COP28 Archives - An Economic View of the Environment

What Happened at COP29 in Baku?

Having recently returned from the 29^th Conference of the Parties (COP29) of the U.N. Framework Convention on Climate Change (UNFCCC), held in Baku, Azerbaijan, I want to offer my personal summary and assessment of the major takeaways from COP29, briefly summarize Harvard’s participation, and offer some thoughts about the path ahead to COP30.

Why Azerbaijan?

You probably won’t be surprised to learn that the setting for this COP in the oil-rich, authoritarian state of Azerbaijan was not conducive to a productive let alone an enjoyable Conference of the Parties. Azerbaijan feels like exactly what it is – a former Soviet republic – the Azerbaijan Soviet Socialist Republic – from 1920 until 1991, when the Soviet Union was dissolved, and now an “independent” country that remains firmly within the Russian sphere of influence. So, why was it held in Azerbaijan? The reason is simple: Vladimir Putin said it could be held there. Let me explain.

The COPs rotate among five regional groups of United Nations member states to ensure geographical diversity and equity in hosting the conferences. These regions, in alphabetical order, are: (1) Africa; (2) Asia-Pacific; (3) Eastern Europe; (4) Latin America and the Caribbean; and (5) Western Europe and Others. This was the turn of Eastern Europe. The specific location of the COP within a given region depends on which country from the region volunteers, as long as no country from the region objects. Poland volunteered (they have held three remarkably successful COPs in the past), but Russia objected to any (Eastern European) country that supported Ukraine in the current war being the host. The result was Azerbaijan volunteering to host, and Russia approving. This was not an auspicious beginning to the process of Baku following Dubai.

Five Major Takeaways from COP29

I can identify five significant takeaways – important phenomena or negotiating outcomes – from the two-week Conference in Baku: (1) the counter-productive leadership of COP29 by Azerbaijan’s president; (2) the lame duck status of the U.S. delegation; (3) the outcome of negotiations on “finance;” (4) the evolution of language about the future role of fossil fuels; and (5) the completion of the “carbon-market article” in the Paris Agreement. I take these in turn.

(1) COP29 Leadership by Azerbaijan

As the President of COP29, Azerbaijan President Ilham Aliyev sought to position his country and his leadership at COP29 as a bridge-builder between the Global North and the Global South. In practice, it did not turn out that way. Indeed, I would say that geopolitical tensions at COP29 between rich and poor countries were greater than ever before.

Aliyev started things off with a defiant opening presentation at the beginning of COP29, in which he characterized his country’s oil and gas reserves as “a gift of God,” maintained that it is “not fair” to call his country a petrostate, and then accused Western countries of “double standards” and “political hypocrisy.” Then, the next day, he attacked France and the Netherlands for their overseas territories, which he described as “colonies” which don’t have seats in the climate negotiations. In addition, the Azerbaijani government and its state company, SOCAR (the State Oil Company of the Azerbaijan Republic, the national oil and gas company), finalized several natural gas deals at COP29 to increase natural gas exports to Europe.

This perspective on fossil fuel use from an autocratic ruler made it challenging, to say the least, for Azerbaijan to preside over the talks and find compromise on some very delicate climate topics. I cannot say exactly how Aliyev’s leadership resulted in the COP29 outcomes, but in the hallways, delegates from a diverse set of countries complained vociferously about the host country’s leadership of the Conference.

(2) The Lame Duck Status of the United States

Donald Trump’s election as the next U.S. president pervaded everyone’s thinking, at least during the first week in Baku. In particular, expectations that Trump will follow through on his promise to pull the USA out of the Paris Climate Agreement, as he did in 2017 during his first term in office, fueled concern that this would have profound, negative impacts on multilateral climate action. (See my previous blog essay, Looking Back, Looking Forward: Implications of Trump 2.0.)

The chief U.S. climate envoy, John Podesta, tried in vain to reassure his various audiences – other countries’ negotiators, climate activists, and the press – that the U.S. remains on track at the U.N. climate talks. I will note that there is merit to his claim that the global energy-transition trend will not be stopped by a change in U.S. administration, because much of it, in my view, is driven by markets and exogenous technological change. After a few days, the significance of the U.S. election may have faded somewhat in the negotiators’ minds, but it remained the starting point for discussion in every meeting in which I engaged – with a diverse set of people from governments, NGOs, industry, and the press.

The key question, of course, is whether Trump’s election and the anticipated withdrawal of the United States from the Paris Agreement – or more broadly, the election results and the promise of Trump 2.0 – has on other countries’ climate stances, pledges, and policies. It was clear that the U.S. delegation was more muted than usual, and that there would be no effective pressure from the USA (as there was during the Obama years) for China to become more ambitious in its pledges.

It was striking that during the first week of COP29, right-wing populist leader Javier Milei threatened to withdraw Argentina from the talks altogether, which led some delegates to fear that Trump’s win might precipitate a global chain reaction of far-right governments withdrawing from the Paris Agreement. But the Argentinian government subsequently clarified that it was not leaving Paris Agreement, and those fears dissipated.

It may be that Trump’s election need not derail global climate action, but it is too soon to make firm predictions. For one thing, it does appear that Trump’s victory emboldened Saudi Arabia to be much more strident in its defense of fossil fuels at COP29, even more aggressive than it has been in previous COPs.

(3) The Center-Stage Outcome: Finance

COP29 was labeled the “Finance COP,” because it was intended that the focus would be on augmenting developed countries’ commitment made in 2009 (at COP15 in Copenhagen) to mobilize $100 billion per year by 2020 to support developing countries in addressing climate change, both for mitigation and for adaptation (that target appears to have been met about two years late).

The debates on this continued for the entire two weeks of COP29 (and then some), ranging from heated discussions to acrimonious arguments, with developed countries on one side, and, on the other side, developing countries plus China, which insists it is a “developing country” under UN rules from 1990. China’s position remains that it supports developing country demands for very high levels of financial transfers, but as a developing country itself, it will not contribute, despite the fact that it has been the world’s largest emitter since 2006, and is now second only to the United States as a contributor to the stock of atmospheric greenhouse gases (GHGs).

The developing countries at COP29 insisted on $1.3 trillion/year as the new level of commitment, but the rich countries offered a new goal to deliver to poor countries $300 billion/year by 2035, with developed countries taking the lead and some developing countries (that is, China) encouraged to contribute on a voluntary basis. The developing world wanted all of the funds to come from public sources (that is, foreign aid), but the final deal allows some money to come from private sources, such as foreign direct investment, which (in my opinion) makes abundant sense.

Although the new $300 billion/year target is three times the size of the previous target (see above), it is less than 25% of the $1.3 trillion/year sought by developing countries. So, not surprisingly, developing countries were not happy, with the complaints led vocally by India’s lead negotiator, Chandni Raina, who called it “a paltry sum” and a “travesty of justice.”

(4) The Future of Fossil Fuels

One year earlier, at the 28^th Conference of the Parties (COP28) in Dubai, the closing statement (officially the “Decision of the First Global Stocktake”) endorsed “transitioning away from fossil fuels in energy systems, in a just, orderly and equitable manner …”. That statement received more attention than any other outcome of COP28, although I wrote at the time that it was not of great significance (What Really Happened at COP28 in Dubai). However, many governments, NGOs, and the press hailed that compromise statement as making COP28 a success.

So, when it came to the conclusion of COP29 in Baku, all eyes were turned to the question of whether COP29 would endorse, indeed strengthen that language about transitioning away from fossil fuels. The result, largely due to Saudi Arabia fighting aggressively and effectively against any negative comments about fossil fuels in the final text, was that the COP29 text simply references the Dubai outcome, but does not repeat the call for a transition away from fossil fuels, let alone offer something stronger. The European Union (EU) and the U.S. negotiators wanted something to be included about actions to achieve any goal, but that was likewise rejected.

(5) What About Article 6 of the Paris Agreement?

As some of you may know, I’ve worked on and written about Article 6 (more specifically, Article 6.2) of the Paris Agreement, which deals with “international cooperation,” since long before the Paris Agreement and Article 6 were even developed, via my extensive work on international linkage of heterogeneous policy instruments (Jaffe and Stavins 2008; Ranson and Stavins 2013; Ranson and Stavins 2015). And once the Paris Agreement began to take shape, I turned to examining how international policy linkage could be facilitated by its Article 6.2 (Bodansky, Hoedl, Metcalf, and Stavins 2015; Mehling, Metcalf, and Stavins 2019), as well as numerous essays at this blog.

So, what happened in this regard at COP29? Remarkably, despite the very contentious debates on finance and the future of fossil fuels, there was finally (eight years after the Paris Agreement came into force) agreement on the adoption of Article 6, which can facilitate international GHG trading. Unfortunately, as I will write about in some future essay at this blog, the ways in which countries are interpreting Article 6.2 and exploiting it do not bode well for it living up to its great promise.

So, that’s my summary and assessment of five meaningful takeaways – significant phenomena and negotiating outcomes – from the two-week Conference in Baku. I leave it to readers to decide whether this indicates that COP29 was a success or not.

I now turn to a very brief summary of the work our Harvard delegation was doing at COP-29, and then conclude with some thoughts about the path ahead to COP30.

Harvard Participation

Once again, I led our Harvard delegation, which was severely limited in size at COP29 due to the low allocation of badges we were awarded by the host country. Nevertheless, we held a couple of dozen meetings over three days with governments, industry representatives, NGOs, and the press, largely focused on the work of the Harvard Salata Initiative on Reducing Global Methane Emissions, which I’m directing.

In addition, we hosted two official side events. The first was on New Horizons in Methane-Emissions Abatement, co-sponsored by the Harvard Project on Climate Agreements and the Institute for Governance and Sustainable Development (IGSD), on Tuesday, November 12, 2024.

Speakers included: Zerin Osho, Director, India Program, Institute for Governance & Sustainable Development (IGSD); Sarah Smith, Program Director – Energy, Global Methane Hub; Ole Sander, Senior Scientist for Climate Change, International Rice Research Institute; and myself, as moderator and presenter.

Our second side event was on Industrial Policy, Trade, and the Political Economy of Decarbonization, co-sponsored by the Harvard Project on Climate Agreements, the Enel Foundation, the Massachusetts Institute of Technology, and the Foundation Environment – Law Society, on Thursday, November 14, 2024.

This second panel, which I moderated, featured: Daniele Agostini, Head of Energy and Climate Policies, Enel Group; Chantal Line Carpentier, Head of the Trade, Environment, Climate Change, and Sustainable Development Branch at UNCTAD; Michael Mehling, Deputy Director, Center for Energy and Environmental Policy Research, MIT; and Joyashree Roy, Distinguished Professor and Director SMARTS Center, Asian Institute of Technology. A background paper, “Good Spillover, Bad Spillover? Industrial Policy, Trade, and the Political Economy of Decarbonization,” and its 2-page summary can be downloaded here.

The Path Ahead

There is some consistency between COP28 (Dubai), COP29 (Baku), and next year’s COP30 in Brazil, as that country is Latin America’s largest oil producer (Petrobras now surpasses the production of Mexico and Venezuela). But expectations are very high for COP-30, which will take place November 10-21, 2025, in Belém do Pará in the Amazon region of Brazil, because that is where countries’ updated targets under the Paris Agreement are scheduled to be finalized. Those revised Nationally Determined Contributions are due to be submitted by February 2025. Stay tuned.

Whether I will maintain my streak next year in Brazil of annual COP participation is, as always, an open question, particularly after having spent several days this year in Baku, Azerbaijan.

What to Expect at COP-28 in Dubai

With just a few days remaining until the start of the 28^th Conference of the Parties (COP28) of the United Nations Framework Convention on Climate Change (UNFCCC) in Dubai, United Arab Emirates (UAE), COP28 is the focus of this blog post and my most recent podcast. In the podcast, I engage in conversation with environmental economist Nathaniel Keohane, the president of the Center for Climate and Energy Solutions (C2ES). Nat will be leading the C2ES delegation at COP28. I’ll also be at COP28, with our group from the Harvard Project on Climate Agreements. So, at the end of this blog post, I provide a list of Harvard activities at COP28.

This is a special pre-COP episode of “Environmental Insights: Discussions on Policy and Practice from the Harvard Environmental Economics Program,” which is produced by the Harvard Environmental Economics Program. Listen to the conversation here.

Keohane, before becoming president of C2ES, was Senior Vice President for Climate at the Environmental Defense Fund (EDF), and before that served in the Obama Administration as Special Assistant to the President for Energy and Environment.

In our podcast conversation, Nat explains that the “Global Stocktake” will play a prominent role at COP28 in Dubai beginning later this week. In fact, he expresses considerable optimism that the Global Stocktake will provide incentives for participating nations to step up their collective efforts to slow the rise of global temperatures.

“What we’re looking for coming out of this COP is to highlight a handful of those high-level political signals coming out of this global stocktake. Things like a commitment to triple renewable energy globally by 2030. Things like slashing methane emissions. You can imagine a handful of others on land use and carbon sinks, on adaptation and global finance, a handful of things that can define an action agenda for 2024 and then can inform what countries do when they set those more ambitious targets in 2025. That’s the real centerpiece of this COP,” he says. “The goal is to catalyze action and collaborative cooperative action in 2024, looking ahead to 2025, not just simply to say, ‘Well, gee, we’re off track. That’s too bad’… We need to catalyze action going forward.”

Keohane remarks that the controversial issue of “Loss and Damage” will also play a prominent role in the negotiations this year as the concept of providing financial support to the nations hardest hit by climate change becomes more widely accepted.

“I think we’ve come a long way with the recognition that there are damages that the most vulnerable countries are going to suffer, are suffering already, that go beyond simply the investments in adaptation and climate resilience, and that there needs to be some way to address those. And I think we’ve made a fair amount of progress, even though it’s not going to be satisfying to everybody right away,” he says. “I think it’s the first step towards an institution over time that can grow and build and become something more important.”

We discuss how the recent COPs have grown larger with a growing contingency of participants from the private sector, NGOs, and multi-lateral organizations that are dedicated to advancing the goals of the Paris Agreement.

“[The COP] really becomes a magnet, a draw for everybody working on climate. And the fact that all those side events have become so big I think reflects the fact that climate is now central to the decisions that policymakers are making, not just in a Climate Ministry or an Environment Ministry, but in the Treasury and in Finance Ministries and in Energy Ministries and so on. Climate is [also] central to what businesses are doing and how they’re making plans,” Nat says. “I’ve always been of the view [that if] we didn’t have the COP already we would have to invent it because we need that kind of focal point for people to come and gather talking about what I think is the most existential issue of our time.”

For this and much more, I encourage you to listen to our complete conversation in this 54^th episode of the Environmental Insights podcast series.

As I noted at the outset of this blog post, both Keohane and I will participate in COP28 events in Dubai. So I close this special pre-COP edition of my blog with a description of some of our own – that is, Harvard – activities at COP28.

========================================================

Linked with my current role as director of a Harvard-wide initiative on Reducing Global Methane Emissions, which I’ve described in detail in previous essays at this blog, much – but not all – of our focus at COP28 will be on methane and related public policies. Indeed, efforts around and impacts of global methane-emissions abatement will be our focus in our official Side Event on December 6, at COP28.

Reducing Global Methane Emissions: Imperatives, Opportunities, and Challenges

This panel will feature several leading scholars and climate policy experts who will discuss current research and practice on technology, policy, and international cooperation, drawing in part on Harvard’s major new methane initiative supported by the Salata Institute for Climate and Sustainability at Harvard University. I will moderate the discussion.

The other panelists will be:

Stephen Hammer, Chief Executive Officer, New York Climate Exchange, and former Methane Lead, World Bank;
Claire Henly, Senior Advisor for Non- CO2 greenhouse gases, US Special Presidential Envoy for Climate;
Daniel Jacob, Vasco McCoy Family Professor of Atmospheric Chemistry and Environmental Engineering, Harvard University and global expert on satellite-based methane detection and attribution;
Helena Varkkey, Associate Professor of Environmental Politics and Governance, Universiti Malaya and Principal Investigator, UM-CERAH-EDF initiative on methane emissions in Malaysia

Time, Date, and Location: December 6, 2023, 3:00 – 4:30 pm local time, Side Event Room 4, COP-28, Expo City, Dubai

(Note: All official side events are within the “Blue Zone” at COP-28; registration for the COP and a badge are required to enter)

For questions and further information about this and the other COP28 events that follow below, please contact: Jason Chapman (Jason_chapman@hks.harvard.edu).

Some other speaking engagements of mine at COP28 include:

Net Zero in Action: Showcasing Decarbonization Technologies

December 5, 10:00 – 11:30 am, panelist at IPIECA event: “Net Zero in Action: Showcasing Decarbonization Technologies,” Pavilion of the International Emissions Trading Association, Blue Zone.

Transforming High Global Warming Potential Sectors through Carbon Markets

December 6, 9:00-10:30 am, panelist, where RNS will make a presentation on “The Promise and Peril of GHG Markets for Reducing Global Methane Emissions,” Asian Development Bank Pavilion, Blue Zone

Application of Low Emission Development Strategies and Progress of Global Energy Transition

December 6, 1 – 2:30 pm, Robert Stavins is a panelist at Ninth Global Climate Change Think Tank Forum. The event is hosted by China’s National Center for Climate Change Strategy and International Cooperation. Theme: “Application of Low Emission Development Strategies and Progress of Global Energy Transition,” China Pavilion, Blue Zone.

In addition to Professors Stavins and Jacob, the Harvard delegation in Dubai will include several leading scholars from the Harvard T.H. Chan School of Public Health (HSPH) and others from around Harvard.

HSPH is sponsoring two events at COP-28:

“Linking Agendas of the UNFCCC and the World Health Assembly – Regional perspective,” 3 – 4:30 pm, December 6, Guatemala Pavilion, Blue Zone.

“Linking Agendas of the UNFCCC and the World Health Assembly – Global perspective,” 9:30 – 10:45 am, December 12, WHO Pavilion, Blue Zone.

For more information on the HSPH events, contact Liz Willetts (ewilletts@hsph.harvard.edu).

I hope to see many of you at one or more of these events, and/or other meetings, in the hallways, or elsewhere at COP28 in Dubai!

Finally, I want to remind you to listen to this 54^th episode of the Environmental Insights series, with future episodes scheduled to drop each month. You can find a transcript of our conversation at the website of the Harvard Environmental Economics Program. Previous episodes have featured conversations with:

Gina McCarthy, former Administrator of the U.S. Environmental Protection Agency
Nick Stern of the London School of Economics discussing his career, British politics, and efforts to combat climate change
Andrei Marcu, founder and executive director of the European Roundtable on Climate Change and Sustainable Transition
Paul Watkinson, Chair of the Subsidiary Body for Scientific and Technological Advice (SBSTA) within the United Nations Framework Convention on Climate Change
Jos Delbeke, professor at the European University Institute in Florence and at the KU Leuven in Belgium, and formerly Director-General of the European Commission’s DG Climate Action
David Keith, professor at Harvard and a leading authority on geoengineering
Joe Aldy, professor of the practice of public policy at Harvard Kennedy School, with considerable experience working on climate change policy issues in the U.S. government
Scott Barrett, professor of natural resource economics at Columbia University, and an authority on infectious disease policy
Rebecca Henderson, John and Natty McArthur University Professor at Harvard University, and founding co-director of the Business and Environment Initiative at Harvard Business School.
Sue Biniaz, who was the lead climate lawyer and a lead climate negotiator for the United States from 1989 until early 2017.
Richard Schmalensee, the Howard W. Johnson Professor of Management, and Professor of Economics Emeritus at the Massachusetts Institute of Technology.
Kelley Kizier, Associate Vice President for International Climate at the Environmental Defense Fund.
David Hone, Chief Climate Change Adviser, Shell International.
Vicky Bailey, 30 years of experience in corporate and government positions in the energy sector.
David Victor, professor of international relations at the University of California, San Diego.
Lisa Friedman, reporter on the climate desk at the The New York Times.
Coral Davenport, who covers energy and environmental policy for The New York Times from Washington.
Spencer Dale, BP Group Chief Economist.
Richard Revesz, professor at the NYU School of Law.
Daniel Esty, Hillhouse Professor of Environment and Law at Yale University.
William Hogan, Raymond Plank Research Professor of Global Energy Policy at Harvard.
Jody Freeman, Archibald Cox Professor of Law at Harvard Law School.
John Graham, Dean Emeritus, Paul O’Neill School of Public and Environmental Affairs, Indiana University.
Gernot Wagner, Clinical Associate Professor at New York University.
John Holdren, Research Professor, Harvard Kennedy School.
Larry Goulder, Shuzo Nishihara Professor of Environmental and Resource Economics, Stanford University.
Suzi Kerr, Chief Economist, Environmental Defense Fund.
Sheila Olmstead, Professor of Public Affairs, LBJ School of Public Affairs, University of Texas, Austin.
Robert Pindyck, Bank of Tokyo-Mitsubishi Professor of Economics and Finance, MIT Sloan School of Management.
Gilbert Metcalf, Professor of Economics, Tufts University.
Navroz Dubash, Professor, Centre for Policy Research, New Delhi.
Paul Joskow, Elizabeth and James Killian Professor of Economics emeritus, MIT.
Maureen Cropper, Distinguished University Professor, University of Maryland.
Orley Ashenfelter, the Joseph Douglas Green 1895 Professor of Economics, Princeton University.
Jonathan Wiener, the William and Thomas Perkins Professor of Law, Duke Law School.
Lori Bennear, the Juli Plant Grainger Associate Professor of Energy Economics and Policy, Nicholas School of the Environment, Duke University.
Daniel Yergin, founder of Cambridge Energy Research Associates, and now Vice Chair of S&P Global.
Jeffrey Holmstead, who leads the Environmental Strategies Group at Bracewell in Washington, DC.
Daniel Jacob, Vasco McCoy Family Professor of Atmospheric Chemistry & Environmental Engineering at Harvard.
Michael Greenstone, Milton Friedman Distinguished Service Professor of Economics, University of Chicago.
Billy Pizer, Vice President for Research & Policy Engagement, Resources for the Future.
Daniel Bodansky, Regents’ Professor, Sandra Day O’Connor College of Law, Arizona State University.
Catherine Wolfram, Cora Jane Flood Professor of Business Administration, Haas School of Business, University of California, Berkeley, currently on leave at the Harvard Kennedy School.
James Stock, Harold Hitchings Burbank Professor of Political Economy, Harvard University.
Mary Nichols, long-time leader in California, U.S., and international climate change policy.
Geoffrey Heal, Donald Waite III Professor of Social Enterprise, Columbia Business School.
Kathleen Segerson, Board of Trustees Distinguished Professor of Economics, University of Connecticut.
Meredith Fowlie, Professor of Agricultural and Resource Economics, U.C. Berkeley.
Karen Palmer, Senior Fellow, Resources for the Future.
Severin Borenstein, Professor of the Graduate School, Haas School of Business, University of California, Berkeley.
Michael Toffel, Senator John Heinz Professor of Environmental Management and Professor of Business Administration, Harvard Business School.
Emma Rothschild, Jeremy and Jane Knowles Professor of History, Harvard University.

“Environmental Insights” is hosted on SoundCloud, and is also available on iTunes, Pocket Casts, Spotify, and Stitcher.

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.