COP27 at Sharm el-Sheikh in Egypt was always going to be a very different conference to Glasgow in 2021. While Glasgow focused on raising ambitions in emission reductions, this year focused on the implementation of those ambitions, particularly around the necessary financing to deliver them.
Three of the world’s largest emitters – China, the US and the EU – have taken significant steps to back their emissions reduction goals with serious programmes of implementation – from renewables and electric vehicles to green hydrogen and carbon capture, two of the critical levers of industrial decarbonisation.
Nevertheless, there are key areas where progress is lacking. The phase out of coal in existing power stations is not happening at the pace and scale required, methane emissions continue to rise, and deforestation continues. And importantly, the world is struggling to extend the rapid scale up of clean electricity to emerging markets and developing economies.
Recent estimates from the IEA (International Energy Agency) suggest that to make meaningful progress on the multitude of promised policies and actions will require low-carbon financing to be increased from just over $1 trillion a year today to around $2 trillion a year by 2030. And while huge steps in the right direction have already been made, it is still just 50% of the finance required.
At Sharm el-Sheikh this gap was acknowledged, with the need to scale financing a theme which cut across all topics addressed.
The importance of nature was also on the agenda like never before. A new coalition was launched by Brazil, Indonesia and the Democratic Republic of Congo which aims to protect forests from deforestation and curb the release of the vital carbon stocks they hold. Against a backdrop of increasing pressure on global forests driven by meat consumption, it was recognised that the scale up in funding that may be required is enormous.
Perhaps the most significant undertaking from the climate talks is what has been hailed as a “historic” deal to provide financial assistance to poorer nations stricken by climate disaster. The global “loss and damage” fund acknowledges the vast inequities of the climate crisis, and refers to the most severe impacts of extreme weather on the physical and social infrastructure of poor countries, and the financial assistance needed to rescue and rebuild them.
How the world will reflect on COP27 in Sharm el-Sheikh is yet to be determined, but it’s clear that much progress has been made in reducing emissions over the past few years, and many factors indicate this will continue to accelerate. How far this gets us towards the crucial global goal of 1.5C will depend on our ability to significantly scale and target financial flows to achieve a major acceleration of clean energy investment, a phase out of coal use and an end to deforestation.
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