New COP27 draft: References to carbon budget, phasing down fossil fuels removed

A new draft of the deal being discussed at the UN Climate Change Conference (COP27) in Egypt’s Sharm El Sheikh was released on the last day of the negotiations on Friday morning following overnight negotiations, and closed-door meetings. There are still placeholders for important agenda items such as loss and damage finance, the new collective quantified goal for finance (post-2025), and adaptation fund replenishment, meaning a logjam in negotiations over these issues continues.

The first draft on Thursday appeared to prevent efforts of developed nations to shift some of their action and funding to developing countries such as India and China. It appeared to impede consensus before the Friday deadline.

The new draft has been reduced from 20 to 10 pages and has been toned down with the removal of references to important issues for developing countries including disproportionate consumption of the carbon budget, and the need for developed nations to attain net negative carbon emissions by 2030. The reference to 785 million people with no access to electricity has also been removed.

A developing country negotiator said a lot of issues remain unresolved and that they can expect fireworks over the EU and the US’s proposal to expand the donor base and dilute the categorisation of developed and developing countries. This will be unacceptable to China and India, the negotiator said.

On 1.5 degree goal

The new draft recognises the impact of climate change will be much lower at the temperature increase of 1.5 degrees Celsius compared with 2 degrees Celsius. It reaffirms the resolution to pursue efforts to limit the temperature increase to 1.5 degrees Celsius compared to pre-industrial levels.

The draft notes this requires immediate, deep, and sustained reductions in global greenhouse gas emissions. It calls accelerated financial support for developing countries from developed nations and from other sources a critical enabler to enhancing mitigation action.

The earlier 20-page text retained the distinction between rich and poor nations. It highlighted the Paris Agreement principles of “equity” and “common but differentiated responsibilities (CBDR)”, relating to the fundamental understanding that countries will act as per their national circumstances and respective capabilities.

It cited the goal in the agreement of holding the increase in the global average temperature to well below 2 degrees above pre-industrial levels and pursuing efforts to limit the temperature increase to 1.5 degrees above pre-industrial levels.

On coal

The same language on coal has been retained in the new draft, which calls for enhancing the share of renewable energy in the mix at all levels as part of diversifying energy mixes and systems. It encourages continued efforts to accelerate measures towards the phase-down of unabated coal power. The new draft seeks to phase out and rationalise inefficient fossil fuel subsidies in line with national circumstances. It recognises the need for support towards just transitions.

India’s call to treat all fossil fuels equally has been ignored. India on Thursday said focusing on one fossil fuel is prescriptive and it is not okay with such an approach.

“It is important to remember there is the same coal language in Glasgow Pact and in the G20 communique. So it is difficult to undo it completely,” said an observer at COP27.

There is no reference to curbing fossil fuel fuels like oil and gas on which developed countries are dependent. The text notes meeting the 1.5 degrees goal requires immediate, deep, and sustained reductions in global greenhouse gas emissions.

On loss and damage

The new text welcomes the agreement for the first time to include a sub-agenda item titled “Matters related to funding arrangements responding to loss and damage associated with the adverse effects of climate change including a focus on addressing loss and damage” under the agenda titled “matters related to finance”.

It calls this a reflection of the wide global consensus around the grave situation in relation to loss and damage and the need for effective funding arrangements. But the issue has not been resolved and there are divergent views on what this facility should be like.

The EU proposed a loss and damage funding facility from a broad donor base to only support the most vulnerable countries as the logjam over one of the contentious issues on the agenda of COP27 continued till late on Thursday evening.

Observers and negotiators earlier this week said both the US and EU were looking to expand the donor base to include “high income” and “emerging economies” including China and India, ignoring the Paris Agreement provision that climate finance will flow from developed to developing nations.

The EU proposed to establish a loss and damage response fund for the most vulnerable countries through the CMA (Conference of the Parties serving as the meeting of the Parties to the Paris Agreement) and under Article eight of the pact. “This fund would be established at this [Sharm El Sheikh] CMA and be designed to respond to the needs of the most vulnerable countries to the adverse effects of climate change. The details of this fund will be designed in accordance with a work plan also to be agreed upon at the CMA and in a way that would enable it to receive financing from sources from a broad donor base. It will be one part of a mosaic of solutions including looking into debt and the multilateral development banks,” said EU’s climate policy chief Frans Timmermans at a COP27 Presidency’s informal stocktaking.

On climate finance

The new draft refers to the non-delivery of climate finance compared to the scale of funding required by developing countries. It notes global climate finance flows are small relative to the overall needs of developing countries. Global climate finance in 2019–2020 was estimated to be $803 billion. This amount is 31–32% of the annual investment needed for the global temperature rise to follow a well below 2 degrees or a 1.5 degrees pathway.

This level of climate finance is also below what was expected in light of the investment opportunities identified and the cost of failure to meet climate stabilisation targets.

The text urges developed country parties to provide enhanced support, including through financial resources, technology transfer, and capacity building. It asks them to respect both mitigation and adaptation and encourages others to provide or continue to such support voluntarily.

Experts said there is nothing new or powerful in the new draft. They said the main fight revolves around expanding the donor base for mitigation, adaptation, and loss and damage finance likely to be negotiated on Friday.

Diego Pacheco, Bolivia’s negotiator, and the Like-Minded Developing Countries spokesperson, said developed countries do not want to provide financial resources to the developing nations and are trying very hard to open new ways for the provision of finance. “...we witnessed efforts by developed countries in...the negotiation process...to dilute all the agenda items...”

He said it is really problematic to hear interpretations of the international climate regime and of their obligation or responsibilities for solving this climate crisis. “...we have serious concerns...because developed countries are diluting and deleting decisions regarding equity and common but differentiated responsibilities.”