Cop27 draft agreement fails to include a fund for climate compensation

The draft text is expected to change amid ongoing negotiations at the Sharm el-Sheikh conference

The first draft of the Cop27 agreement was published on Friday just hours before the critical climate summit was due to draw to a close in Egypt.

The release of the draft agreement - which is expected to change amid ongoing negotiations - is the defining moment of Cop27 so far, allowing the world a first look at their countries’ collective vision for tackling the climate emergency.

The current version has many “placeholders” on the thorniest issues, notably on funding arrangements for loss and damage. The issue of how to compensate vulnerable countries for climate destruction has been a central issue at the two-week conference in Sharm el-Sheikh.

The draft states, with concern, the “growing gravity, scope and frequency” of loss and damage in all regions, and underlines that an “adequate and effective” response is of “great importance” to the continued credibility and relevance of the United Nations’ climate process.

Developed nations, grown rich by burning fossil fuels, have admitted that loss and damage needs to be addressed. But many, including the United States, have pushed back on the concept of a new fund.

A breakdown in trust between the Global North and South has led to threats by some developing countries that they are ready to walk out of negotiations, according to reports.

Other key takeaways from the Cop27 draft include:

- Reaffirms resolution to pursue 1.5C global average temperature limit as enshrined in Glasgow Climate Pact

- Limiting to 1.5C requires “rapid, deep and sustained reductions in global greenhouse gas emissions”

- No inclusion of India’s demand for the “phase down of all fossil fuels” rather than just coal

- Contradictory language on “phasing down” versus “phasing out” coal

- Calls for Multilateral Development Banks and other institutions to reform to address climate emergency without worsening the debt burdens of poor countries.

Keeping 1.5C ‘alive’

The Cop27 draft reaffirms that countries will pursue efforts to limit average global temperature rise to 1.5C (above pre-industrial levels), a repeat of language from the Glasgow Climate Pact last year.

But the draft “notes with serious concern” that countries’ emissions-reduction plans are not in line with keeping to 1.5C, or 2C.

Limiting to 1.5C would require “rapid, deep and sustained” cuts to greenhouse gas emissions, the document states, and “strongly urges” parties that have not yet submitted more ambitious plans to do so.

Analysts point out that this language on reducing emissions is not new and does not represent progress from Glasgow.

At Cop26, countries were requested to “revisit and strengthen” their 2030 climate targets in 2022 but so far only a handful have done so.

While the Cop27 draft encourages updated plans, it does not call on all countries to up their ambition on 2030 targets.

“It’s not responding to calls we heard in the room for strengthened language on 1.5C and on 2030 climate targets,” Tom Evans, a policy adviser at the climate think tank E3G, explained on the draft.

Some countries are pushing for the final Cop27 agreement to emphasize the need to peak emissions in 2025 - the deadline for keeping 1.5C “alive”, scientists say. So far, this has not be included in the text.

The status quo, however, is preferable to a weakening of the commitment to 1.5C, as some officials had feared ahead of the first draft being published.

A Western official told The Independent on Thursday that Brazil, China and Russia were among the countries backsliding on the Glasgow commitment to “keep 1.5C alive”.

The official said the countries were pushing for the Paris goal of “well below 2C”, rather than the more ambitious 1.5C. The Independent has contacted country representatives for comment.

Fossil fuels v coal alone

The draft text has no mention of India’s demand to include a statement on the “phase down of all fossil fuels”.

The Glasgow Climate Pact called on countries to accelerate efforts towards the “phase down of unabated coal power.”

At Cop27, India - which is heavily dependent on coal - has pushed for the final agreement to make a statement on reducing all fossil fuel use. While that move was described by some negotiators as a “tactical decision”, it nevertheless gained the support of a number of countries, and the European Union.

Instead, the draft text includes two conflicting messages on coal. At one point, the pact “encourages the continued efforts to accelerate measures towards the phase down of unabated coal power...”

But in another paragraph, it “reaffirms the call” for “accelerating efforts towards the phaseout of unabated coal power”.

India’s environment minister, Bhupender Yadav at Cop27. New Delhi has been pushing for the final “Sharm” pact to phasedown all fossil fuels - not just coal (AP)

Analysts say the current draft does not make progress on Cop26’s aim of consigning coal to history. The International Energy Agency warned this week that global coal use must be slashed by 90 per cent by 2050 to hold global temperature rise to 1.5C.

The text also includes peculiar language on fossil fuel subsidies - government interventions that lower the costs of production for the fossil fuel industry.

The Glasgow Climate Pact called on countries to “phase out” inefficient fossil fuel subsidies, making it the first-ever UN climate agreement to mention fossil fuels, which are largely responsible for the climate crisis.

In Friday’s draft, one sentence encouraged countries to phase out and “rationalize” inefficient fossil fuel subsidies, which appeared to be a step backward from Glasgow.

Money, money, money

How climate finance works - and more importantly doesn’t work for many countries - has been another major issue at Cop27.

Barbados Prime Minister Mia Mottley, and other leaders of small island states and vulnerable countries, want an overhaul of the Multilateral Development Banks (MDBs) and other international financial institutions which lend money to help countries recover from devastating impacts like hurricanes and extreme flooding - but do so on vastly inequitable terms.

Barbados Prime Minister Mia Mottley speaks at Cop27 (Copyright 2022 The Associated Press. All rights reserved)

The Cop27 draft makes reference to these demands, calling for MDBs to reform “practices and priorities” to reduce the cost of borrowing for climate projects in developing countries, and invest more in adaptation plans.

It also “urges” MDBs to align their operations with the Paris Agreement, and climate change emergency.

Notably, the draft “expresses grave concern” that rich countries have failed to meet their 2020 pledge of providing $100bn in climate finance per year to support poor countries, and “urges” them to do so.

It also states that a roadmap should be developed to deliver on another pledge - doubling of adaptation finance by 2025.

This article has been updated