COP27: key outcomes [Gas in Transition]

This year’s COP was even more challenging than last year’s edition. The Middle East oil producers stood up for oil and gas and made the case that the pace of energy transition is overestimated by western governments, contributing to the energy crisis. This enraged climate change activists and those who would like to see fossil fuels phased out as soon as possible. However, the majority of the 200 participating states, perhaps reflecting concerns emanating from the energy crisis, prioritised energy security. After all, 80% of the world’s energy comes from fossil fuels and, based on various published Outlooks, it will carry on doing so for a while yet.

However, despite the success of agreeing to set up a ‘loss and damage’ fund, COP27 has not made much difference in reducing carbon concentration in the atmosphere, the main purpose of the COP meetings.

The key outcomes of COP27 are as follows:

• ‘Loss and damage’ Fund: Some call it ‘fund for climate justice’. After years of talking about it, this has finally been adopted, with rich countries agreeing to support it. It may not necessarily attract the funds to make a difference to start with, but it has finally been launched. The purpose of it is to provide funds for developing countries that suffer ‘loss and damage’ from climate-change-driven events. It may take time before it is up and running. It still needs to be agreed how the fund will be run, how the money will be dispersed, which countries are likely to be eligible and most importantly when and where the funds will come from. A transitional committee has been set up to do that, with the first meeting to be held before the end of March 2023.
• Fossil fuel phase-down: Despite pressure to include oil and gas in the agreement made at COP26 to phase-down coal, this did not get the required support, even though about 80 countries are now behind it. As a result, the wording in the COP27 deal remained the same as in COP26: to phase down use of unabated coal power and phase-out inefficient fossil fuel subsidies. However, the COP27 deal now includes a provision to boost “low-emissions energy”, without defining what this means. Some interpret it to include natural gas, that has the lowest emissions of all fossil fuels, but also fossil fuels in general when paired with carbon capture and storage (CCS).
• Adaptation: COP26 agreed to increase the $20bn promised to support adaptation: to build flood defences, preserve wetlands, restore mangrove swamps and regrow forests. COP27 reconfirmed this. However, not much has been done so far to progress it. But there is now a roadmap to lay out adaptation actions to meet by 2030.
• Methane emissions: 150 countries have now signed the Global Methane Pledge to cut human-caused methane emissions by at least 30% by 2030, compared to 2020 levels.
• NDCs: Nationally determined contributions. COP26 agreed to strengthen these, but only a few countries have done so. In fact, COP27 went backwards, by taking out a resolution to peak emissions by 2025, even though global warming has already reached 1.1°C. However, a positive outcome is that the Paris Agreement 1.5°C goal has been reconfirmed. But without increasing NDCs, it is difficult to see how the temperature increase can be kept below 1.5°C.

The good news is that the ascendance of Luiz Ignacio Lula da Silva to the presidency of Brazil has brought Brazil back into fighting climate change, by promising to cooperate on forest preservation. In fact, on his arrival in Egypt he said pointedly “Brazil is back.”

Also important is that, after a meeting between presidents Biden and Xi in Indonesia, the US and China have agreed to resume cooperation on climate change and have “empowered key senior officials” to do so.

COP27 also discussed plans to reform the World Bank and other major international financial institutions so that they take more risk and increase funding for climate change projects. This is now reflected in the final COP27 deal. It even has the support of the US. Its climate envoy John Kerry wants such a plan to be ready by April.

It is sobering, though, to note that without more change and more drastic measures, the world may still be headed to a temperature increase close to 3°C by the end of this century.

Oil and gas at COP27

After getting a short-shrift at COP26, oil and gas company executives were present at this year’s summit in numbers, perhaps emboldened by the role oil and gas is playing in shoring up energy security during the current energy crisis.

Natural gas CEOs “billed themselves as climate leaders at COP27,” as the summit adopted a final declaration that can be interpreted to place natural gas at the centre of energy transition. This was a surprise last minute addition. Responding to a question, an Egyptian diplomat said “It depends because every country is going to have to utilise whatever sources of energy it has until it makes the transition.”

China will also be happy with such interpretation given that it places top priority on energy security, with natural gas playing an important role.

To a certain extent, this reflects the important contribution gas is playing in response to the energy crisis, particularly in Europe. With no clear pathways to an energy-secure future completely reliant on renewables in the near to medium term, many countries still see a role for gas well into the next decade. This includes African countries that are asking financial support to develop their natural gas resources as part of the energy transition.

It does not appear that phasing-down oil and gas will fare better at COP28. The host, UAE President Sheikh Mohammed bin Zayed al-Nahyan, said the UAE will continue to deliver oil and gas "for as long as the world is in need".

Limited progress

Many, including the EU, France and Germany, were left disappointed with the limited progress, and in some cases backtracking, made at COP27 and the fact that it did not include a commitment to cut emissions in countries such as China and India. The absence of key polluting country leaders, such as China, India and Russia, did not help. Even US president Joe Biden made only a ‘cameo’ appearance right at the end of the summit, while Canadian prime minister Justin Trudeau, a vocal figure of late on the global climate stage, sent only his environment minister, former Greenpeace activist Steven Guilbeault, to lead the Canadian delegation.

Alok Sharma, chairman of COP26, expressed disappointment that many of the provisions he fought for were either dropped from this year’s decision or watered down. He said: “Emissions peaking before 2025 as the science tells us is necessary? Not in this text. Clear follow-through on the phasedown of coal? Not in this text. Clear commitment to phase out all fossil fuels? Not in this text. The energy text? Weakened in the final minutes.”

EU vice-president Frans Timmermans also expressed reservations. He said the resulting deal “is not enough of a step forward for people and planet,” adding “it does not bring enough added efforts from major emitters to increase and accelerate their emissions cuts.”

On the other hand, COP27 president Sameh Shoukry said during the closing session “I consider the text to be adopted to be a reflection of both a delicate balance that responds to the interests of all of us represented in this conference, and also a manifestation of the highest ambition that can be reached at this point in time.”

Given the challenges the world is facing with the energy, economic and food crises, the Russia-Ukraine war, rampant inflation, security of energy supplies, it is not surprising that COP27 faced challenges.

However, the global goal remains to switch to green energy, eliminate carbon emissions and stick to the 1.5°C goal. But until we get there, the reality is that the world will still need secure and affordable supplies of oil and gas, as shown by the recent BP and IEA energy outlooks. That was confirmed by the majority of states participating at COP27 that did not agree to include phase-down of oil and gas in the final deal.

One thing that many of the participants agree on is that it is about time to reboot future COP summits. “What the world needs now is action to reduce emissions and as a result the COPs are no longer fit for purpose.” They need to reflect the reality of where the world is and a fresh path towards climate action.