Energy Charter: EU wants to postpone modernization
Dear reader,
With the traditional hammer blow, Sameh Shoukry ended the second-longest climate conference on Sunday morning at 9:30 in Sharm el-Sheikh. Europe was unable to get its good proposals into the final documents. The demands of the EU did not really stick in the negotiations of the last days and hours. Especially not with those who, according to EU negotiators, would benefit most from these proposals: The island states and the least developed countries.
The discussions around loss & damage have shown in the past two weeks what Europe lacks: political clout. Instead of breaking the G77/China bloc with the European compromise proposal, it became clear how isolated the EU often is in the climate-cosmos. It took days before the first representatives of island states showed up at Europe’s side. Bernhard Pötter analyzes how an agreement on loss and damage was finally reached.
Above all, there often isn’t the necessary trust in their European partners to forge new alliances. The most vulnerable states are skeptical whether Europe will make money available despite its grandiose announcements. They know that Europe often stands alone in the geopolitical climate cosmos. Alexandra Endres and Bernhard Pötter explain the different positions of the countries during this COP.
At the end of COP27, Europe’s weakness was again apparent. The EU had previously invested a lot of political capital in the mitigation work program. The result is hardly worth mentioning, as we show in our analysis of the COP results.
After the eventful COP weeks, the next issue of Climate.Table will be published on Thursday.
Your Lukas Knigge
Feature
From historic to disappointing: the decisions of Sharm el-Sheikh
Germany’s chief negotiators: Jennifer Morgan (left) and Annalena Baerbock during the closing plenary session of COP27.
Just a week ago – at the halfway point of COP27 – it was considered almost impossible that a fund for loss & damage would come to be. Now it has been decided and is to come next year. It is a historic decision, as developing countries have been calling for a financial instrument to address loss and damage resulting from climate change for 30 years. Christoph Bals, political director of Germanwatch called it an important breakthrough. He says the German government was instrumental in getting the EU and other industrialized countries to warm up to this fund.
A new fund for particularly vulnerable developing countries
Other financing measures outside the fund
New additional funding from a variety of sources, including the World Bank and the International Monetary Fund
The establishment of a transition committee to clarify details and make proposals between now and COP28
On Sunday night, there was still wrangling over whether only “particularly vulnerable” developing countries or all developing countries should be eligible to receive funds from the loss and damage financial instruments. A formulation that classified all developing countries as of 1992 as recipient countries was dropped shortly before the closing plenary of the COP.
Just as controversial was the question of who should provide the funding. The EU and later also some island states insisted that new financial sources must be found – so far, so vague. Originally, the EU demanded to expand the group of contributing countries. Thus, emerging economies that are now wealthy, such as China, India, South Korea, Indonesia, Mexico and oil-rich nations, would also have had to pay into the fund. “The EU wanted to make China and the Gulf states contributors – but in the end, it didn’t have the courage for the necessary confrontation,” analyzes David Ryfisch, head of the International Climate Policy team at Germanwatch.
While the new formulation does not exclude the expansion of contributors, it is not particularly explicit either. It is now up to the transition committee to propose new funding sources for loss and damage. This means that the debate on whether China, as the historically second-largest emitter, must also bear responsibility for climate damage is by no means over, but merely postponed until COP28.
Mitigation work program: 1.5-degree target at risk
The roadmap for global greenhouse gas reductions was of enormous importance to Europeans at the COP. It was supposed to be an ambitious path to achieving the 1.5-degree target. But it falls short of many expectations. “In Glasgow, we were still able to maintain the 1.5. At this COP, we are at a juncture where it could lose,” said Franz Perrez, Switzerland’s chief negotiator.
Urges countries to align national climate targets with the 1.5-degree path
Establishes sectoral consideration of GHG reductions (as per IPCC report)
Calls for annual progress reports at COP
Calls for funding for Just Energy Transition Partnerships (JETPs).
The industrialized countries would have preferred even more ambitious targets, which they, as the main emitters, would most likely have had to implement themselves. But even less ambitious targets would have been possible: An earlier version of the text stated that the work program must not lead to higher climate targets. An absolute no-go for the EU, which it also made clear to the Egyptian COP presidency. Without higher climate targets (NDCs), the 1.5-degree target would remain out of reach. The EU prevailed, but at what price?
Cover decision: Shoukry’s legacy
The price may have been horse-trading, as the final text – called the cover decision – falls short of Glasgow and will likely be a bad memory of European negotiators for a long time to come.
reducing global emissions by at least 43 percent by 2030 compared to 2019 levels
clean and equitable transition to renewables
expansion of “low-emission and renewable” energies
The last point in particular leaves many questions unanswered because “low-emission” also means gas and nuclear power. EU climate commissioner Frans Timmermans said on Sunday that only gas with CO2 capture is considered “low-emission”. However, David Ryfisch of Germanwatch estimates that other countries will interpret the wording differently.
However, there are also positive signals from the Sharm el-Sheikh Implementation Plan. For example, the accelerated expansion of renewable energies in the Cover Decision is also considered progress in EU circles. What is not in the cover decision is much more important than what is in it:
no emissions peak in 2025 (EU call)
no sentence on methane
no fossil phase-out/down
An alliance of 80 countries (including the US, India and the EU) firmly tried to build on the ambitions shown in Glasgow on Saturday night. They explicitly called for a “phase-out” of all fossil fuels. But COP President Sameh Shoukry ignored the push, as opposition, particularly from oil-rich countries like Saudi Arabia, was too strong. Instead, the presidency submitted the now-agreed text to a “take it or leave it” vote, says Christoph Bals. In the end, after a night of negotiations, at 7 a.m., none of the 80 countries voiced any objections.
Annalena Baerbock
China
Climate Policy
Climate protection
COP27
EU
Loss and Damage
Mitigation
Loss and damage: first ignored, then rejected, and ultimately celebrated
Loss and damage from climate change have increased sharply. What was known for a long time was ignored by official climate policy for almost as long. Especially recently, however, awareness of the problem has increased enormously: record heat in India and Pakistan, floods in Nigeria, the drought in the Horn of Africa, the flood disaster in Pakistan – and not least the devastating flood in the Ahr valley last year. This set the stage for the COP27 decision for a new fund. The road to this point was long and winding.
Long run-up to loss and damage
It was already clear at COP26 in Glasgow: Loss and damage would dominate the next conference. Scotland was the first industrialized country to promise money for this – two million British pounds, and that had a high symbolic value. Until now, the global North had always refused it – for fear of high claims, but also of lawsuits for damages. The “Glasgow Dialog” was supposed to make it clear that it would be about money, not just talk.
The issue was topical at the Bonn “interim conference” in June. The pressure became so strong that the topic was actually put on the Sharm el-Sheikh agenda.
At the Petersberg Climate Dialogue in July, it was host Germany that made loss and damage finance, as it is officially known, the topic. Red lines were explored in the informal discussion format.
They looked like this in the summer: The EU did not want a fund, but a “mosaic” of different financing options. The “Global Shield,” a German idea at the G7 (Climate.Table reported), is intended to guarantee vulnerable countries quick aid in the event of climate damage. The program was launched at COP, but was not officially intended to compete with L&D.
USA skeptical, but L&D becomes agenda item
The US, in turn, are traditionally skeptical of climate money for foreign countries, even though their fair share of it would have to be about 40 billion dollars a year instead of 11. Climate czar John Kerry warned several times that there would be no American tax money for the L&D fund. Instead, he presented a mechanism ETA at COP that would allow companies to bring billions to countries of the Global South through the private market for carbon emissions (Climate.Table reported).
In the summer, German Climate Secretary Jennifer Morgan, along with Chilean Environment Minister Maisa Rojas, were tasked by the COP Presidency to act as “facilitators” in this difficult area in the negotiations.
Shortly before COP, the states decided to indeed make loss and damage an “agenda item” and thus put it on the official agenda. This created a good atmosphere at the outset and increased the visibility of the issue. Seven other topics fell under the table in return – including the redirection of all financial flows toward global transformation in accordance with the Paris Agreement. Thus the EU, to which this point is very important, made another concession.
The negotiation process in Egypt
Shortly after the start of the conference, the chair of the AOSIS group, Gaston Browne, caused a stir: He called for China to also participate in future climate policy financing. Considering it came from a member of the G77/China group, that was quite a call. Browne backed down. Nevertheless, the signal was set.
On Monday of the second week, there was a secret meeting of the “High Ambition Coalition” in a hotel of ministers from the EU, island states and least-developed countries. The meeting was supposed to produce a ministerial statement, observers say. But that did not materialize, partly because the EU did not move enough on the fund. The meeting ended in disappointment.
The next day, the G77/China officially presented their maximum demands for the fund: Only industrialized countries should pay in, all developing countries should benefit, and the decisions should rest with the developing countries. An unacceptable advance (Climate.Table reported).
On Wednesday, Foreign Minister Annalena Baerbock arrived at the conference as Germany’s lead negotiator. She expressed skepticism about a quick decision on a fund: “This conference is perhaps not the right place to decide on this,” she said.
EU presents compromise proposal
On Thursday evening, however, the EU decided to change its position. Climate Commissioner Frans Timmermans told the plenary session that a fund was being sought (Climate.Table reported). However, with conditions: Only the most vulnerable countries would get money, funding should be provided from a “broader base” – i.e. also from oil states and China. And there should be progress on the “work program” on climate protection by 2030, the Europeans demanded. “This is the final offer,” Timmermans said.
What the EU hoped for did not happen: On Friday, the last day of the conference, no major country of the G77 dared to come out of the woodwork to officially welcome the EU proposal. Frustration spreads in the EU delegation.
Friday morning, a strange paper made the rounds: In it, the US, UK, Australia and EU apparently propose a watered-down form of the EU proposal. But the EU and Australia declared to have never agreed to this proposal. How the EU got into the letterhead of the paper remains unclear at the conference.
COP presidency with own ideas
On Saturday, the COP Presidency published the first draft text. Regarding the L&D fund, it was unacceptable for the EU: All red lines were erased in it: Instead of the most vulnerable countries, the money should be available to all developing countries. Instead of expanding the donor group, there was only talk of a “wide and extended variation” of funds. “We cannot agree to this text,” Austrian Environment Minister Leonore Gewessler said late Saturday night.
Internally, the EU played out what a failure would look like – and who would end up with the damage if the conference and the fund failed. Does the EU want to be guilty of torpedoing such urgently needed aid for the poorest of the poor? And: Will the time window for this still be open at the next COP?
Saturday evening: The “High Ambition Coalition” comes together for a declaration: Representatives from the EU, Norway, Chile, Maldives, Colombia, among others, stand behind the EU and its demands for a fund.
After long and fierce protests and negotiations, the final version contains positions acceptable to the EU. The fund is decided.
Pakistan’s Climate Minister Sherry Rehman drew a positive conclusion, saying, “We have struggled for 30 years on this path and today in Sharm el-Sheikh this journey has achieved its first positive milestone. It is a downpayment and investment in climate justice.”
COP27
Loss and Damage
Four climate tasks for 2023
The departure from fossil energy
Mankind is on a path towards 2.7 degrees – this COP could not change that. There were hardly any new NDCs. And the mitigation work program that the European Union wanted to promote in Sharm el-Sheikh remained lackluster in the end. The program was supposed to set out a process by which industrialized countries would gradually tighten their climate targets, in exchanges between high-level government representatives and with annual reviews. But the EU was unable to prevail.
The gradual phase-out of all fossil fuels instead of just coal, as agreed in Glasgow, also did not make it into the final document, although many countries called for it. The reference to climate science and the 1.5-degree target remained weak.
In the coming year, it will be all the more important to pursue the decarbonization of the global economy. The handover of the G20 presidency to Indonesia offers a first opportunity. The country has just signed a Just Energy Transition Partnership (Climate.Table reported) with several industrialized countries and intends to prioritize the transition to sustainable energy during its G20 presidency.
Redirect global financial flows
It is a goal of the Paris Agreement that has received too little attention so far: Article 2(1)c calls for bringing financial flows worldwide into line with climate goals – for example, directing investments away from fossil energy toward climate-friendly technologies and also reviewing government subsidies for fossil fuels. The issue did not make it onto the agenda.
Nevertheless, there were discussions at COP27 about reforming development banks, the World Bank, and the International Monetary Fund, for example, based on Barbados President Mia Mottley’sBridgetown Initiative. French climate diplomat Laurence Tubiana, an architect of the Paris Agreement, noticed “momentum behind the push to restructure the World Bank and IMF to make them not only fairer for the vulnerable but also so that they meaningfully support renewables.”
Mottley will certainly continue to campaign for her initiative behind the scenes. The spring meeting of the International Monetary Fund and the World Banknext April could be an occasion to continue talking officially about redirecting global financial flows.
Financial mechanisms for loss and damage
There is now a fund from which compensation payments for loss and damage are to be made. How it is to be structured is the big question that is likely to shape the next climate summit – and the working sessions that will take place between the two COPs under the UNFCCC. Closely related, however, is a much bigger question:
What is the status of China?
It’s an age-old dispute at international climate negotiations. Until the Paris Agreement was signed, China refused any commitment (Climate.Table reported) to cut domestic emissions. Instead, it joined other emerging economies in pointing to the historically rooted obligation of industrialized nations. The Paris Climate Agreementbroke down the front between industrialized and developing countries.
At COP27, it again surfaced clearly: China – now a major power and the world’s largest emitter – insisted on its status as a developing country under the UNFCCC process. This had tangible consequences for the negotiations on loss-and-damage offset: China refused to pay into a fund. Instead, it wanted the opportunity to receive compensation payments itself.
A new working group is now dealing with the technical details of the Loss and Damage Fund and the financial mechanisms that are to be built around it. But China’s power ambitions are also likely to shape climate policy in the coming years. Alexandra Endres/Bernhard Pötter
China
Climate Policy
Climate protection
COP27
COP28
Decarbonization
Geopolitics dominated climate policy
After a night shift and 37 hours later than originally planned, COP27 ended and the delegates managed to reach an agreement in Sharm el-Sheikh after all. It was preceded by tough diplomatic disputes. Just the day before, the European Union threatened to break off the negotiations and let the entire conference fail. Several delegations drew red lines. For a short time, the summit was on the brink.
Russia’s reluctance
Geopolitics was to blame – but differently than expected. The most visible line of conflict was between the old industrialized countries, which allied themselves with the particularly vulnerable countries on some issues, and China, which partly allied itself with oil states such as Saudi Arabia.
Before the COP, it appeared that the Russian war of aggression in Ukraine would complicate the talks. The conflict between China and the U.S., which had suspended their climate talks in the summer because of tensions over Taiwan, could also have put a strain on the COP. However, both sources of tension hardly played a role in Sharm el-Sheikh. Russia barely made an appearance throughout the summit. Instead, another conflict erupted.
China: Has the biggest carbon emitter pay?
The first question had hung unresolved over the climate summits for decades: What commitment to climate action and managing its consequences must China make? Seven years ago, the fact that China also agreed in the Paris climate agreement that all countries must reduce their emissions in the long term was a major success. Now, behind the scenes in Sharm el-Sheikh, the debate began about whether China, as an economic and climate superpower, can continue to dodge climate aid funding commitments in the long term.
A second fundamental dispute flared up over fossil energy sources. The oil states used the Ukraine war and the ensuing energy crisis as an opportunity to push for a renaissance of oil, coal and gas. In the end, their attack was repelled. But it prevented any progress on emissions reductions.
Here’s how the individual blocs negotiated at COP:
The EU had a big plan: To present itself as a climate superpower and stand up to China and the USA. But the surprise coup on the penultimate day of the conference was only half successful. The EU offered to accept a loss-and-damage (L&D) fund with conditions attached: To reserve the money only for the most vulnerable, to get more serious climate protection and at the same time to urge China and the oil countries to finance upcoming tasks – now the fund is coming and the demands are strongly weakened in the resolution.
The USA only had a supporting role at COP27. The conference breathed a sigh of relief when it turned out that the Democrats could hold the Senate in the “midterms.” President Biden arrived and declared the US a climate change leader, but had nothing to offer to justify such a role other than the domestic 369 billion infrastructure program. The world’s richest country repeatedly said it had no money for international climate programs and rejected an L&D fund. At least the United States and China officially resumed talking about the climate. However, they did not show any signs of the feared coalition of slowdowns. The US momentum was perhaps also slowed down by the fact that climate czar John Kerry was isolated at the end of the conference – he had tested positive for Covid.
China also refrained from making big public appearances. In the meetings, however, the country and its allies made sure that COP did not become too ambitious. Beijing first rebuffed the EU’s attack, whose fund proposal was meant to divide the G77/China group into poorer nations most affected by climate change and rich “big emitters”. “There was nothing on the agenda here that would have really affected Chinese interests,” said Greenpeace expert Li Shuo. “The EU proposal was only political and was hardly reflected in the negotiating texts.” But the Chinese were not too loud either: After all, China will itself chair a COP – the biodiversity conference in Montreal in early December.
The oil and gas countries wanted to turn the “African COP” into a gas conference – with some success. Before the start of the conference, the African climate negotiators rejected the idea of glorifying new gas fields in Africa as a contribution to climate protection. But there were more lobbyists for gas and oil than ever before at COP, and panels and papers presented fossil gas as the main solution. With active help from the Egyptian presidency, the interests of neighboring Saudi Arabia and its allies were repeatedly given priority. India’s push to phase down all fossil fuels – not just coal – did not appear in the final declaration – even though 80 countries advocated it.
The G77/China group was under pressure, but only showed slight cracks. Right at the beginning, the chairman of the Alliance of Small Island States (AOSIS) demanded that China also be involved in financing an L&D fund – but then backed down. India’s proposal on fewer fossils found icy silence in the group. EU negotiators report that many small countries felt economically and politically coerced by China and did not trust the West – but therefore did not dare to leave the G77. So far, the strange alliance is holding, although conflicting interests are growing within it.
The High Ambition Coalition has risen from the ruins. The community of interests of climate protection pioneers, for example, the EU, Norway, sometimes the USA, and G77 states such as Indonesia, Brazil, Chile, Colombia or island states such as Tuvalu and Barbados, come together every now and then when things get serious: in 2015 at the Paris Agreement, this time to save the deal surrounding the L&D Fund. If this were a permanent group that reached across traditional divides, it could generate a lot of momentum. Alexandra Endres/Bernhard Pötter
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News
Energy Charter: EU wants to postpone modernization
The EU has no mandate to vote on the modernization of the Energy Charter Treaty on Nov. 22. A qualified majority could not be reached in the vote in the Permanent Representatives Committee on Friday. Germany, France, Spain and the Netherlands abstained. Accordingly, the EU cannot approve the modernization of the treaty at the Energy Charter Conference in Mongolia scheduled for Tuesday.
The EU Commission now wants to postpone the vote on modernizing the Energy Charter. It now works to remove the vote from the agenda of the ECT conference on November 22.
More and more votes for EU exit
Meanwhile, calls for the EU to withdraw from the Energy Charter are growing louder. With the vote on Friday, “the climate killer treaty has now also finally failed at the EU level. We call on the EU Commission to immediately initiate the exit!”, writes the Munich Environmental Institute in a press release.
This is exactly how MEP Anna Cavazzini (Greens) sees it: “This climate-damaging adhesion contract can no longer be saved. The EU must now also finally get out.” Since last week, a letter has already been circulating in which MEPs from the Greens, Renew, S&D and the Left call on the EU Commission to withdraw from the Charter.
Luxembourg also withdraws from the Charter
On Friday afternoon, Luxembourg also announced its withdrawal from the Energy Charter. “Even if the modernization of the Energy Charter Treaty leads to some progress, the treaty is still not compatible with the goals of the Paris Climate Agreement, as it continues to protect investments in fossil and nuclear energies,” criticizes Green energy minister Claude Turmes. Charlotte Wirth
Energy Charter: EU wants to postpone modernization
Dear reader,
With the traditional hammer blow, Sameh Shoukry ended the second-longest climate conference on Sunday morning at 9:30 in Sharm el-Sheikh. Europe was unable to get its good proposals into the final documents. The demands of the EU did not really stick in the negotiations of the last days and hours. Especially not with those who, according to EU negotiators, would benefit most from these proposals: The island states and the least developed countries.
The discussions around loss & damage have shown in the past two weeks what Europe lacks: political clout. Instead of breaking the G77/China bloc with the European compromise proposal, it became clear how isolated the EU often is in the climate-cosmos. It took days before the first representatives of island states showed up at Europe’s side. Bernhard Pötter analyzes how an agreement on loss and damage was finally reached.
Above all, there often isn’t the necessary trust in their European partners to forge new alliances. The most vulnerable states are skeptical whether Europe will make money available despite its grandiose announcements. They know that Europe often stands alone in the geopolitical climate cosmos. Alexandra Endres and Bernhard Pötter explain the different positions of the countries during this COP.
At the end of COP27, Europe’s weakness was again apparent. The EU had previously invested a lot of political capital in the mitigation work program. The result is hardly worth mentioning, as we show in our analysis of the COP results.
After the eventful COP weeks, the next issue of Climate.Table will be published on Thursday.
Your Lukas Knigge
Feature
From historic to disappointing: the decisions of Sharm el-Sheikh
Germany’s chief negotiators: Jennifer Morgan (left) and Annalena Baerbock during the closing plenary session of COP27.
Just a week ago – at the halfway point of COP27 – it was considered almost impossible that a fund for loss & damage would come to be. Now it has been decided and is to come next year. It is a historic decision, as developing countries have been calling for a financial instrument to address loss and damage resulting from climate change for 30 years. Christoph Bals, political director of Germanwatch called it an important breakthrough. He says the German government was instrumental in getting the EU and other industrialized countries to warm up to this fund.
A new fund for particularly vulnerable developing countries
Other financing measures outside the fund
New additional funding from a variety of sources, including the World Bank and the International Monetary Fund
The establishment of a transition committee to clarify details and make proposals between now and COP28
On Sunday night, there was still wrangling over whether only “particularly vulnerable” developing countries or all developing countries should be eligible to receive funds from the loss and damage financial instruments. A formulation that classified all developing countries as of 1992 as recipient countries was dropped shortly before the closing plenary of the COP.
Just as controversial was the question of who should provide the funding. The EU and later also some island states insisted that new financial sources must be found – so far, so vague. Originally, the EU demanded to expand the group of contributing countries. Thus, emerging economies that are now wealthy, such as China, India, South Korea, Indonesia, Mexico and oil-rich nations, would also have had to pay into the fund. “The EU wanted to make China and the Gulf states contributors – but in the end, it didn’t have the courage for the necessary confrontation,” analyzes David Ryfisch, head of the International Climate Policy team at Germanwatch.
While the new formulation does not exclude the expansion of contributors, it is not particularly explicit either. It is now up to the transition committee to propose new funding sources for loss and damage. This means that the debate on whether China, as the historically second-largest emitter, must also bear responsibility for climate damage is by no means over, but merely postponed until COP28.
Mitigation work program: 1.5-degree target at risk
The roadmap for global greenhouse gas reductions was of enormous importance to Europeans at the COP. It was supposed to be an ambitious path to achieving the 1.5-degree target. But it falls short of many expectations. “In Glasgow, we were still able to maintain the 1.5. At this COP, we are at a juncture where it could lose,” said Franz Perrez, Switzerland’s chief negotiator.
Urges countries to align national climate targets with the 1.5-degree path
Establishes sectoral consideration of GHG reductions (as per IPCC report)
Calls for annual progress reports at COP
Calls for funding for Just Energy Transition Partnerships (JETPs).
The industrialized countries would have preferred even more ambitious targets, which they, as the main emitters, would most likely have had to implement themselves. But even less ambitious targets would have been possible: An earlier version of the text stated that the work program must not lead to higher climate targets. An absolute no-go for the EU, which it also made clear to the Egyptian COP presidency. Without higher climate targets (NDCs), the 1.5-degree target would remain out of reach. The EU prevailed, but at what price?
Cover decision: Shoukry’s legacy
The price may have been horse-trading, as the final text – called the cover decision – falls short of Glasgow and will likely be a bad memory of European negotiators for a long time to come.
reducing global emissions by at least 43 percent by 2030 compared to 2019 levels
clean and equitable transition to renewables
expansion of “low-emission and renewable” energies
The last point in particular leaves many questions unanswered because “low-emission” also means gas and nuclear power. EU climate commissioner Frans Timmermans said on Sunday that only gas with CO2 capture is considered “low-emission”. However, David Ryfisch of Germanwatch estimates that other countries will interpret the wording differently.
However, there are also positive signals from the Sharm el-Sheikh Implementation Plan. For example, the accelerated expansion of renewable energies in the Cover Decision is also considered progress in EU circles. What is not in the cover decision is much more important than what is in it:
no emissions peak in 2025 (EU call)
no sentence on methane
no fossil phase-out/down
An alliance of 80 countries (including the US, India and the EU) firmly tried to build on the ambitions shown in Glasgow on Saturday night. They explicitly called for a “phase-out” of all fossil fuels. But COP President Sameh Shoukry ignored the push, as opposition, particularly from oil-rich countries like Saudi Arabia, was too strong. Instead, the presidency submitted the now-agreed text to a “take it or leave it” vote, says Christoph Bals. In the end, after a night of negotiations, at 7 a.m., none of the 80 countries voiced any objections.
Annalena Baerbock
China
Climate Policy
Climate protection
COP27
EU
Loss and Damage
Mitigation
Loss and damage: first ignored, then rejected, and ultimately celebrated
Loss and damage from climate change have increased sharply. What was known for a long time was ignored by official climate policy for almost as long. Especially recently, however, awareness of the problem has increased enormously: record heat in India and Pakistan, floods in Nigeria, the drought in the Horn of Africa, the flood disaster in Pakistan – and not least the devastating flood in the Ahr valley last year. This set the stage for the COP27 decision for a new fund. The road to this point was long and winding.
Long run-up to loss and damage
It was already clear at COP26 in Glasgow: Loss and damage would dominate the next conference. Scotland was the first industrialized country to promise money for this – two million British pounds, and that had a high symbolic value. Until now, the global North had always refused it – for fear of high claims, but also of lawsuits for damages. The “Glasgow Dialog” was supposed to make it clear that it would be about money, not just talk.
The issue was topical at the Bonn “interim conference” in June. The pressure became so strong that the topic was actually put on the Sharm el-Sheikh agenda.
At the Petersberg Climate Dialogue in July, it was host Germany that made loss and damage finance, as it is officially known, the topic. Red lines were explored in the informal discussion format.
They looked like this in the summer: The EU did not want a fund, but a “mosaic” of different financing options. The “Global Shield,” a German idea at the G7 (Climate.Table reported), is intended to guarantee vulnerable countries quick aid in the event of climate damage. The program was launched at COP, but was not officially intended to compete with L&D.
USA skeptical, but L&D becomes agenda item
The US, in turn, are traditionally skeptical of climate money for foreign countries, even though their fair share of it would have to be about 40 billion dollars a year instead of 11. Climate czar John Kerry warned several times that there would be no American tax money for the L&D fund. Instead, he presented a mechanism ETA at COP that would allow companies to bring billions to countries of the Global South through the private market for carbon emissions (Climate.Table reported).
In the summer, German Climate Secretary Jennifer Morgan, along with Chilean Environment Minister Maisa Rojas, were tasked by the COP Presidency to act as “facilitators” in this difficult area in the negotiations.
Shortly before COP, the states decided to indeed make loss and damage an “agenda item” and thus put it on the official agenda. This created a good atmosphere at the outset and increased the visibility of the issue. Seven other topics fell under the table in return – including the redirection of all financial flows toward global transformation in accordance with the Paris Agreement. Thus the EU, to which this point is very important, made another concession.
The negotiation process in Egypt
Shortly after the start of the conference, the chair of the AOSIS group, Gaston Browne, caused a stir: He called for China to also participate in future climate policy financing. Considering it came from a member of the G77/China group, that was quite a call. Browne backed down. Nevertheless, the signal was set.
On Monday of the second week, there was a secret meeting of the “High Ambition Coalition” in a hotel of ministers from the EU, island states and least-developed countries. The meeting was supposed to produce a ministerial statement, observers say. But that did not materialize, partly because the EU did not move enough on the fund. The meeting ended in disappointment.
The next day, the G77/China officially presented their maximum demands for the fund: Only industrialized countries should pay in, all developing countries should benefit, and the decisions should rest with the developing countries. An unacceptable advance (Climate.Table reported).
On Wednesday, Foreign Minister Annalena Baerbock arrived at the conference as Germany’s lead negotiator. She expressed skepticism about a quick decision on a fund: “This conference is perhaps not the right place to decide on this,” she said.
EU presents compromise proposal
On Thursday evening, however, the EU decided to change its position. Climate Commissioner Frans Timmermans told the plenary session that a fund was being sought (Climate.Table reported). However, with conditions: Only the most vulnerable countries would get money, funding should be provided from a “broader base” – i.e. also from oil states and China. And there should be progress on the “work program” on climate protection by 2030, the Europeans demanded. “This is the final offer,” Timmermans said.
What the EU hoped for did not happen: On Friday, the last day of the conference, no major country of the G77 dared to come out of the woodwork to officially welcome the EU proposal. Frustration spreads in the EU delegation.
Friday morning, a strange paper made the rounds: In it, the US, UK, Australia and EU apparently propose a watered-down form of the EU proposal. But the EU and Australia declared to have never agreed to this proposal. How the EU got into the letterhead of the paper remains unclear at the conference.
COP presidency with own ideas
On Saturday, the COP Presidency published the first draft text. Regarding the L&D fund, it was unacceptable for the EU: All red lines were erased in it: Instead of the most vulnerable countries, the money should be available to all developing countries. Instead of expanding the donor group, there was only talk of a “wide and extended variation” of funds. “We cannot agree to this text,” Austrian Environment Minister Leonore Gewessler said late Saturday night.
Internally, the EU played out what a failure would look like – and who would end up with the damage if the conference and the fund failed. Does the EU want to be guilty of torpedoing such urgently needed aid for the poorest of the poor? And: Will the time window for this still be open at the next COP?
Saturday evening: The “High Ambition Coalition” comes together for a declaration: Representatives from the EU, Norway, Chile, Maldives, Colombia, among others, stand behind the EU and its demands for a fund.
After long and fierce protests and negotiations, the final version contains positions acceptable to the EU. The fund is decided.
Pakistan’s Climate Minister Sherry Rehman drew a positive conclusion, saying, “We have struggled for 30 years on this path and today in Sharm el-Sheikh this journey has achieved its first positive milestone. It is a downpayment and investment in climate justice.”
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Four climate tasks for 2023
The departure from fossil energy
Mankind is on a path towards 2.7 degrees – this COP could not change that. There were hardly any new NDCs. And the mitigation work program that the European Union wanted to promote in Sharm el-Sheikh remained lackluster in the end. The program was supposed to set out a process by which industrialized countries would gradually tighten their climate targets, in exchanges between high-level government representatives and with annual reviews. But the EU was unable to prevail.
The gradual phase-out of all fossil fuels instead of just coal, as agreed in Glasgow, also did not make it into the final document, although many countries called for it. The reference to climate science and the 1.5-degree target remained weak.
In the coming year, it will be all the more important to pursue the decarbonization of the global economy. The handover of the G20 presidency to Indonesia offers a first opportunity. The country has just signed a Just Energy Transition Partnership (Climate.Table reported) with several industrialized countries and intends to prioritize the transition to sustainable energy during its G20 presidency.
Redirect global financial flows
It is a goal of the Paris Agreement that has received too little attention so far: Article 2(1)c calls for bringing financial flows worldwide into line with climate goals – for example, directing investments away from fossil energy toward climate-friendly technologies and also reviewing government subsidies for fossil fuels. The issue did not make it onto the agenda.
Nevertheless, there were discussions at COP27 about reforming development banks, the World Bank, and the International Monetary Fund, for example, based on Barbados President Mia Mottley’sBridgetown Initiative. French climate diplomat Laurence Tubiana, an architect of the Paris Agreement, noticed “momentum behind the push to restructure the World Bank and IMF to make them not only fairer for the vulnerable but also so that they meaningfully support renewables.”
Mottley will certainly continue to campaign for her initiative behind the scenes. The spring meeting of the International Monetary Fund and the World Banknext April could be an occasion to continue talking officially about redirecting global financial flows.
Financial mechanisms for loss and damage
There is now a fund from which compensation payments for loss and damage are to be made. How it is to be structured is the big question that is likely to shape the next climate summit – and the working sessions that will take place between the two COPs under the UNFCCC. Closely related, however, is a much bigger question:
What is the status of China?
It’s an age-old dispute at international climate negotiations. Until the Paris Agreement was signed, China refused any commitment (Climate.Table reported) to cut domestic emissions. Instead, it joined other emerging economies in pointing to the historically rooted obligation of industrialized nations. The Paris Climate Agreementbroke down the front between industrialized and developing countries.
At COP27, it again surfaced clearly: China – now a major power and the world’s largest emitter – insisted on its status as a developing country under the UNFCCC process. This had tangible consequences for the negotiations on loss-and-damage offset: China refused to pay into a fund. Instead, it wanted the opportunity to receive compensation payments itself.
A new working group is now dealing with the technical details of the Loss and Damage Fund and the financial mechanisms that are to be built around it. But China’s power ambitions are also likely to shape climate policy in the coming years. Alexandra Endres/Bernhard Pötter
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Geopolitics dominated climate policy
After a night shift and 37 hours later than originally planned, COP27 ended and the delegates managed to reach an agreement in Sharm el-Sheikh after all. It was preceded by tough diplomatic disputes. Just the day before, the European Union threatened to break off the negotiations and let the entire conference fail. Several delegations drew red lines. For a short time, the summit was on the brink.
Russia’s reluctance
Geopolitics was to blame – but differently than expected. The most visible line of conflict was between the old industrialized countries, which allied themselves with the particularly vulnerable countries on some issues, and China, which partly allied itself with oil states such as Saudi Arabia.
Before the COP, it appeared that the Russian war of aggression in Ukraine would complicate the talks. The conflict between China and the U.S., which had suspended their climate talks in the summer because of tensions over Taiwan, could also have put a strain on the COP. However, both sources of tension hardly played a role in Sharm el-Sheikh. Russia barely made an appearance throughout the summit. Instead, another conflict erupted.
China: Has the biggest carbon emitter pay?
The first question had hung unresolved over the climate summits for decades: What commitment to climate action and managing its consequences must China make? Seven years ago, the fact that China also agreed in the Paris climate agreement that all countries must reduce their emissions in the long term was a major success. Now, behind the scenes in Sharm el-Sheikh, the debate began about whether China, as an economic and climate superpower, can continue to dodge climate aid funding commitments in the long term.
A second fundamental dispute flared up over fossil energy sources. The oil states used the Ukraine war and the ensuing energy crisis as an opportunity to push for a renaissance of oil, coal and gas. In the end, their attack was repelled. But it prevented any progress on emissions reductions.
Here’s how the individual blocs negotiated at COP:
The EU had a big plan: To present itself as a climate superpower and stand up to China and the USA. But the surprise coup on the penultimate day of the conference was only half successful. The EU offered to accept a loss-and-damage (L&D) fund with conditions attached: To reserve the money only for the most vulnerable, to get more serious climate protection and at the same time to urge China and the oil countries to finance upcoming tasks – now the fund is coming and the demands are strongly weakened in the resolution.
The USA only had a supporting role at COP27. The conference breathed a sigh of relief when it turned out that the Democrats could hold the Senate in the “midterms.” President Biden arrived and declared the US a climate change leader, but had nothing to offer to justify such a role other than the domestic 369 billion infrastructure program. The world’s richest country repeatedly said it had no money for international climate programs and rejected an L&D fund. At least the United States and China officially resumed talking about the climate. However, they did not show any signs of the feared coalition of slowdowns. The US momentum was perhaps also slowed down by the fact that climate czar John Kerry was isolated at the end of the conference – he had tested positive for Covid.
China also refrained from making big public appearances. In the meetings, however, the country and its allies made sure that COP did not become too ambitious. Beijing first rebuffed the EU’s attack, whose fund proposal was meant to divide the G77/China group into poorer nations most affected by climate change and rich “big emitters”. “There was nothing on the agenda here that would have really affected Chinese interests,” said Greenpeace expert Li Shuo. “The EU proposal was only political and was hardly reflected in the negotiating texts.” But the Chinese were not too loud either: After all, China will itself chair a COP – the biodiversity conference in Montreal in early December.
The oil and gas countries wanted to turn the “African COP” into a gas conference – with some success. Before the start of the conference, the African climate negotiators rejected the idea of glorifying new gas fields in Africa as a contribution to climate protection. But there were more lobbyists for gas and oil than ever before at COP, and panels and papers presented fossil gas as the main solution. With active help from the Egyptian presidency, the interests of neighboring Saudi Arabia and its allies were repeatedly given priority. India’s push to phase down all fossil fuels – not just coal – did not appear in the final declaration – even though 80 countries advocated it.
The G77/China group was under pressure, but only showed slight cracks. Right at the beginning, the chairman of the Alliance of Small Island States (AOSIS) demanded that China also be involved in financing an L&D fund – but then backed down. India’s proposal on fewer fossils found icy silence in the group. EU negotiators report that many small countries felt economically and politically coerced by China and did not trust the West – but therefore did not dare to leave the G77. So far, the strange alliance is holding, although conflicting interests are growing within it.
The High Ambition Coalition has risen from the ruins. The community of interests of climate protection pioneers, for example, the EU, Norway, sometimes the USA, and G77 states such as Indonesia, Brazil, Chile, Colombia or island states such as Tuvalu and Barbados, come together every now and then when things get serious: in 2015 at the Paris Agreement, this time to save the deal surrounding the L&D Fund. If this were a permanent group that reached across traditional divides, it could generate a lot of momentum. Alexandra Endres/Bernhard Pötter
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Energy Charter: EU wants to postpone modernization
The EU has no mandate to vote on the modernization of the Energy Charter Treaty on Nov. 22. A qualified majority could not be reached in the vote in the Permanent Representatives Committee on Friday. Germany, France, Spain and the Netherlands abstained. Accordingly, the EU cannot approve the modernization of the treaty at the Energy Charter Conference in Mongolia scheduled for Tuesday.
The EU Commission now wants to postpone the vote on modernizing the Energy Charter. It now works to remove the vote from the agenda of the ECT conference on November 22.
More and more votes for EU exit
Meanwhile, calls for the EU to withdraw from the Energy Charter are growing louder. With the vote on Friday, “the climate killer treaty has now also finally failed at the EU level. We call on the EU Commission to immediately initiate the exit!”, writes the Munich Environmental Institute in a press release.
This is exactly how MEP Anna Cavazzini (Greens) sees it: “This climate-damaging adhesion contract can no longer be saved. The EU must now also finally get out.” Since last week, a letter has already been circulating in which MEPs from the Greens, Renew, S&D and the Left call on the EU Commission to withdraw from the Charter.
Luxembourg also withdraws from the Charter
On Friday afternoon, Luxembourg also announced its withdrawal from the Energy Charter. “Even if the modernization of the Energy Charter Treaty leads to some progress, the treaty is still not compatible with the goals of the Paris Climate Agreement, as it continues to protect investments in fossil and nuclear energies,” criticizes Green energy minister Claude Turmes. Charlotte Wirth
