The Notable Victory on Loss and Damage at COP27

There is something in the modern radical mind that wants the climate negotiations to fail. Such a failure, after all, would seem to prove that this wretched system cannot be reformed, that only a revolutionary break can save humanity's future.

COP27, the climate conference in Sharm El Sheik in Egypt, was not, however, a failure. I say this despite the fact that my inbox contains, among much else, an alert from an international organization I generally support (and will not name) that tells me that "For the 27th time in its history, COP, the United Nations Convention on Climate Change, has failed. The rapid degradation of our planet by our industrial economy will not be held in check."

Alas, this email's date stamp, November 18, places it two days before COP27 ended. During those two days, the rich countries that had blocked the establishment of the Loss & Damage fund folded under immense political pressure, thus allowing COP27 to finally create the fund.

The United States, the greatest of the miscreants, was the last to stand down. By some reports, it only did so after a last-minute threat by European negotiators to abandon the talks. But despite this win, the endless U.S. stalling did immense damage. In particular, it allowed the Egyptian presidency, no friend of humanity and nature, to play out an end-game gambit in which, finally, the core mitigation text--which is far too weak--couldn't be challenged without putting the new fund at risk.

This was a failure, no doubt about it. But it was not a systemic failure. It wasn't the fault of "the COP"--as in "COP27 is a COP out," one of the least inspired of the recent headlines--unless this accusation extends to the UN system itself, which condemns the climate talks to consensus decision-making. But blaming the UN lets the governments themselves off the hook, and this will not do, because the governments could yet change the rules.

Still, the Loss & Damage fund is a very big deal, or will be if it is adequately funded. As Mohammed Adow, the executive director of Power Shift Africa, a key civil society group based in Kenya, puts it, "What we have is an empty bucket. Now we need to fill it so that support can flow to the most impacted people who are suffering right now at the hands of the climate crisis."

Not only is a great deal of loss and damage finance needed, so is a great deal of mitigation finance. And adaptation finance. And just transition finance. But after COP27's loss-and-damage finance battle, something very large has shifted. Back in the old days, when it was still possible to honestly imagine that mitigation alone would be sufficient, it was also possible to argue that the redirection of private capital flows world more or less suffice. But those days are over. Today, no one honestly believes that a meaningful flow of loss-and-damage finance will come through private channels. And this realization spills over to the transition portfolio as a whole.

The decision to create the Loss & Damage fund has thus queued up the real financing battle, in which international public finance takes center stage. Further, it did this even while it pushed the linked battle to phase out fossil fuels to a qualitatively new level. That battle was lost at COP27, but this was just an initial skirmish. Indeed, at COP27, the government of India, which will soon hold the G20 Presidency, came out, again and unambiguously, for the "phase down" (not "out") of all fossil fuels, not just coal. The politics here are complex and fraught, and they promise to remain so, but this was unambiguously good news. The old days in which all major G77 politicians could be expected to reflexively argue that fossil energy is essential to development are, it seems, over.

The COP Context

COP27 was a Childhood's End moment. But it sure didn't feel like one on arrival at Sharm El Sheik. The COVID pandemic set the stage, and so had a host country that has, since the Arab Spring, settled into an old-school authoritarianism that has oscillated between brutality and incompetence. Meanwhile, Russia's war in Ukraine had roiled global food and energy markets, increased the short-term use of coal, drawn fleets of LNG tankers to Europe, and seriously threatened to undermine the precious little mitigation ambition that had been won last year in Glasgow.

Ambition had in fact lagged in the run-up to the COP: 2022 was on track for record emissions, and the UN had just warned that "no credible pathway" to the official goal of a 1.5C maximum global temperature increase still existed. Given this, the tin-pot realism that had attempted to frame COP27 as an "implementation COP" was basically dead-on -arrival. So too, more unfortunately, was the effort to frame COP27 as an "African COP" that would be defined by battles over gas, battles in which national regimes such as Senegal and Congo sought to develop their oil and gas resources--even if the resulting fuels would be exported to Europe and Asia rather than used to "develop" their own societies--while African civil society demanded a laser focus on justice-first renewable energy leapfrogging.

The themes resounded at the COP, but quickly gave way to larger ones. The developing countries--and importantly the global civil society networks--had decided to go all in on the loss-and-damage showdown, and this was even before the Pakistani floods ratified the wisdom of this decision. There was also the Global Adaptation Goal, which could not be forgotten. And the Global Stocktake, an essential component of the Paris "ambition ratchet." And on the horizon was the New Collective Finance Goal, of which more soon.

And above all there was the challenge of "keeping 1.5C alive."

It was soon obvious that together, the loss-and-damage and global mitigation battles would entirely dominate the proceedings. These two are tightly bound together, and neither makes any sense without the other.

"Loss and damage" is that which lies beyond adaptation, and the only way to limit its demands is to stabilize the climate system as quickly as is humanly possible. Despite all the optimism and spin about carbon dioxide removal and other "negative emissions" technologies, the only real chance at rapid stabilization lies in very rapidly phasing out fossil fuels. Spoiler alert: this cannot be done unless it is done fairly. Both of these challenges have everything, or almost everything, to do with money, and COP27 marked the moment in human history when this became altogether obvious. Further, this knowledge really does change everything. To have any real chance of success of stabilizing the climate system, one of the oldest and most difficult questions of global climate justice must be answered: Who pays?

The 1.5C Goal

Just before COP27, David Wallace Wells, now stabled at The New York Times, went out of his way to explain that 1.5C is no longer achievable. The Economist then did him one better by adorning its COP27 cover with a lurid image of the Earth pierced by an arrow, and the caption "Say Goodbye 1.5C."

But in Sharm El Sheikh, below the surface was a more complex and challenging truth, in which the 1.5C goal appears not as an impossible dream but rather as a strong weapon that would be foolish to just give up. Bluntly, and perhaps paradoxically, the chances of avoiding an overshoot of 1.5C are fading. But it's possible to reframe the 1.5C goal in the concrete, visceral terms of fossil fuel phase-out. The number itself, after all, was never the point, but only an instrument by which to vividly and productively invoke the mind-boggling ambition needed to stabilize the climate system in time, and the social and political transformation necessary to make that ambition real.

For a while, the 1.5C goal did just this, and beautifully. Think, for example, of the warnings of the IPCC's Special Report on Global Warming of 1.5C, which in 2018 said that "Limiting global warming to 1.5degC would require rapid, far-reaching and unprecedented changes in all aspects of society," and that "there is no documented historic precedent for their scale." Recall, particularly, that the IPCC translated these statements into numeric terms, reiterated in its Fifth Assessment Report, that to have a 50 percent chance of holding warming to 1.5C, emissions must drop by about 50 percent by 2030. These numbers were extremely powerful, for they sketched out an easily understood short-term goal that would establish a defensible "net zero" pathway. But, alas, even in the short time since 2018, it has gotten harder to imagine change actually happening at the necessary pace, and this despite the fact that, technically, there's enough money and the science to make it so.

What's to be done? Numbers alone do not give the full picture. If, however, the idea of a fossil fuel phase-out--or, rather, the idea of a fair fossil fuel phase-out--is added, the narrative shifts. No longer is 1.5C merely an abstract target distilled from vast bodied of complex science. Now there are the nuts and bolts of desperate prudence and rational capital expenditure. The pivot was marked by the International Energy Agency, which has taken to emphasizing the fact that to achieve 1.5C requires an immediate cessation of all investment in fossil fuel infrastructure anywhere in the world. This key point has as much to do with international justice as it does with planetary physics.

COP27 marked the point where equity finally, decisively, took center stage. Never before had the term "fossil fuel phase-out" so often been preceded by the word "fair." It came as one of those wonderous moments of learning that mark living social movements, in which suddenly everybody knew that the fossil fuel phase-out could only happen if it was simultaneously a shift towards developmental justice. Everybody, that is, except the wealthy country delegations, who still insisted on pounding on about the necessity of the 1.5C goal, in itself, as if it were a mere implementation problem, even though they had absolutely failed to deliver, or even seriously consider, the finance and technology transfer breakthroughs that might make it achievable. Even though they tried, at every opportunity, to leave out all references to equity.

Brandon Wu, the director of policy and campaigns at ActionAid USA, was notable for channeling his irritation into a scathing op-ed. It goes to the core of the decarbonization challenge, and the hypocrisies that pretend that rapid decarbonization is achievable without centering equitable international burden-sharing:

Objections from developing countries to the current language emphasizing the 1.5-degree goal is fundamentally premised on equity concerns--especially in light of all this developed country hypocrisy. Statements like "all Parties must increase efforts towards 1.5-compatible pathways" are completely devoid of equity. They erase history, ignoring that developed countries have been polluting for more than 150 years, in favor of putting all countries at the same starting point regardless of their historical emissions or their current levels of development.

Without any equity principles, where is the balance of efforts going to fall? If history is any guide, developed countries will not do their fair share, and will push off their obligations onto the backs of the poor. They will continue with their fossil fuel expansion plans and blow through the remaining carbon budget for a 1.5-degree world, all the while failing to provide the finance and technology developing countries need to have any chance of making just transitions a reality in their own economies.

The Centrality of Equity

COP27 did not formally advance the anti-fossil effort, though over 80 countries--including even the United States and India--came out in favor of a "phase down" of all fossil fuels. Despite all the politics and complex dynamics below the surface, the fact of these declarations remains, and remains stunning. Civil society, for its part, left Sharm El Sheikh with new focus and energy and united around one key point in particular: no adequately rapid phase-out is possible unless the equity challenges posed by extremely rapid decarbonization in this extremely unjust world are faced with far more bravery than hitherto seen.

The challenges here have leapt from the pages of the climate equity literature (see for example, the Civil Society Equity Review's 2022 report The Imperative of Cooperation) and into the pages of actual diplomatic history. The COP27 decision text itself establishes an ad hoc "transitional committee on the operationalization of the new funding arrangements for responding to loss and damage and the associated fund," which is charged with making its initial report by COP28. Which by the way will be in Dubai, in the United Arab Emirates. Which is going to be amusing as well as maddening, because it's not going to be easy for the UAE or Saudi Arabia or any of the Middle East's oil exporting states to insist that they are "developing counties" and should not therefore be contributors to global climate transition funds, not while the opulence of the Dubai cityscape sets the background.

Or, rather, it will be easy, but it won't plausible.

There's a distinction to be made here between the long term and the short. In the long term, achieving anything like true sustainability will require developing some robust sort of planetary economic and ecological justice. But rapid decarbonization is needed in the short term. This means an end to disingenuous rich-world fantasies of a rapid global transition in which each country--whether it be rich or poor--is essentially on its own. But it also means finding pragmatic ways forward, ways that do not assume that the trillions of dollars needed for international transition financing are soon going to pass through the national treasuries of global north countries that, frankly, are embroiled in low-level civil wars with a reawakened neo-fascist right. And here too COP27 offered some long overdue focus, for it was thick with ideas for international finance workarounds and multilateral mobilization. No prior COP saw anything like this discussion of "transformational climate finance."

Several points are already clear. One is that the decision text has been seeded with references to developing country "debt burdens," which affirm the need to avoid exacerbating these burdens with loan-based climate financing mechanisms. Another is that there is a great deal of buzz about the "reform" of the multilateral development banks, a prospect that cannot be passed over, though the history here does not inspire a great deal of confidence. A third is that the Bridgetown Initiative floated by the Prime Minister of Barbados Mia Mottley has garnered a terrific amount of attention and demonstrated just how great the desire for visionary pragmatism is. If the elites can actually come up with something real--some quasi-Keynesian mechanism that can actually mobilize hundreds of billions in climate finance--it would be widely welcomed. And, yes, a global tax on fossil energy profits would be a great place to start.

In the longer term, true transitional justice is in order, and it's going to be more challenging. This issue too exploded at COP27, which saw an unprecedented interest in climate reparations, which notably disconcerted U.S. climate envoy John Kerry. This reparations discussion returns, inevitably, to the UN Framework Convention's keystone equity principles of "common but differentiated responsibilities and respective capabilities." The issues here will not fade away, especially now that the New Finance Goal is on the table and the ultimate taboo topic of "expanding the contributor base" has been cracked open. Without returning to first principles, how can U.S. and Chinese fair shares be compared?

Because of COP27, national fair shares are now on the agenda, if only as the background to an inevitable debate about pragmatic ways forward. Future meetings will determine these next steps--at the IMF, at the World Bank, at the big conclave that Mottley and France's Emmanuel Macron are spinning up for next year, and of course at COP28.

One last point: about the tragedy of the situation, the tragedy that focuses the conversation on ways and means--finance and technology--instead of mobilization and solidarity. In other words, the debate is on money rather than an emergency phase-out of fossil fuels, a phase-out that simultaneously lifts up the poor and creates new development paths around the world.

At COP27, the crunch came down to finance and fossil fuels, and this is likely to happen again and again, even as loss and damage remains forever on the stage. These are the key pieces, and all of them must be addressed as part of an honest and productive conversation about a rapid fossil fuel phase-out that is fair, or at least fair enough. The only option is to talk about developmental justice--for everyone--despite the terrifying waves of loss and destruction that can no longer be avoided.