0 of 0 for ""

Wrapping up COP27

What succeeded, what failed and what to expect

The annual summit of climate talks has come to an end. Andreas Gyllenhammar, Chief Sustainability Officer at Sweco, attended the negotiations in Egypt and provides an in-depth analysis of the key outcomes and business implications of this year’s UN Climate Conference, COP27.

A state of turmoil ahead of COP27

Humanity is in a state of turmoil. In the aftermath of the COVID pandemic, longing for a period of recovery and refocus on sustainable development, the world was thrown into multiple interconnected crises. Nations, companies, and individuals entered short-sighted mode geared at handling the immediate effects of a European war with global consequences such as economic downturn, and high energy and food prices.

2022 was also a year of extreme weather events. The reality of the climate crisis catapulted climate loss and damage on the top of this year’s COP agenda. Ahead of the climate talks in Egypt, IPCC summarised 7 years of climate science into the sixth cycle of its assessment reports. The message was crystal clear: Temperature is rising, it’s us, the effects are increasingly felt and unless we act fast and transformational, we are in for a destructive future. But also, we know how to fix it. All of this, was the backdrop to the COP27, branded as ”The implementation COP”, following on the Glasgow COP26, having been ”The Ambition COP”. With struggling nations and climate change setting the agenda, we all met in Sharm el-Sheikh.

Starting off with Loss and Damage

The first week at COP27 saw an immediate push for Loss and Damage to be on the agenda. This was accepted and the negotiations started off in the three different tracks that nowadays make up the negotiations. Meanwhile, at the ”climate fair” section of the COP, where all the stakeholder pavilions showcase solutions, a vast variety of topics were discussed, bursting out in a flurry of planned or spontaneous meetings between more than 45,000 delegates from all around the world.

Already after the initial few days, it became apparent that this COP was very different from the previous one. Where COP26 aimed to activate non-state actors like cities, regions and businesses, this COP saw much less action when it came to new pledges and alliances being formed. Not that it was completely depraved of it. Some pledges were reporting on progress, some existing were joined by new members or expanded its scope.

Pledges and net-zero claims

The Breakthrough Agenda launched during COP26, with members (countries and industries) representing 50% of world GDP, expanded their scope and reach. They are now ramping up projects to deploy infrastructure projects to include at least 100 hydrogen valleys, set a common target date to phase our polluting cars, mobilise billions of pounds to stimulate demand for green industrial goods and systematically strengthen financial support and technological assistance to developing nations.

The First Movers Coalition announced expansion to include the cement and concrete sector where its new members committed to purchase at least 10% of near-zero carbon cement and concrete by year 2030.

Many of these commitments are meant to be signals to the market that there will be change and a clear demand for decarbonising technologies and low carbon products.

In all, some well needed action, but also not at the scale that was seen at COP26. One of the discussions I participated in, pointed to the lack of an overview or a common platform to follow up on these pledges to be a barrier towards holding actors accountable. The UN did its part and delivered on last year’s promise to produce recommendations for how to enhance the credibility and comparability of net-zero targets. The report, Integrity Matters, is a strong warning to those that take light on announcing net-zero commitments without making them transparent, thorough and true. The report concluded that net-zero claims cannot be made without looking through the whole value chain, cannot include spending money on anti-climate lobbying and have to take into account effects on biodiversity and nature.

The report, that tries to raise the bar on net-zero claims, might scare some away from committing, but will also, if they are adhered to, fence off accusations of greenwashing.

The formal negotiations

The first week saw negotiations progressing at a lower speed than usual. The Loss and Damage talks where explorative and the other tracks were piling up controversial issues for week two and the ministerial talks. Not everything was slow. Sessions on transparency and some parts on carbon markets were moving on. Climate finance and the 1.5 degree limit, however, created fears that there might be backsliding on progress made at COP26. Developing nations where also more reasonable on Loss and Damage than was previously thought. Hopes where set that the outcome actually could result in a new fund or a mosaic of financial solutions to move from ”billions to trillions” which was pushed hard from developing nations.

A hard week to COP

The practical constraints to the venue and its facilities and accommodation became evident quite soon. It stalled negotiations and impacted the mood and the smoothness of getting through the long days at the COP. The reason was probably a combination of bad planning and huge turnout of delegates. This year, more than 45,000 people where accredited for the negotiations. Around 29,000 within national delegations, 14,000 observers (me included) and 3,500 journalists.

Gender balance and human rights

There was a lot of talk on the gender balance, or lack of it. On Heads of State-level, women are heavily under-represented, but the COP overall shows a better balance. I looked through the preliminary delegate lists and found 16,000 men and 11,000 women. That would be around 40% women, although it doesn’t tell the distribution within different roles and positions. Interestingly, in one of the areas where the COP resulted in good progress, Loss and Damage, almost all of the key players where women which might have had influence on the outcome according to some reports.

There were also criticisms on the Egyptian presidency regarding matter like logistics, choice of sponsors (Coca Cola) and dubious arrests of climate activists. The presidency had to handle many questions from journalists on these topics during the daily press briefings.

Closing the deal on overtime

The second week inherited the difficult matters from the first week and it became apparent that things where not going to end on schedule, on Friday evening. As stakes where getting higher, EU where among the groups pushing for more commitment on mitigation and having trouble getting ”the usual suspects” (i.e. Saudi Arabia, Russia, Iran and a few more) on board. Negotiations were going on around the clock and the meeting finally ended on Sunday morning.

Key takeaways from the agreement

  1. A new Loss and Damage fund will be setup during 2023

This was a major win for the developing countries. Without it, overall results from this COP and future COPs would have been jeopardised due to gravely deteriorated trust between developed and developing nations. I am surprised that the matter went from not being on the agenda to resulting in a set of actions during the same COP. It points to the importance of the question. Although a lot of work remains to be done, this might be the trigger that set off a broader change in climate finance (see below).

  1. A mosaic of actions to upscale climate finance

In the cover decision, named ”The Sharm el-Sheik Implementation Plan”, we see progressive language on climate finance. The debate whether to go for new funding or use existing mechanisms clearly ended in a mix. Besides pointing to the importance of mobilising funds from existing multilateral banks and the International Monetary Fund (IMF), the decision highlights that delivering funding at scale ”will require transformation of the financial system and its structures and processes, engaging governments, central banks, commercial banks, institutional investors and other financial actors”. Let’s see how that plays out, but it is a first for a COP decision.

  1. 1.5 still there, and still on life support

There was no complete backsliding on the 1.5 target, but not any progress either.
The final text left out any mentions of either ”phasing out” or ”phasing down” fossil fuels. It also softened the language on ”renewable energy” to include ”low-emission energy” which perhaps opens up discussions on whether natural gas or other fossil alternatives would qualify. It depends on what you compare with, right?

  1. The link to the broader context

The document is unusually clear on linkages to intertwined and related challenges. The link towards the Biodiversity COP, coming up in Toronto in a few weeks, is there and so is language on forests, rivers, oceans and food. And climate tipping points. For the first time!

The cover decision is an interesting read, for those of you that want to dive deeper into it. Here it is: Sharm el-Sheikh Implementation Plan

Business observations and some words of advice

High ambitions from businesses

As mentioned, many businesses showed up with high ambitions, working climate solutions and high hopes for a progressive agenda on climate mitigation. So did mayors. The frustration by the Mayor of the Dutch city of Utrecht expressed in one of the side events sums up the reaction in week 2: ”We should be on the other side of this wall instead of out here”. This was a set-back from previous years that successively built up momentum from non-state actors. There was also very little mentions on the importance and role of the private sector in the decisions.

Embrace climate adaptation

All reports released in the running up to the conference point to that we are in for a new climate. The updated Climate Action Tracker reveals that we are heading for a global temperature increase (by year 2100) of 2.7°C. If the national climate plans to 2030 are reached it goes down to 2.4°C. With the inclusion of submitted and binding long-term targets, we are in for 2.0°C warming and the very best scenario is when we add all announced targets. Then we could have a 50/50 chance of limit global warming to 1.8°C. This tells us two things. Firstly, climate will get hotter, so let’s plan for it. Otherwise, we will face severe damages to societal values and risk lives and livelihoods. The answer lies in creating resilience. Secondly, the amount of warming will depend on the actions we take in the next coming years and decades.

Deliver on net zero claims

We are already facing more tight regulations regarding climate reporting due to EU and national regulations all around the world. This will further strengthen when the proposed guidelines on net-zero reporting trickles down the systems. Companies need to secure a holistic and transparent approach to net zero targets.

Shift is happening

One of the more positive reports that came out during the COP was ”THE BIG FOUR: Are major emitters downplaying their climate and clean energy progress?”, an analysis by the ”Energy & Climate Intelligence Unit”. It highlighted progress by shifting the climate perspectives from top-down to bottom-up. Suddenly, the major transformations in four major economies (US, China, India and EU) became visible. We are scaling up renewable energy in a speed that will take us from the present 10% to 40% to 2030. Every second bus that is sold is now an electric. We are in the positive spiral of economics of scale, resulting in lowering costs, faster deployment and so on. Global investment in clean energy continues to rise and now accounts for almost all new investment in electricity generation.

China and US resumed climate cooperation

After the dark climate ages of President Trump, China and US announced that they are taking up climate talks and cooperation. This will further raise the speed of development of green solutions and make climate progress visible.

Not only Sweco talking about the skills gap

In the running up to this COP, we at Sweco joined hands with the global organisation for engineers, FIDIC (representing more than I million engineers and 40,000 companies). The result was a call for focus on the emerging skills gap that have the potential to slow down climate action. Talking to other business participants our view on this topic was confirmed. We need to work together across companies and with governments and the education sector to secure that we 1) increase the total number of engineers and designers 2) reskill our existing workforce to equip them with the capabilities to contribute to the green transitions and 3) to facilitate mobility on the labour markets.

Final thoughts on COP27

This year’s COP was messier than in many years. There is a need for a discussion on what a COP is and how the UN could further develop the global climate agenda. Since the 1990s, the climate issue has gone from managing developed countries emissions, to include adaptation and non-state actors.We are now also talking about matters related to loss and damage, global financial systems and all of this very very little time left to keep us all safe. This should call for a discussion on reforming UNFCCC, its scope, reach and meeting formats. It should [could] [would better] [must] [has to] [needs to] achieve more agility, flexibility, inclusion and mandate in order to maximize its impact on our common future.

Still, I think the COPs make a difference. It is sometimes not visible unless you take a multi-year perspective. I am totally convinced that we wouldn’t have seen the level of decarbonisation, the green steel initiatives, the electrification of transport and the renewable energy revolution that we are scaling up today without the signal sent from Paris in 2015. In a few years, we will look back and say: In 2022, we kickstarted the work on Loss and Damage and look where we are now!
The climate push that comes with a COP meeting is not only of global concern, the amount of knowledge that is gathered, created and released in relation to a COP is immense and would provide business intelligence for a full year. It is also a good opportunity to raise climate issues on all levels in society. Climate change is a challenge and an opportunity for everyone.

Andreas Gyllenhammar, Chief Sustainability Officer, Sweco

About the author of this article

Andreas Gyllenhammar has been attending UNFCCC COP meetings since 2009 as an observer for the business and industry group or as a part of the Swedish delegation. He is Sweco’s liaison officer for WBCSD (the World Business Council on Sustainable Development) and a renowned climate analyst, working with clients to shape climate strategies by interpret science, market shifts to identify and capture opportunities in the transition towards a fossil free future.