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What Really Happened at COP27 in Sharm El-Sheikh?

The Twenty-Seventh Conference of the Parties (COP27) of the United Nations Framework Convention on Climate Change (UNFCCC), held November 7-20 in Sharm El-Sheikh, Egypt, turned out to be important in several ways, but disappointing in others.

The Most Important Development During COP27 for Long-Term Climate Policy

Ever since Donald Trump was elected U.S. President in November 2016, a major question has been when would the United States and China return to the highly effective co-leadership they had played during the years of the Obama administration in the runup to the Paris Agreement. This was an important question at last year’s COP26 in Glasgow. It turned out that this year’s COP27 provided an answer, although in somewhat surprising fashion.

In my view, the most important development during COP27 held November 7-20 in Sharm El-Sheikh, took place six thousands miles away in Bali, Indonesia, when U.S. President Joe Biden and China President Xi Jinping met on November 14 on the sidelines of the G20 summit, shook hands, and engaged on in a three-hour conversation in which, among other topics, they signaled their return to the cooperative stance that had previously been so crucial for international progress on climate change. That three-hour meeting marked the end of the breakoff of talks that had been initiated by China in response to Speaker Nancy Pelosi’s trip to Taiwan in early August, and the two leaders’ intention to not allow disagreements regarding international trade, human rights, movement away from democracy in Hong Kong, and Taiwan’s security to contaminate their cooperation on climate change.

The discussion between the two heads of state quickly (and explicitly) trickled down to the heads of the respective negotiating teams at COP27 — John Kerry of the United States and Xie Zhenhua of China. They are longtime friends, but had not been engaged in discussions or cooperation on climate change because of the problems that had existed since August at the highest level between the two governments. After the Biden-Xi meeting in Bali, statements from both John Kerry and Xie Zhenhua indicated that the two countries will resume cooperation. I believe it is reasonable to anticipate that there may even be something of a return to the co-leadership on climate change policy which China and the United States had previously exercised, and which was absolutely essential for the successful enactment of the Paris Agreement (adopted by 196 Parties at COP21 in Paris, December 12, 2015, and entered into force on November 4, 2016), but cooperation that had disappeared long before Pelosi’s trip to Taiwan, namely with the beginning of the former Trump administration and throughout much of the first two years of the Biden administration.

The Most Contentious and Dramatic Decision at COP27

If the restart of China-U.S. climate cooperation was the most important development during the COP for long-term climate policy, the most dramatic and contentious decision reached within the halls of COP27 by the negotiators from 195 countries was the establishment of a fund for so-called “Loss and Damage,” an issue that has been kicked down the road since it was first floated in 1991 when Vanuatu, a small island nation in the Pacific, suggested the creation of a United Nations fund to help pay for the consequences of rising sea levels. For thirty years, action on this notion has been delayed, including with a clever approach in the Paris Agreement itself. One year ago, at the conclusion of COP26 in Glasgow, I predicted that this Loss & Damage issue would be the major focus of this year’s COP27. My predictions do not always come true, but this one did.

First, some background for those of you who are not UNFCCC/COP junkies. “Loss and Damage” refers to the range of impacts associated with climate change, since even if emissions are reduced to zero tomorrow morning, damages will continue due to the long lag time of greenhouse gases (GHGs) in the atmosphere, particularly CO₂ with its atmospheric half-life of more than 100 years. Most of the Paris Agreement targets reducing emissions (via the mechanism of the Nationally Determined Contributions), and the famous $100 billion commitment for finance from developed countries for developing countries targets mitigation and adaptation. But adaptation is not possible for all impacts – think about the very existence of small island states, or this year’s floods in Pakistan.

The controversy has been with regard to who should pay for such loss and damage, with the focus on those most responsible for climate change, namely the countries with the greatest contributions to the accumulated stock of GHGs in the atmosphere – the United States and other large, wealthy countries, plus – importantly – China.

This has been controversial because, on the one hand, it is absolutely (and understandably) viewed as essential by countries such as the small island states, whereas countries such as the USA, China, and the EU member states worry that talk of “loss and damage” raises the specter of compensation for bad weather and unlimited legal liability. Indeed, at some climate talks before the Paris Agreement (2015), debates on this issue nearly caused the talks to collapse.

But the issue was finessed in the Paris Agreement’s Article 8, which recognizes the importance of loss and damage, but then eliminates the most contentious aspects in Decision 52 (a document that accompanied the Paris Agreement), where the Parties agreed that loss and damage “does not involve or provide a basis for any liability or compensation.” Understandably, some countries were not satisfied with this “resolution.”

The developing-country voices regarding loss and damage – this time favoring the creation of a new fund for loss and damage payments – were more prominent at COP26 last year than at any previous COP, but on the final day of the talks last year the wealthy countries blocked such proposals, and instead agreed to talk more about it in the future by setting up a “dialogue” on the issue in future COPs.

That brief history will convey the significance of what happened at COP27, when China, the European Union, and a few other developed countries came out in support of a loss & damage fund; and, then, as the second week of the COP was approaching its close, John Kerry announced that the U.S. also supported (in principle) the creation of such a fund, reversing its long-standing opposition. It’s important to note that the agenda item on Loss & Damage, which was adopted at the outset of COP27 (and was the basis for the Loss & Damage decision), was agreed on the understanding (in the report of the meeting) that Loss & Damage does not involve compensation or legal liability, and, furthermore, that understanding is cross-referenced in the preamble to the Loss & Damage decision. Hence, the important caveat from Decision 52 accompanying the Paris Agreement was reiterated in the Loss & Damage decision produced at COP27.

Such a fund could – on the demand side – eventually amount to trillions of dollars per year. Note that the World Bank has estimated that this year’s floods in Pakistan caused $40 billion in damages. However, on the supply side, the few quantitative financial pledges stated thus far are in the tens of millions of dollars. COP27 established a transition committee to develop recommendations on funding arrangements at COP28 in 2023. The transition committee will have a majority of developing country representatives (which may not be a prescription for a pragmatic and effective process).

So, is the new Loss and Damage Fund an empty shell? China is important, as the world’s largest emitter, but not the greatest contributor to the atmospheric stock of greenhouse gases, a title held by the United States. And damages are a function of the existing stock, not the emissions in any year. However, depending on relative rates of economic growth and other factors, China may become the largest contributor to the stock in a decade or two. China’s announced position at COP27 was that it supports the creation of the Loss and Damage Fund, but that as a “developing country” it will not be responsible for any contributions to the fund. By the way, China’s definition of itself as a “developing country” links to the 1992 list of non-Annex I countries under the UNFCCC, when China’s per capita GDP was less than $400/year. The fact that its per capita GDP has grown by 3,330% since then is not considered relevant by China.

Interestingly, there is some convergence on the Loss and Damage Fund between China and the United States, although certainly not in regard to China’s self-proclaimed exemption from financial contributor status. Rather, the U.S. has a story that winds up in a similar place. It goes like this. “We support the Loss & Damage fund, but due to the new Republican majority in the House of Representatives, it is impossible for us to make any commitment of new funding.” (Minor caveat: What about a quick move via inclusion in the Omnibus Budget Bill in December, before the Republicans take control? Not going to happen.)

So, is the new Loss and Damage Fund an empty shell, or is it a principled first step toward equitable allocation of responsibility under the Paris Agreement? It may be both. How it will evolve in the future is difficult to say.

Other Developments and Issues at COP27

There were plenty of other debates and developments at COP27, but in my view they were of secondary consequence compared with the Biden-Xi rapprochement and the establishment of the Loss & Damage fund.

Of course, the UNFCCC, the Paris Agreement, and the annual COPs are ultimately and mainly about reducing emissions of GHGs. There have been many statements in the popular press and from some of the delegations of disappointment because the COP27 closing statement did not fully embrace the 1.5 C target (relative to pre-industrial temperatures), versus 2 C target of the Paris Agreement, nor did it state the intention – in what is really no more than a non-binding resolution – to phase out not just “unabated coal,” as in the Glasgow decision, but all fossil fuels.

These are valid, indeed important concerns. But I remember when the Business-as-Usual (BAU) predictions from the Intergovernmental Panel on Climate Change (IPCC) were as high as 7.0 C this century, then with Paris, 3 C; then with enhanced Paris & the Kigali amendments to the Montreal Protocol, 2.5 C; and now with the latest pledges from China and India, capping warming at 1.7 C this century may be feasible, according to the International Energy Agency. Much will depend upon future actions by the large emerging economies – China, India, Brazil, Korea, South Africa, Mexico, and Indonesia – as well as by the United States and other developed countries. But this COP need not cause excessive hang-wringing, let alone depression. This is a marathon, not a sprint.

Also, since I have written extensively – and worked at the annual COPs – on international linkage, trading, and Article 6 of the Paris Agreement, I should at least note that a variety of technical decisions regarding operationalizing the Article 6.2 mechanism were deferred to COP28. To some degree, this is good news, since developments with Article 6.2 since the Rulebook for it was completed at COP26 are not encouraging, nor are the interpretations of 6.2 that many policy participants seem to hold. More about this in the future.

In the meantime, there were also significant discussions and developments regarding a very important non-CO₂ GHG, namely methane. In this regard, in a previous blog post, I described a podcast conversation with my Harvard colleague, Professor Daniel Jacob, who specializes in this realm. And in my most recent previous blog post, I described my own activities and speaking engagements at COP27 regarding our work at Harvard on satellite-detection of methane concentrations, statistical estimation of related emissions, and development and implementation of appropriate public policies. This was an important focus of several bilateral meetings at COP27, as well as some of my speaking engagements (others were on carbon pricing). I’ll have more to say about our methane work and U.S. and global developments in future essays at this blog.

Next Year: COP28 in Dubai

This year was officially the “Implementation COP,” and next year’s COP28 in Dubai, United Arab Emirates (UAE), is officially the “Global Stocktake COP.” But if COP27 was, in effect, the “Loss & Damage COP,” we might anticipate that the incoming UAE presidency of COP28 will make it the “Carbon Removal COP,” with renewed attention to carbon capture & storage, carbon capture & utilization, direct carbon removal, as well as solar radiation management. If that happens, it will be controversial, like loss & damage was, but for different reasons and with very different parties.

Photos from COP27

Finally, I’m including a few photos below from some of my speaking engagements and meetings. You can find more photos and stories about activities at COP27 of the Harvard Project on Climate Agreements here.

Entrance to COP27

Speaking at China Pavilion

Panel session at China Pavilion

Speaking at China Pavilion

Group of presenters at China Pavilion

Room View at China Pavilion

Room View of session on Frontiers in Carbon Pricing in IETA Pavilion

Panel session on Frontiers in Carbon Pricing in IETA Pavilion

Panel Session Frontiers in Carbon Pricing in IETA Pavilion

Speaking in IETA Pavilion

Interview with Lisa Friedman, New York Times

Video interview with Michael Jung, Executive Director, ICF Climate Center

Meeting with Prof. Jos Delbeke, European University Institute, and Prof. Simone Borghesi, University of Siena, Italy

View of Room for HPCA-Enel Foundation Side Event on Methane Emissions Reduction

Professor Daniel Jacob speaking at Side Event on Methane Emissions Reduction

Panel at HPCA Side Event with Lena Hoglund Isaksson on Methane Emission Reduction

Can Europe Decarbonize in the Midst of a Geopolitical Crisis?

Is the geopolitical crisis due to the Russian invasion of Ukraine likely to accelerate or retard the energy transformation in the European Union? This and related topics on decarbonizing Europe were central to the most recent webinar in our series, Conversations on Climate Change and Energy Policy, sponsored by the Harvard Project on Climate Agreements (HPCA). This time, we featured a conversation with Dan Jørgensen, the Danish Minister of Climate, Energy, and Utilities, who expressed his hope (if not expectation) that the tragic war in Ukraine will help accelerate the clean energy transformation by weaning Europe off Russian gas. A video recording (and transcript) of the entire webinar is available here.

As many readers of this blog know, in this webinar series I feature leading authorities on climate change policy, whether from academia, the private sector, NGOs, or government. In this most recent Conversation, I was fortunate to engage with someone who has had solid and important experience in government.

Dan Jørgensen, who played a significant role in maintaining the focus on reducing the rise of global temperatures during the 26^th Conference of the Parties (COP-26) to the United Nations Framework Convention on Climate Change (UNFCCC) in Glasgow last November, lauded the efforts of European countries like Greece that are proclaiming their intent to reduce their use of Russian gas in favor of other energy sources, although Greece has simultaneously announced that it will therefore have to increase its use of coal for electricity generation.

“One of the few positive things that might come out of a terrible situation is that we will now be forced to speed up the green transformation away from fossils in Europe,” Jørgensen says. “It has opened the eyes… I think, for decision makers all over Europe to ramp up the replacement of fossils – that’s gas, that’s oil, that’s coal, with renewables. And we have a lot of potential for that in Europe.”

Jørgensen talks about important legislation being negotiated in the European Union which would create new directives on energy efficiency and renewable energy that could, he states, help EU countries greatly reduce their dependency on Russian fossil fuel.

Much of the discussion also focuses on COP-26 and the decision by participating countries to agree on language calling for a “phase down” of unabated coal and to reduce inefficient fossil fuel subsidies.

“On one hand, I’m disappointed that the text is not stronger than it is on those issues. On the other hand, it is really huge progress that it’s now in the text, meaning that…[it will be] the starting point for the next negotiations [at COP-27 in Sharm el-Sheikh, Egypt],” Jørgensen remarks. “The overall result was a positive one. There was some real progress. But first and foremost, the aim of the COP-26 meeting was to keep 1.5 alive, so to speak. What does that mean? It means that if we hadn’t made the decisions that we actually made then…it would be almost impossible for us to keep the promise of staying below 1.5 alive, and it wouldn’t be credible.”

Looking ahead to COP-27, Jørgensen says negotiators will focus on the promise of more ambitious nationally determined contributions (NDCs) as well as questions surrounding finance for developing countries requiring short-term assistance to reduce their dependency on fossil fuels and adapt to climate change.

“I do understand how some of the growing economies of this planet that are also now amongst the biggest emitters, why they think it’s only fair that the richer countries of the planet help them in the transformation,” he states. “We have a climate problem because rich countries have been polluting for more than 100 years. Now, some countries are raising their standard of living and…starting to pollute more. But I don’t really think it would be fair for us to say, ‘You cannot have the same standard of living as we do.’ That would not be legitimate, in my point of view. And it wouldn’t be fair if we didn’t also offer help to mitigate the problem. So, we need to have a clear focus on the financing part.”

Jørgensen also shares his thoughts on the potential for carbon trading systems to reduce global emissions, arguing that pricing can be complicated but is absolutely necessary.

“We need clear price signals in the market,” he says. “It needs to be more expensive to produce in a way where you’re dependent on fossil fuels and less expensive to do the opposite.”

I ask Jørgensen about the European Union’s Emissions Trading System (EU ETS), established in 2005 as the first large greenhouse gas emissions trading scheme in the world, and which now covers more than 11,000 factories, power stations, and other installations in 31 countries, including all 27 EU countries.

“It is actually pretty incredible that we have this well-functioning system with 27 countries that is economically rational, that works, that cuts emissions, even in times of crisis where normally many countries will probably say, ‘Okay, well, we want to save the climate, but we need to get through this crisis first,’” he says. “In times of crisis like that, it’s extremely important that we have these systems. And what I like especially about it is that it’s a win-win. I mean, it is the cheapest, most efficient way of making a transformation.”

During the forum, Jørgensen also responds to questions from attendees from around the world, including questions focusing on carbon capture and sequestration, solar radiation management, methane, nuclear power, and the youth climate movement.

All of this and much more can be seen and heard in our full Conversation here. I hope you will check it out.

Previous episodes in this series – Conversations on Climate Change and Energy Policy – have featured Meghan O’Sullivan’s thoughts on Geopolitics and Upheaval in Oil Markets, Jake Werksman’s assessment of the European Union’s Green New Deal, Rachel Kyte’s examination of “Using the Pandemic Recovery to Spur the Clean Transition,” Joseph Stiglitz’s reflections on “Carbon Pricing, the COVID-19 Pandemic, and Green Economic Recovery,” Joe Aldy describing “Lessons from Experience for Greening an Economic Stimulus,” Jason Bordoff commenting on “Prospects for Energy and Climate Change Policy under the New U.S. Administration,” Ottmar Edenhofer talking about “The Future of European Climate Change Policy,” Nathaniel Keohane reflecting on “The Path Ahead for Climate Change Policy,” Valerie Karplus talking about “The Future of China’s National Carbon Market,” Laurence Tubiana reflecting on “A European Perspective on COP26,” and Congressman Garret Graves on “U.S. Climate Change Policy in an Era of Political Polarization.”

Watch for an announcement about our next webinar. You will be able to register in advance for the event on the website of the Harvard Project on Climate Agreements.

What Happened in Glasgow at COP26?

I returned a couple of days ago from the 26^th Conference of the Parties (COP26) of the United Nations Framework Convention on Climate Change (UNFCCC) in Glasgow, Scotland. In today’s post, I try to highlight – as briefly as possible – my major impressions of what transpired during the two weeks of the COP, and how to think about the key elements of the outcome. For your interest – and my convenience – I organize my commentary as a follow up to my blog post from a few weeks ago, “What to Expect at COP-26 in Glasgow.”

But first, I want to offer you my view of the overall nature and evolution of these annual events, based on my personal participation for over a decade. Ever since I attended my first COP – COP13 in Bali, Indonesia, in 2007 – I have described these annual get-togethers via an analogy to a plumbing industry convention, where the core function is to negotiate an agreement among plumbers (the Parties to the agreement) about standards for such things as moving from old-style metal pipes to newer PVC pipes. That’s the major explicit function of the annual plumbers’ convention, but in addition to those negotiations, the convention attracts many other interested people and organizations (Observers) – including the businesses that provide and support the newer types of pipes, and those who provide and support the older styles. Beyond this, there are various non-profit organizations that advocate for the new pipes, and some that worry about the impacts of phasing out the old pipes. In addition, some of those non-profit organizations are universities and think tanks that carry out research related to the negotiations or to the broader issues surrounding the convention. I assume I don’t need to state the ways in which this is analogous to what we have been experiencing for many years at the annual COPs regarding climate change.

What is most striking to me is that whereas a decade or more ago I found that the lion’s share of the attention (and attendance) in the annual COPs was directly associated with the negotiations, over time this has gradually evolved to the point where the side shows have sometimes become the featured attractions. As I explain below with specific examples, many of the most prominent events at the COP and many of what may be the most important outcomes are not associated with the negotiations themselves (on the Paris Agreement), but rather are fundamentally outside of the Agreement, and frequently outside of the authority of the COP and the broader UNFCCC.

Big Issues in Glasgow

As in my pre-COP blog post, I will consider what I consider to be the big issues in four categories: (1) the big stories for the popular press; (2) the major issues for many of the delegates; (3) some issues for policy wonks (like myself); and (4) what I expected would be “the elephant in the room.”

Potential Big Stories for the Popular Press

One of the potential big stories for the press was substantive and one logistical. First, on substance, this COP was a particularly important one because it brought with it the first implementation of a key element of the Paris Agreement – renewal and presumably ratcheting up of national emissions reduction pledges every five years. The substantive issue which has indeed dominated most stories in the popular press after the COP concluded on Saturday, November 13^th (“only” 24 hours after its scheduled adjournment) is whether or not the new, updated Nationally Determined Contributions (NDCs) from some of the major emitters – such as the European Union, the United States, Canada, the UK, and Japan, – combined with the existing, but not updated NDCs from other major emitters – Australia, China, Russia, and Brazil – together put the world on track to achieve the Paris Agreement’s major target of limiting warming in this century to 2^o C, and, even more ambitious, to just 1.5^o C.

The answer, according to a report released by the United Nations, is that even with the enhanced 2030 targets, the world is on track for a temperature increase of about 2.7^o C this century. (And this assumes that every country puts in place effective polices that will fully achieve its targets.) If we add in the additional statements (not part of the NDCs under the Paris Agreement) made by many countries of net-zero emissions by 2050 (the EU and the USA, for example), by 2060 (China), or by 2070 (India), warming this century could be limited to 2.4^o C, or as little as 1.8^o C, if other such “commitments” from the private sector are included. To put this in perspective, note that estimates prior to the Paris Agreement were for the then current set of policies and trajectories leading to 3.7^o C of warming this century! So, in the very short period of time from 2014 to 2021, predicted warming this century has fallen from 3.7^o to as low as 2.4^o or even 1.8^o.

That is a very significant change, but whether it represents success or failure depends upon the observer. Clearly, in the eyes of Greta Thunberg, the Extinction Rebellion, and many of the young (and not-so-young) demonstrators outside of the COP26 secure area (the “blue zone”), it is just “bla, bla, bla,” to quote Ms. Thunberg. But for some of the negotiators and some of the official Observers, it is remarkable progress, although not ultimate success.

Before and during the COP, Prime Minister Boris Johnson urged the delegations to increase even more the ambition of their pledges within their respective NDCs. For the most part, this did not come to pass. So, the Prime Minister and the British COP President, Alok Sharma, changed this exhortation to one saying that the delegates should increase their stated ambitions by the time of the next COP in 2022. This appeared in the political agreement that closed COP26, the COP’s “Decision,” known this year as “The Glasgow Climate Pact.” In other words, the can (of heightened ambition) was kicked down the road, with the request that the Parties to the Paris Agreement revisit their NDCs next year.

The other potential big story – which fortunately did not come to pass – was the possibility that COP26 in Glasgow would turn out to be a logistical nightmare, perhaps on the scale of the logistical meltdown at COP15 in Copenhagen in 2009. This year, for COP26, as many as 20,000 credentialed participants were expected to show up at the COP site in Glasgow for entrance to the secure area, and reduced capacity because of COVID might leave many credentialed participants unable to gain entry (or having to wait hours outside in line before getting in). I am delighted to say that this logistical nightmare did not materialize, partly because COVID travel restrictions may have dissuaded many observers from attending. But let me be clear that the other reason the nightmare did not come to pass is that the COP hosts – the UK government, but more to the point the hundreds of Scottish host personnel manning the check points and at locations throughout the COP – were superb, both highly efficient and exceptionally warm and gracious. (Given that I found the Glasgow Scots – whether at the COP, or in hotels, restaurants, airports, and taxis – to to be consistently friendly and helpful suggests that the logistical success may have been due to individuals as much as to institutions.)

There was one other issue that I predicted would get substantial press attention — whether or not a post-COP statement (Decision) from the Parties would commit to a global phase-out of the extraction and burning of coal. I said this was unlikely to happen, because leaders from the Group of 20 major economies at their pre-COP meeting in Rome had failed to include such a statement in their post-G20 communique. Opposition came from Australia, China, India, Russia, Saudi Arabia, and Turkey. Without a positive signal from the G-20 leaders, agreement on this in Glasgow appeared highly unlikely. What I noted might be possible, however, would be a general statement from the Glasgow conference about “phasing down” rather than “phasing out” coal. This is precisely what was agreed to in the final negotiations on Saturday, November 13^th, and included in the negotiated Glasgow Climate Pact with the final text calling for “accelerating efforts” to phase down “unabated coal power and phase out inefficient fossil fuel subsidies.”

Major Issues for Many of the Delegates

About 80% of the national delegations to the climate negotiations are from developing countries (on the order of 157 out of 197), and so the issues that are of greatest significance to those delegations are particularly important. Two stood out in my mind in advance of the COP.

One was climate finance, which refers to the commitment made in Copenhagen in 2009 that by 2020, developed countries would begin to contribute $100 billion per year to developing countries to help finance their greenhouse gas (GHG) emissions mitigation and their adaption to climate change. We’re about to enter the year 2022, but the $100/billion has not materialized, with some estimates pegging the combined pledges to be about $80 billion per year over the next few years. So that is a huge issue for developing countries. A closely related issue is whether and when the developed countries will make up for what will be the historic shortfall, even if the $100 billion/year is eventually achieved.

The “resolution” of this issue, codified in the Glasgow Climate Pact, was that the wealthy countries are urged to at least double their levels of finance by 2025 (particularly for adaptation by poor countries).

The other issue that was (and is) a major one for some developing countries, in particular those most vulnerable to the impacts of climate change, is characterized in the negotiations as “Loss and Damage,” which has been an important source of controversy in the annual talks for the past ten years or so. This phrase refers to the range of damages associated with climate change, since even if emissions are reduced to zero tomorrow morning, damages will continue due to the long lag time of GHGs in the atmosphere, particularly CO₂ with its atmospheric half-life of more than 100 years. The controversy has been with regard to who should pay for such loss and damage, with the focus on those most responsible for climate change, namely the countries with the greatest contributions to the accumulated stock of GHGs in the atmosphere – the United States and other large, wealthy countries, plus China.

This has been controversial because, on the one hand, it is absolutely (and understandably) viewed as essential from countries such as the small island states, whereas countries such as the USA, China, and the EU member states worry that talk of “loss and damage” raises the specter of unlimited legal liability. Indeed, at some climate talks before the Paris Agreement (2015), debates on this issue nearly caused the talks to collapse. But the issue was finessed in the Paris Agreement’s Article 8, which recognizes the importance of loss and damage, but then eliminated the most contentious aspects in Decision 52 (a document that accompanied the Paris Agreement), where the Parties agreed that loss and damage “does not involve or provide a basis for any liability or compensation.” As one can understand, some countries are not happy with this apparent resolution, and so the issue was raised again Glasgow.

The developing-country voices regarding loss and damage – this time favoring a new fund for loss and damage payments – were more prominent than at any previous COP, but in the end the wealthy countries blocked such proposals, and instead agreed to talk more about it in the future by setting up a “dialogue” on the issue in future COPs.

Issues for Policy Wonks

In my pre-COP blog post I cited two issues that policy wonks – both from the government delegations and the observer organizations from civil society (like me) – would be thinking about and working on.

One was the question of whether China and the United States would return to the spirit and reality of cooperation that characterized their relationship during the Obama years, when their joint initiatives were absolutely essential to the successful completion of the Paris Agreement. That was before such cooperation evolved into confrontation during the Trump years, which sadly has continued during the Biden year. Sometimes it seems that “America First” has evolved into “American Manufacturing First.”

Half way through the second week of the COP, the possibility suddenly appeared that China and the United States might re-occupy their position of co-leadership on climate change that had so characterized their relationship during the Obama years. In a dramatic announcement, the press was informed that U.S. climate envoy John Kerry and his Chinese counterpart, Xie Zhenhua, would hold a joint press conference to reveal a surprise deal to address climate change. Although it was a welcome development and a surprise to see China and the USA shaking hands (or the COVID equivalent) and seeming to cooperate on various initiatives, neither country announced increased ambitions, and most observers did not consider this a return to the former era of serious co-leadership. In particular, there was no apparent impact of the joint statement on the actions in Glasgow of the other 195 Parties to the Paris Agreement.

The other issue that I said would be receiving a great deal of attention was the one part of the Paris Agreement for which the accompanying “rulebook” had not been finalized – Article 6. A little background may help. The Paris Agreement provided a promising, fresh approach by instituting a bottom-up strategy in which all participating countries specify their own targets, consistent with their national circumstances and domestic political realities. This convinced many nations to sign up. Countries that joined the Paris Agreement represent 97% of global GHG emissions, compared with 14% under the second commitment period of the top-down Kyoto Protocol. But it also gave every country an incentive to minimize its own actions while benefiting from other nations’ emission reductions.

So, are there ways to persuade nations to increase their commitments over time? One key strategy is linking national policies, so that emitters (compliance entities under a national policy) can buy and sell carbon emissions allowances or credits across borders. Such linking need not be restricted to pairs of cap-and-trade systems. Rather, heterogeneous linkage among cap-and-trade, carbon taxes and performance standards is feasible. Such linkage lowers costs, enabling countries to be more ambitious. One study estimated that linkage could, in theory, reduce compliance costs by 75%.

But for such systems to be meaningful, each country’s steps must be correctly counted toward its national target under the Paris Agreement, with no double-counting. This is where Article 6, in particular 6.2, comes in. Writing the rules for this article was the primary task for negotiators in Madrid (28 other articles were completed at the 2018 COP in Katowice, Poland). Unfortunately, Brazil and a few other countries insisted on adopting accounting loopholes that made it impossible to reach agreement in Madrid on Article 6. Negotiators had an opportunity to define clear and consistent guidance for accounting for emissions transfers but failed to close a deal. On the other hand, if they had adopted guidance that extended much beyond basic accounting rules, as some countries wanted, the result could have been restrictive requirements that would actually impede effective linkage.

In particular, in Madrid and this year in Glasgow, there were proposals for two very problematic elements to be included in the Rulebook for Article 6.2, which can and should simply be the home for accounting rules to prevent double counting toward meeting NDCs when international exchanges take place between firms under the authority of a bilateral international linkage: (a) a requirement that net emissions be reduced by some specified amount whenever an exchange occurs under Article 6.2; and (b) a tax on any international exchanges (to generate funds for adaptation in developing countries). Although increasing ambition (cutting emissions) and generating funds for poor countries to adapt to climate change are both worthy objectives, there are other parts of the Paris Agreement that are proper homes for such provisions. Such implicit and explicit “taxes on trading” would simply reduce such exchanges, drive up costs, and fail to reduce emissions.

So, with no closure in Madrid, the baton for completing Article 6 was passed to COP-26 in Glasgow. The good news is that Brazil signaled that it might be open to compromise. As it turned out, the final Rulebook for Article 6 avoids the worst, despite the fact that the final text cannot be labeled the best possible.

In the final deal on Saturday, a two-track approach was agreed, in which the worst proposals apply only to Article 6.4 (a top-down CDM-style project-based offset program), not to Article 6.2 (which provides accounting for international linkages to avoid double counting toward NDCs). First, although a provision for “overall mitigation in global emissions” is included in the Rulebook for Article 6.4 in the form of 2% of exchanged offsets being cancelled with each exchange, there is no such provision under 6.2. It may well be appropriate in 6.4, given that such offset (emissions reduction credit) systems are plagued by the well-known additionality problem, it is quite possible that exchanges can actually serve to increase emissions if the offsets are bogus.

Secondly, the proposal for “share of proceeds” was included in the 6.4 mechanism at a rate of 5%, but there is no such requirement for Article 6.2 exchanges (where it made no sense, since 6.2 is simply an accounting mechanism, not a home for nation-nation trading – otherwise it would be similar to the Kyoto Protocol’s Article 17, and would fail for the same reasons, as I wrote about long ago with Robert Hahn).

The rules for accounting (under both 6.2 and 6.4) via “corresponding adjustments” to NDCs was made clear, which is the key protection against double counting. Finally, Brazil’s demand to use Kyoto era Certified Emission Reductions (CERs) to comply with Paris was approved in a compromised fashion, allowing only CERs produced between 2013 and 2020 to be counted against countries’ first (and only first) NDCs.

Another issue I noted in my previous blog post that policy wonks were watching was associated with cutting global emissions of methane — an extremely potent greenhouse gas, although relatively short-lived in the atmosphere. I predicted there would be a success in this regard in Glasgow, because leaders from a number of important countries were likely to pledge at COP26 to cut methane emissions by at least 30% by 2030, a goal that was previously unveiled by the United States and the European Union in September. More than a dozen countries had already signed the pact. For its part, the Biden administration will impose aggressive regulations on methane leaking from all existing oil and gas wells and pipelines throughout the United States, an approach which is more ambitious than the Obama administration’s regulation, subsequently withdrawn by former President Trump, to regulate wells built since 2015. In fact, outside of the actual negotiations, over 100 countries agreed in Glasgow to cut methane emissions by 30 percent over the next 8-9 years. Unfortunately, the world’s top methane emitter, China, did not join the international pledge.

One other potentially important issue was not actually associated directly with COP26 itself, but rather with the reality that prior to the beginning of the Glasgow sessions, the Biden administration announced a trade agreement with the European Union which incorporates the concept of using tariffs on trade to cut carbon emissions. The agreement is intended to cut imports of steel that is particularly carbon intensive in its production (such as from China and Brazil). Such agreements may turn out to be a very important complement (or even substitute) for the Paris Agreement. I hope to write more about carbon tariffs (border adjustments) in a forthcoming essay at this blog.

The Elephant in the Room

For everyone – the press, the delegates, and observers of all kinds – I predicted that a major question in Glasgow would be whether the United States’s ambitious NDC – a 50-52% reduction of GHG emissions by 2030 below the 2005 level – is truly achievable with reasonably anticipated policies. I’ve written about this in the past, so suffice it to say that this question boils down to whether the Biden administration – in the real world of current Congressional politics – is able to sign enacted legislation that can make dramatic strides toward that impressive 2030 target. The Biden administration has included in its scaled-down “reconciliation bill” a $555-billion spending plan of tax breaks, tax credits, and other subsidies for various approaches and types of clean energy generation and use, validating once again that U.S. politicians are more comfortable giving out benefits than costs. Importantly, what would have been an effective program for green electricity generation has been scrapped, and fees on methane releases may or may not survive. Indeed, a new White House plan for achieving the 2030 target relies in part on carbon removal and unknown technologies.

So what can the Biden administration accomplish via regulations and executive orders? See my comments above regarding a new methane rule. But the regulatory approach, in general, is particularly challenging because legal challenges from the political right are much more likely to be successful during the Biden years than they were during the Obama years, given the 245 Trump-appointed Federal judges (>25% of the total federal judiciary) and the 6-3 conservative majority on the Supreme Court.

In this regard, it is worth noting that a recent report from the Rhodium Group calculates that even if the scaled-back version of the climate and social spending bill now before Congress is signed into law, new action by the states plus a significant number of new rules and regulations will be required (for sectors that have yet to be regulated, including chemicals, natural gas, and refineries) in order to have a chance of achieving the Biden administration’s NDC target. Also, regulations for power plant emissions would have to be more stringent than the Obama-era predecessor (the Clean Power Plan), and would have to include mandates for carbon capture and storage for existing power plants. Despite all of this, President Biden’s climate team in Glasgow sought to assure the delegates that the U.S. is on track to achieve its 2030 target.

Although multiple parties with whom I met in the COP26 hallways in Glasgow – from the press, delegations, and observer organizations – were certainly aware of this inconsistency between the ambitious and impressive U.S. NDC and domestic political realities, I was surprised to find that many or most seemed quite happy to put this reality aside, and proceed with the many other issues they were confronting.

A Final Word

In addition to my making presentations at COP26 in Glasgow at the pavilions of some countries, and participating in meetings with country delegations, multilateral organizations, NGOs, academics, and the press, the Harvard Project on Climate Agreements conducted a panel event at COP26, which I moderated – “Securing Climate Ambition with Cooperative Approaches: Options under Article 6,” co-sponsored with the Enel Foundation, and the Foundation Environment-Law Society. More information about it is found here, and – more importantly – you can watch a video of the complete panel discussion at this event in the blue zone of COP26 here. As you will note in the video, shortly before the event was scheduled to conclude, I had to make a hasty exit to the airport for my flights back to Boston!