The United Nations Climate Change Conference (COP27) has reached an agreement to provide "loss and damage" funding to countries affected by climate disasters. This marks an important point of progress, as the issue of "loss and damage" funding has been a longstanding topic of discussion within the UN Climate Change negotiations. The agreement establishes new funding arrangements and a dedicated fund to assist developing countries in responding to loss and damage caused by climate change. A "transitional committee" will be formed at COP28 in 2023 to make recommendations on how to operationalize both the new funding arrangements and the fund.
The conference reaffirmed the commitment to limiting global temperature rise to 1.5 degrees Celsius above pre-industrial levels and strengthened action to reduce greenhouse gas emissions and adapt to the impacts of climate change. This commitment is in line with the goals of the Paris Agreement, which aims to hold the increase in the global average temperature to well below 2 degrees Celsius above pre-industrial levels and to pursue efforts to limit the temperature increase to 1.5 degrees Celsius. In order to achieve these goals, countries must significantly reduce their greenhouse gas emissions and implement measures to adapt to the impacts of climate change.
A specific fund for "loss and damage" was established for the first time at COP27 and a "transitional committee" will be formed to operationalize the fund at COP28 in 2023. The establishment of this fund is a significant milestone, as it provides a mechanism for addressing the impacts of climate change that cannot be avoided through mitigation and adaptation efforts. The "transitional committee" will be tasked with making recommendations on how to operationalize the fund and ensure that it is accessible to developing countries that are particularly vulnerable to the adverse effects of climate change.
The Sharm el-Sheikh Implementation Plan estimates that transitioning to a low-carbon economy will require investments of at least $4-6 trillion per year. This figure represents the minimum level of investment needed to transition to a low-carbon economy, as identified by the Intergovernmental Panel on Climate Change (IPCC). The plan emphasizes the need for a swift and comprehensive transformation of the financial system and its structures and processes in order to deliver this level of funding. This will require the engagement of governments, central banks, commercial banks, institutional investors, and other financial actors.
There is concern that the goal of developed countries to mobilize $100 billion per year by 2020 has not yet been met, and developed countries are urged to meet this goal. This goal was established as part of the Copenhagen Accord in 2009 and reaffirmed in the Paris Agreement. It represents the minimum level of climate finance that developed countries are expected to provide to developing countries in order to assist with their efforts to reduce greenhouse gas emissions and adapt to the impacts of climate change. Despite efforts to mobilize this level of funding, there is concern that the goal has not yet been met, and developed countries are being urged to increase their efforts to meet this target.
The conference concluded with a call for urgent action on climate change and a commitment to achieving the goals of the Paris Agreement. This call for action reflects the urgency of the climate crisis and the need for countries to ramp up their efforts to reduce greenhouse gas emissions and adapt to the impacts of climate change. The conference emphasized the importance of cooperation between the public and private sectors in addressing the crisis and the need for countries to work together to achieve the goals of the Paris Agreement.