseout of fossil fuels. We didn’t get that at COP this year.”

In the absence of fossil fuels from the deal this year, some civil society members and activists are taking heart from the fact that the transition to renewable energy is already underway around the world. Already they’re looking to next year’s summit, which will take place in the United Arab Emirates, to advance this transition further, and will likely be lobbying for this to be front and center on the 2023 agenda.

“The COP28 climate summit next year must be the COP of climate credibility,” Manuel Pulgar-Vidal, COP20 president and WWF global climate and energy lead, said in a statement. “And countries must deliver.”