The backdrop of this year’s extreme weather painted a bleak picture of the reality of climate impacts – with the flooding in Pakistan, that caused over USD 30 billion in damages, as just one example.
After much negotiation, the most celebrated outcome of COP27 was the establishment of a loss and damage fund for vulnerable nations. Dubbed a ‘breakthrough’ by the UN Climate Change secretariat the fund marks the outcome of over a decade long dialogue on how to address the impacts to those most vulnerable to the climate crisis.
But exactly where the money will come from remains an open question. The text mentions a “wide variety of sources” including “innovative sources”. To answer these questions a committee on operationalising the new fund was established at COP27. The group will report the outcomes to COP28 in Dubai next year. We will likely see continued clashes about which countries are eligible for help, who will pay, what ‘innovative sources’ will be drawn upon, and how much money will go into the fund.
In parallel, there were discussions on finance for adaptation – the costs of mitigating against physical risk. Pre-conference expectations were that the adaptation agenda would take center stage. However, despite some new pledges, including eight countries committing just over USD 100 million, the tangible outcomes for the adaptation agenda were scarce.
Countries agreed to establish a framework for adaptation, based on the pledge made in Glasgow to (at least) double adaptation finance to USD 40 billion by 2025. However, a shift in language saw the emphasis removed from the funding to negotiators agreeing to produce a report for COP28 on the progress towards adaptation. As noted by UNEP, the adaptation finance gap remains vast.
As we stated ahead of the conference, we were particularly interested in the role the private sector may play in mobilizing adaptation finance. On this, the European Bank for Reconstruction and Development (EBRD) launched the EBRD Climate Adaptation Action Plan which aims to build adaptation into project and policy design, as well as mobilize private finance for adaptation projects. Released before the conference, IIGCC’s Climate Resilience Investment Framework sets out a baseline for institutional investors to consider adaptation and how to build climate resilient portfolios.
Outcome: A historic agreement to establish a loss and damage fund marked real progress at COP27. However, there was little advancement on adaptation. The hard battles on both the adaptation and loss and damage agendas are still to come. We will continue to watch as this evolves ahead of COP28.