Themes to Watch For at COP27

The 27th UN Framework Convention on Climate Change (UNFCCC) Conference of the Parties (COP27) will be held November 6–18 in Sharm El Sheikh, Egypt. The COP26 held last year in Glasgow had two particularly positive outcomes. First, countries updated their nationally determined contributions (NDCs) to collectively reflect enough ambition to meet the 2 degree Celsius warming target of the Paris Climate Agreement. Second, different levels of government, the private sector, and philanthropy announced a variety of measures to tackle challenges in technology, finance, and the political economy of emissions reductions. Many of these initiatives were sealed outside of the official negotiations.

While ambitious pledges and new multilateralism are the legacy of COP26, the Egyptian presidency wants to make COP27 about converting these pledges and multilateralism into action. Rania Al Mashat, Egyptian minister for international cooperation, said in an interview with The Guardian that “what we want this COP[27] to be about is moving from pledges to implementation. And we want to highlight what are the practical policies and practices, the processes that can actually push the pledges [into action], to bridge that gap.”

Although the COP27’s implementation goal is natural, it is not one that portends major advancements in international climate politics. The divide between wealthy developed countries and developing countries will be front and center as high prices from the ongoing energy crisis and increasing climate risks are felt heavily by developing countries.

Here are a few areas to watch.

Momentum from the United States

For years, the United States has played various roles in international climate diplomacy. The United States has been both a critical agent for success and a spoiler of it. But consistently, the lack of domestic climate policy has weakened the United States’ ability to motivate other countries into acting themselves. At COP27, the United States will want to tout the Inflation Reduction Act (IRA) as a major down payment on clean energy transition, one that will both motivate others and accelerate global decarbonization.

The IRA includes an array of clean energy tax credits and spending programs to deploy low-carbon technology in the United States and reduce emissions. Emissions projections indicate that the bill will help the United States make progress toward its climate goals, but it is not enough to secure President Biden’s target of a 50 percent emissions reduction by 2030. Despite that shortfall, the investment approach of the IRA will be positioned as a positive approach for global decarbonization, as deployment of new technologies like low-carbon hydrogen, offshore wind, electric vehicles, and carbon capture should help reduce costs going forward.

The challenge ahead of the United States is to make sure that the cost-reduction benefits promised by the IRA can be acted on by countries around the world. As Greg Nemet, a professor at the University of Wisconsin has documented, the costs of renewable technologies fell in a world of international trade and depended on countries succeeding in different parts of the innovation pipeline (technology, manufacturing, and policy). The IRA embraces a made-in-the-United-States model for clean technology. It will be important for the United States to give confidence to partner countries that the benefits of IRA will be widely shared and to devise mechanisms to finance their deployment abroad.

Climate Finance

The persistent shortfall in climate finance has led to frustration on the part of the developing world, which seeks help financing both the transition to clean energy and climate adaptation. In 2009, developed countries committed to $100 billion per year for climate finance, articulating the global principle of “common but differentiated responsibility” toward climate change. However, developed countries have repeatedly failed to meet this pledge. The host country highlights this failure. Early this year, the Committee of African Heads of States and Governments on Climate Change (CAHOSCC) released a statement, calling on developed countries to recognize Africa’s special needs in the context of climate change, and to step up with technical and financial support.

Beyond pushing for $100 billion per year for climate finance, developing countries are calling on the private sector to invest toward clean energy infrastructure to help countries meet their clean energy goals. Banking coalitions, like the Net-Zero Banking Alliance, are designed to meet such goals. One of the key focus areas of the alliance is to mobilize capital flows to emerging markets and to developing countries by reducing risks for clean investment and strengthening public-private partnerships Additionally, after successfully passing the IRA, the United States and its partners will also showcase the actions of the private sector in helping to advance climate action for developing countries. For example, the United States has played a key supporting role organizing efforts like the First Movers’ Coalition, a public-private partnership that collects corporate procurement targets for hard-to-decarbonize sectors like industrials, chemicals, and long-haul transport. Originally announced at Glasgow, the coalition has added members and pledges throughout the year, and the United States is likely to highlight these successes (or perhaps new announcements). Such efforts from the financial community will be highlighted and praised at COP27 by the United States as a way to help developing countries transition to clean energy sources.

Loss and Damage

Loss and damage will emerge as one of the major themes during COP27 as well. Developing countries have called on developed countries to provide financial assistance to help deal with the damage brought by climate change. This is seen as a matter of fairness because the emissions from developed countries are principally responsible for climate change.

With China and India’s support, the coalition of developing nations known as the Group of 77 (G77) is likely to push for loss and damage to be part of the official negotiations during COP. They have in fact called for the creation of a climate damages fund to satisfy loss-and-damage claims, which is being pushed back by the United States and the European Union, despite mounting pressure from the environmental groups. Recently, among developed countries, Denmark became the first to commit to funding devoted to loss and damage, followed by Scotland.

Just Transition

Conversations around just transitions are still focused on coal. At COP26, coal-dependent South Africa, together with Germany, France, the United Kingdom, the United States, and the European Union signed a Just Energy Transition Partnership (JETP). The aim of this partnership was to provide South Africa with $8.5 billion to kick-start its just energy transition efforts. Although the actual funds have not flowed, the South African cabinet recently approved a JETP investment plan to be released at COP27.

Riding on the success of JETP with South Africa, the G7 now wants to launch a similar partnership with coal-dependent India, and Indonesia. Talks are underway and each side wants to announce the deal at COP27. This is the biggest announcement to look out for at COP27. This partnership will be built on the South African model and bring financial support to coal-dependent emerging economies transitioning to clean energy. However, these new negotiations ride on the success of the implementation of the South African JETP. But a roadmap for success is emerging, and it depends on clear plans for decarbonization and developed and developing countries agreeing on a mixture of concessional finance and grants.

Tani Salma is a program coordinator for the Energy Security and Climate Change Program at the Center for Strategic and International Studies (CSIS) in Washington, D.C. Sandeep Pai is a senior associate (non-resident) for the CSIS Energy Security and Climate Change Program.

Joseph Majkut is director of the CSIS Energy Security and Climate Change Program.

The authors would like to thank Chen Huang, intern with the CSIS Energy Security and Climate Change Program, for her research contributions to this commentary.

Commentary is produced by the Center for Strategic and International Studies (CSIS), a private, tax-exempt institution focusing on international public policy issues. Its research is nonpartisan and nonproprietary. CSIS does not take specific policy positions. Accordingly, all views, positions, and conclusions expressed in this publication should be understood to be solely those of the author(s).

© 2022 by the Center for Strategic and International Studies. All rights reserved.

Tani Salma

Tani Salma

Former Program Coordinator, Energy Security and Climate Change Program
Sandeep Pai
Senior Associate (Non-resident), Energy Security and Climate Change Program
Joseph Majkut
Director, Energy Security and Climate Change Program