Was the 27th Conference of the Parties (COP27) destined for success or failure? I posed that provocative question in my last post and, with the 2022 event in Egypt concluded, most of what I am reading is trending negative: With the exception of a historic ‘loss and damage’ fund for vulnerable nations.
Many observers believe COP27 failed to move forward from COP26. But I’m also hearing reports of numerous encouraging initiatives and inspiring stories that emerged.
Welcome to the dichotomy that is COP.
On its own terms, COP27 could be considered a failure. The primary cause of global heating is the burning of fossil fuels.[1] COP27, like previous COP events, did nothing to phase out the fossil fuel industry. It didn’t address the root cause of today’s global climate emergencies in any meaningful way. That’s the uncomfortable truth.
German climate scientist Professor Niklas Höhne believes the 1.5°C global warming threshold “remains in intensive care” as global conditions deteriorate, and he observes that “a whole year has been idled away.”[2]
There was no agreement at COP27 on the obvious — that fossil fuels need to be phased out, not just coal. No COP gathering has ever addressed this massive elephant in the room. Let me make that clear — in 30 years of UN climate negotiations, the aim of which is eliminating global heating, fossil fuels have never been mentioned in the decisions. Not once.[3]
Perhaps again stating the obvious, with each passing year, it becomes harder to slash global greenhouse gas emissions by half to meet the 1.5°C target by 2030. To meet that looming deadline, each future COP event will need to drive significant progress.
Was COP27 the west against the rest?
The atmosphere at this COP was challenging. One politically connected colleague has noted that some global leaders were describing the latest meetings harshly amid dialogue and an atmosphere characterized by strong disagreement and which essentially positioned ‘the west against the rest’.
The performance of the global superpowers could be summed up as follows: likely never going to pay, didn’t turn up, focused on Ukraine. Better should be demanded if there’s hope to meet our 2030 and 2050 commitments.
Of course, COP’s mission is wider than just issuing its final statement to the world. Much happens in the plenary sessions and beyond the global headlines. And much certainly depends on your perspective.
While stopping short of declaring COP27 a success, for example, Africa-based climate policy advocate Mohamed Adow describes it as “a surprise precisely because for once the needs of the vulnerable were actually listened to.”[4]
Adow, Director of Power Shift Africa, which he formed in 2018 to mobilize climate action in Africa, at the same time acknowledges the failure to address fossil fuels and the planet’s leading contributors to climate change: “It's now a bit rich for the historic polluters of the wealthy global north, who have caused the climate crisis over the past 100 years, to complain about a lack of progress on emissions reductions.”[5]
But in his overall assessment of COP27, the move to address climate-related ‘loss and damage’ among vulnerable nations should be called out. “At the beginning of these talks, loss and damage was not even on the agenda and now we are making history. It just shows that this UN process can achieve results.”[6]
‘Loss and damage’ fund can be welcomed as a breakthrough
Former US Vice-President Al Gore describes the fund for loss and damage as “historic and morally just.”[7] I think he is also aware of the challenges ahead: Where is the money coming from? How does it get to where it needs to go?
If history is anything to go by, what starts as funding often transforms into loans and complex financial arrangements as the west pursues profits — rather than simply honoring its commitments. It is also naïve to consider the fund for loss and damage in isolation. The world is on track for 2.5°C of global warming by end of the century. In my view, no fund will be large enough to tackle that global catastrophe. Which brings us back to that fossil fuel elephant in the room. The loss and damage fund risks being a big distraction if it doesn’t sit next to real initiatives to slash global consumption of fossil fuels.
At this point, you might ask where — beyond the loss and damage fund — are the encouraging positive signs for future progress as destructive climate events proliferate? After all, the title refers to a dichotomy. At the risk of generalizing, the real successes of COP27 seem to be in the details.
Here are three examples that give you a flavor of those successes:
- Increasing the speed and scale of decarbonization of cities.[8]
- Harnessing forward purchasing power to decarbonize seven “hard to abate” industrial sectors.[9]
- Enabling sustainable energy transition in parts of the world that would otherwise be “last movers.”[10]
In conversation with my KPMG colleague Richard Threlfall, he describes another initiative in response to a relatively unknown problem. The challenge is neatly set out in the ZEV Transition Factbook published by Bloomberg.[11] Rising prosperity in emerging markets is likely expected to double their demand for vehicles over the period to 2050 (and quadruple demand in sub-Saharan Africa). Yet numerous constraints make it much harder to ignite in these regions the exponential growth in demand for zero emission vehicles (ZEVs) now seen in Europe. An exacerbating factor that worries Richard is the likelihood that the petrol and diesel vehicles of wealthy nations end up being dumped in emerging markets, undercutting the growing cost competitiveness of ZEVs.
Future challenges on ZEVs loom
During the second week of COP27, the World Business Council for Sustainable Development (WBCSD) published a paper that addresses this very problem. Financing Charging Infrastructure is a report summarizing insights from five regional dialogues (in North America, LATAM, Europe, Africa and ASEAN) hosted by KPMG firms earlier this year in collaboration with the WBCSD. Representatives of the public sector, corporates and finance providers gathered to discuss how to accelerate the transition to ZEVs.[12]
In a concerted attempt to address this problem, the US and UK governments announced the ZEV Emerging Markets initiative. It provides for more intensive public-private dialogues, country by country, starting with India and with the aim of concluding a series of concrete agreements by COP28 in 2023. Eleven private sector organizations have signed up already to make this happen.[13]
How can I sum up COP27? If I only focus on the positive, I risk losing sight of the scale of the challenge. The hype lets people believe that the hard work has been done and everything will be all right if they just do a little better on their recycling. There is a fine line to tread. Addressing climate change is to a large extent an exercise in monetizing hope. Meaning that people need to believe that the outcome is worth the cost.
COP27, billed as the ‘implementation COP’, didn’t achieve much in terms of concrete implementation steps. If I’m honest, I believe we are now in the position where it is hard to see a credible pathway to 1.5°C.[14] But if the pathway is very narrow, it also increases the focus on what can be done. What must be done. That means scaling existing solutions and increasing the pace of change, not waiting for a technological miracle to save us. It also means that a huge increase in money to finance solutions will be required. While fossil fuels can’t be eliminated overnight, effective and innovative solutions exist right now, like cooling cities with green corridors such as in Columbia and around Madrid; rebuilding the lungs of the world by stopping deforestation and rewilding in the Amazon and on every continent; providing abundant clean energy by accelerating the removal of coal fired power; and constructing renewable alternatives such as onshore and offshore wind, hydro, geothermal, wave technology and solar panels, which can be placed over carparks and canals and on commercial buildings. People should be kept mobile by embracing electric mobility solutions and building charging networks, use energy resources better with insulation to keep people warm and home batteries to bridge peak demand and feed the world with new technologies, like precision fermentation for protein rich food that uses a fraction of the resources required for arable farming. The challenge, particularly in finance, is one of implementation. Turning these bright ideas into credit, investment, and underwriting approvals. There are solutions. Set against global leadership and the limited progress to date, I believe the private sector needs to redouble its efforts.
Footnotes
1 United Nations. (n.d.). Causes and Effects of Climate Change. https://www.un.org/en/climatechange/science/causes-effects-climate-change
2 Prof. Niklas Höhne on. (2022, November 20). Twitter. https://twitter.com/niklashoehne/status/1594242848605769728
3 Carrington, D. (2022, November 21). The 1.5C climate goal died at Cop27 – but hope must not. The Guardian. https://www.theguardian.com/environment/2022/nov/20/cop27-summit-climate-crisis-global-heating-fossil-fuel-industry
4 Mohamed Adow on. (2022, November 21). Twitter. https://twitter.com/mohadow/status/1594679659635085312
5 Mohamed Adow on. (2022c, November 21). Twitter. https://twitter.com/mohadow/status/1594679820780199938
6 Mohamed Adow on. (2022a, November 20). Twitter. https://twitter.com/mohadow/status/1594203907219419138
7 Al Gore on. (2022, November 20). Twitter. https://twitter.com/algore/status/1594206194960302080
8 Net Zero Urban Program. (2022, October 20). KPMG. https://home.kpmg/xx/en/home/insights/2022/10/net-zero-urban-program.html
9 First Movers Coalition. (2022, August 15). World Economic Forum. https://www.weforum.org/first-movers-coalition
10 COP27 | Launch of the Alliance for Just Energy Transformation | United Nations Development Programme. (n.d.). UNDP. https://www.undp.org/energy/events/cop27-launch-alliance-just-energy-transformation
11 BloombergNEF. (2022). Zero-Emissions Vehicle Factbook. In https://assets.bbhub.io/professional/sites/24/2022-COP27-ZEV-Transition_Factbook.pdf. https://www.bloomberg.com/professional/download/2022-zero-emissions-vehicle-factbook/
12 WBCSD. (2022). Financing charging infrastructure. In https://www.wbcsd.org/. World Business Council for Sustainable Development. https://www.wbcsd.org/Programs/Cities-and-Mobility/Transforming-Urban-Mobility/Mobility-Decarbonization/Resources/Financing-charging-infrastructure
13 New initiative to accelerate transition to zero-emission transport in emerging and developing economies. (n.d.). World Business Council for Sustainable Development (WBCSD). https://www.wbcsd.org/Pathways/Transport-Mobility/News/New-initiative-to-accelerate-transition-to-zero-emission-transport-in-emerging-and-developing-economies
14 Climate change: No ‘credible pathway’ to 1.5C limit, UNEP warns. (2022, October 27). UN News. https://news.un.org/en/story/2022/10/1129912
