COP27: progressing climate goals in an exceptional year

November’s COP27 summit was set against the backdrop of the Ukrainian crisis. The war has exposed the world’s reliance on Russian fossil fuels and may, in the longer-term, accelerate the adoption of renewable energy sources. However, in the short-term, increased use of liquified natural gas to replace Russian sources is putting the Paris Agreement’s headline climate goals at risk. This was the inauspicious backdrop against which delegates met in Sharm el-Sheikh this year.

The Climate Action Tracker found that “few governments have increased their 2030 targets, made new net zero commitments nor substantiated them”, despite promises made at last year’s talks in Glasgow. There were also concerns about the level of fossil fuel activists at the event - 636 fossil fuel lobbyists registered to attend and companies at COP27 agreed a number of gas and oil deals with international giants, including Shell and Total.

Professor Niklas Höhne, of CAT partner organisation NewClimate Institute, said “With governments focusing on the energy crisis, this has been a year of little action on the climate: almost no updated national climate targets for 2030 and no significant increase in participation in Glasgow initiatives on coal phase out, clean cars and methane… And without strong 2030 action, governments cannot reach net zero.”

Against this backdrop, significant progress in climate finance action was unlikely. Nevertheless, many participants will have been hoping for more than COP27’s limited achievements. The negotiations failed to secure an agreement to begin phasing out fossil fuels, a key aim for many attendees. The COP27 conference merely repeated the goals set down in Glasgow in 2021 to “phase down” the use of “unabated” coal. “Our planet is still in the emergency room,” concluded António Guterres, the UN secretary-general.

This has long been a source of conflict. Rich nations have driven climate change through industrialisation, and, in general, it is the poorest countries that have paid the price. There has been discussion of compensation paid to countries hard-hit by climate change and this was finally agreed at COP27. Nearly 200 countries agreed to create a fund that can be used by the world’s poorest countries to mitigate the effects of climate disasters.

At the moment, the world is on course for warming of 2.4 degrees. This is if it sticks to its current targets for 2030 and only a limited number of countries have done so.

It has been an exceptional year. The Ukraine crisis has pushed governments back to fossil fuel as they have scrambled to replace Russian supply. In particular, dwindling Russian gas supply has forced European powers to use more liquefied natural gas (LNG). LNG is carbon-intensive, requiring supercooling natural gas to -162C, shipping it and returning it to a gaseous state at dedicated port terminals. This expansion in LNG supply will create an additional 1.9bn tonnes of CO2. Climate Action Tracker says this is “well above emission levels consistent with the IEA Net Zero by 2050 scenario”.

Lower income countries have complained that they are leant money to repair climate change impacts, such as flooding, at exorbitant rates. The conference said banks needed to reform their practices and priorities to “ensure simplified access” along with a call to “define a new vision” so that they are “fit for the purpose of adequately addressing the global climate emergency”.

This was not a conference that moved the dial on climate change, though the loss and damage agreement was important. The targets set by the Paris Agreement and by COP26 are still in place, and achievable – but only just. Equally, COP27 showed that setting targets is not enough. While the past year has been exceptional, and countries can be forgiven for a lack of progress, there cannot be too many more like it if climate change is to be kept to a minimum.

The Fineco platform lets you explore investment opportunities related to climate change by accessing thousands of products from more than 26 countries, with low fees and transparent pricing.