Climate finance was central to all discussions that took place at COP27 this year – holding governments accountable for not delivering the finance target of USD 100 billion per year, reforming multilateral development banks systems, and addressing challenges in mobilisation of finance from the private sector.
Financing Loss and Damage
One of COP27’s key outcomes was the push for a new finance facility to fund the loss and damage to vulnerable countries affected by climate disasters. A transitional committee representing 24 countries has been set up to define how the fund will operate and who the funders and funded should be under this mechanism. Recommendations of this committee will be presented at COP28 in Dubai next year.
France also stated their support for the Bridgetown Agenda, put forth by the Prime Minister of Barbados, which details a reform of the international financial architecture by revisiting the Bretton-Woods system in order to deliver on both climate and development goals. COP27 recognised the need for a transformation of the global financial system is required to reach net zero emissions by 2050. Specifically, investments amounting to USD 4 trillion per year until 2030, should flow into renewable energy projects. French President Emmanuel Macron announced a June 2023 Financing Summit in Paris to discuss the Bridgetown Agenda together with Loss and Damage.
Adaptation
Adaptation was a significant topic for both Asian and African countries at COP27. Countries agreed to develop a framework for delivering the global goal on adaptation (as laid out in the Paris Agreement) and tracking progress towards it. Various forums emphasised the role of private sector in collaborating on adaptation finance, and countries also agreed that a report on progress towards doubling adaptation finance by 2025 will be developed for discussion at COP28.
AIGCC Chief Executive Officer, Rebecca Mikula-Wright, said: “Investors need to start accounting for physical risks of climate change through assessments to ensure resilience of their investment portfolios. Investors should step up in implementing adaptation strategies for the region through regional mechanisms like the National Adaptation Plan (NAP) process. AIGCC has developed a list of key asks from governments on the various elements of the NAP process to support the flow of private finance into adaptation and resilience projects such as the inclusion of action points on implementation of NAPs and financing options.”
“We have not seen significant progress in country-level actions and commitments on mitigation post-COP26. This is concerning as we need to nearly halve GHG emissions by 2030 if we want to meet the 1.5°C target.
“We need to see countries committing to more ambitious transition plans. Governments need to revisit and strengthen the 2030 targets in their national climate plans, as well as accelerate efforts to phase out or phase down the use of fossil fuels and accelerate the transition to renewable energy.”
Deforestation
Deforestation was a priority at COP27 with an added vitality since the results of Brazil’s 2022 presidential election. Brazil is one of three nations that are home to half of the world’s tropical forests. Together with Indonesia and the Democratic Republic of Congo (DRC), the three countries signed a new pact that called for payment to be provided to these countries to tackle deforestation and boost carbon stores in their forests.
Another group of 26 countries, representing a third of the world’s forests, formed the Forests and Climate Leaders’ Partnership. This group has agreed to meet twice a year to track commitments on efforts to halt and reverse forest loss by 2030.
Methane
50 more countries have signed up to the Global Methane Pledge, first announced at COP26. The pact aims to reduce methane emissions by 30% by 2030. Two of the five biggest global methane emitters – China and India – have yet to make commitments. However, at COP27, China announced that it has drafted its own national methane strategy focusing on three sources of emissions: oil and gas, farming, and waste.
Just Transition
Closer to home, Indonesia played hosts to the annual G20 Summit. The country announced the Just Energy Transition Partnership (JETP), a new mechanism to bring in more private finance to support a country’s energy transition, echoing the outcomes of COP27. Indonesia is the second country to launch a JETP after South Africa.
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