COP27 and the ambiguity about responsibility

Source– The post is based on the article “COP27 and the ambiguity about responsibility” published in The Hindu on 26th November 2022.

Syllabus: GS3- Environmental degradation

Relevance: Climate change

News- The article explains the issues related to the climate finance and Loss and Damage provisions.

What is Loss and Damage agenda for developing countries?

The main L and D agendas for developing countries since the Paris Agreement have been changed to the existing narrative of averting L and D to addressing losses that have already occurred. It has now changed to start holding developed countries morally responsible and financially liable for the same.

They argue that losses from these events cannot be adapted to. Developed countries should inherit the resultant responsibility and liability.

What has been the traditional understanding of Loss and Damage?

L and D in ratified UN text talks about prevention and pre-disaster preparation. It conflates L and D with adaptation. This is in the interest of developed countries that do not want any new responsibilities.

What are the issues with Loss and Damage provisions introduced at COP27?

The new L and D fund introduced at COP27 seems a narrative failure. It only makes a distinction between adaptation and L and D. The text finally frames L and D as post-event “rehabilitation, recovery, and reconstruction”.

It excludes mention of historic responsibility and the principle of Common but Differentiated Responsibilities (CBDR). There is no clear indication that the fund will be paid for by developed countries.

The decision to explore a range of solutions means a slow shift of the L and D burden onto the private sector, and perhaps even to richer developing countries such as China.

What is the case of climate finance?

In 2009, developed countries had promised developing countries $100 billion in climate finance annually by 2020. It still remains unmet. Although it is a fraction of what developing countries need, it is an important symbol of trust.

Much deliberation around finance has focused on assessing progress towards this goal. The developed countries now aim to meet this goal by 2023.

There is need for discussions around a new, enhanced developed country target that is meant to replace this $100 billion commitment by 2025. It will be important trust-building exercises encouraging greater cooperation towards climate action.

Carbon markets have emerged as more prominent vehicles for channelling private finance. Under Article 6 of the Paris Agreement, two types of markets will allow countries and companies to trade in emissions reductions.

Many questions regarding the design of these markets were addressed at COP26. But there are still concerns about whether these markets would be transparent, lead to actual emissions reductions, and risk reductions being counted twice.

Developing countries wants to focus on the public finance that developed countries should provide. But the finance conversation is becoming multi-stranded and spreading to arenas outside formal negotiating channels.

What were important development related to climate finance at COP27?

Developing countries have been keen to maintain focus on developed country obligations. Consequently, there was no discussion on Article 2.1c of the Paris Agreement, which seeks to make all finance flows compatible with low-carbon development.

COP27 also saw momentum build towards encouraging finance through other channels.

For the first time, the COP27 decision text included a call for reforming the global financial system, particularly multilateral development banks. It calls for making them more supportive of climate action.

It also calls for MDBs to reduce the costs of borrowing for climate projects, increase finance for adaptation, and better align their operations with the Paris Agreement.