With COP27 over, here’s a look at five key takeaways from the more than two-week climate talks involving nearly 200 countries.

1. New Loss and Damage Fund

Climate change causes inequalities and worsens them. Rich countries made their fortunes by using fossil fuels, leaving poor countries that did not benefit from those emissions to pay huge bills for climate impacts. After decades of calls to compensate for the climate sacrifices made by developing countries, COP27 finally produced an agreement to create a fund to deal with losses and damages.

But this progress comes with huge question marks. No sums of money were actually paid in Sharm El-Sheikh. It remains to be decided next year at COP28 in the United Arab Emirates on the rules and the way the fund will function. Henry Kokofu, a Ghanaian politician and head of the Climate Vulnerable Forum, warned that without further concrete steps there was a risk of creating only an “empty bank account”.

2. Possible changes coming to multilateral lenders

For the first time, the COP meeting included a call to reform the global financial architecture to better align with climate goals. The idea is to refine the mandates of multilateral development banks, such as the World Bank, and international financial institutions, such as the International Monetary Fund. This would provide greater funding for energy transition projects and adapt to a warming planet.

“The moment is right,” said Laurena Tubiana, Chief Executive Officer of the European Climate Foundation. “Climate impacts are beginning to be perceived as a macroeconomic risk.

3. Struggle for the essence

The issue that made negotiations difficult and made COP27 the second longest UN climate summit was the “mitigation agenda”. The idea is to ensure that countries set clear targets, plans and metrics for the speed of emissions reductions to meet climate targets. Until now, commitments have not followed the same standard, with countries using different criteria and bases for their targets. Without a common system, those pledges may not translate into actual emissions reductions.

Climate-promoting countries wanted to run the program until 2030. But opposition from lagging countries led to a compromise to run until 2026, with a chance to extend it. If the program succeeds, it could have better results than countries simply agreeing to political statements about phasing out all fossil fuels.

4. Weak rules for carbon markets

Countries agreed at COP26 to create rules that would allow countries to trade carbon credits. This means that Norway, for example, could pay to preserve Indonesian forests, and in return take emissions off Norway’s carbon book. At COP27, negotiators laid out a more detailed framework for how such a carbon market would work, including allowing corporations to buy credits from governments.

Experts have warned that the rules are still not strict enough. “Glasgow’s carbon market spirit has morphed into Sharm el-Sheikh’s counter-spirit, which risks haunting effective climate action for years to come,” said Sam Van den Plas, policy director at Carbon Market Watch.

5. The 1.5 °C target is in serious jeopardy

Despite attempts by major powers such as the US, India and the European Union, the Sharm el-Sheikh agreement failed to raise ambitions to reduce emissions. This could mean the world misses the 1.5 degree Celsius warming goal contained in the 2015 Paris Agreement. It calls for phasing out all fossil fuels (not just coal) and for global emissions to peak by 2025 (which likely to happen, according to the International Energy Agency) have been rejected by many oil-exporting countries.

Although phasing out all fossil fuels did not reach final adoption, momentum was building around an idea that wasn’t even on the cards before the summit. As many as 80 countries now support it, Timermans said, and the EU and others are expected to lobby on the issue in the coming year.

As the world grapples with an energy crisis and high fossil fuel prices fill the coffers of major producers, the political impact of carbon forces was on display at COP27. Analena Berbock, Germany’s foreign minister, expressed frustration that “a number of major broadcasters and oil producers have stopped communicating.” That fight is likely to get tougher as COP28 is being held in the United Arab Emirates, an oil and gas giant.

E2 portal (Bloomberg)

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