COP27, held in Sharm-el-Sheikh, Egypt, was disappointing to many concerned about the impact of climate change. Our briefing paper is designed to assist proactive and ambitious players in the international carbon space; we therefore focus on key developments through a legal, and constructive, lens.
COP27: No clear statement on fossil fuels
Following the progress made at COP26 in Glasgow, many had hoped that the Sharm-el-Sheikh conference would result in a stronger statement on the need to remove and replace fossil fuels with renewable energy. However, even in early drafts of the COP27 cover decision, no such wording was forthcoming. Instead the cover decision made reference to “low emissions and renewables” – which some interpret as COP27 leaving the door open to gas, as well as nuclear.
In the briefing paper, we analyse what this means for efforts to phase out fossil fuels globally, as well as the debate surrounding Africa’s fossil fuel reserves and the opportunity for the continent to ‘leapfrog’ hydrocarbons and power its development with renewables instead.
The Loss and Damage Fund
Although less was achieved on fossil fuels than hoped, one bold decision that did arise from COP27 was the creation of a Loss and Damage Fund, specifically targeted at “developing countries that are particularly vulnerable” to climate impacts. While there remain many questions over how the funding will work, as well as unfulfilled funding pledges from previous COPs, the Loss and Damage Fund does represent progress and the UN Secretary General has welcomed it as such.
In the briefing paper, we explore the wider context around loss and damage due to climate change, agreements made at previous COPs and the impact of climate change on developing countries.
Net Zero
Shortly before COP27 began, the UN High‑Level Expert Group on the Net Zero Emissions Commitments of Non-State Entities (UNHLEG) published its inaugural report regarding net zero pledges and commitments by non-State actors. For private sector companies, this report sets out what we can expect will be the direction of travel on standards for climate disclosures and commitments – including on the use of carbon credits to offset emissions in addition to decarbonising value chains. The UNHLEG report takes aim at this reliance on carbon credits for offsetting each of Scope 1, 2 and 3 emissions and recommends that reliance on such credits be scaled back. We explore this in more detail in the briefing paper.
Carbon Markets
Carbon markets have long been clouded by a lack of integrity and regulatory uncertainty. The Article 6 rulebooks established at COP26 in Glasgow provided a useful framework for the markets established by Articles 6.1 to 6.7 of the Paris Agreement. Despite this, both commercial and legal uncertainties and complexities remained.
In the briefing paper, we provide a detailed legal analysis of the COP27 decisions that build upon the Article 6.2 and 6.4 rulebooks and identify gaps that are yet to be addressed. We also explore progress made with regards to the voluntary carbon market and the Article 6.8 non-market mechanism.
Other COP27 pledges and outcomes
Numerous pledges and decisions were made at COP27 relating to climate finance, natural gas, water, forestry, and other areas of environmental concern. The conference also noted progress against pledges and targets from previous COPs and reinforced the need to deliver against these.
Climate negotiators worked hard, in particular, to make sure that the 1.5°C target agreed in Glasgow was not rolled back to 2°C, as per the wording of the Paris climate accords. We discuss the importance of this as well as other outcomes in the briefing paper.
COP 27: where next?
It is undeniable that climate activists and policymakers hoped for more from COP27. We share much of the disappointment. Nevertheless, we believe that climate transition is the responsibility of – and belongs to – more parties than were present at the latest COP. There are gaps for ambitious organisations to go further on clean energy and green development. If you would like to discuss them, our door is open.
