COP27: An Inside Perspective
Boston Consulting Group
The 27th edition of Conference of Parties (COP27) has been recently conducted on November 6 – 20, 2022 in Egypt. COP has become an important event for discussion on various issues related to the climate change and decision making for future course of action by the member countries.
BCG served as an Exclusive Consulting Partner of COP27 and has released an executive summary on the discussions and developments happened in the conference. The following are the key excerpts of the executive summary for your reference.
The following are the major takeaways from the two week deliberations/discussions-
- COP27 elevated the concerns of the Global South including adaptation, water, food, just transition, and most importantly agreement to establish a finance facility for loss & damage
- A shift to implementation - from pledges to pathways and projects –along with calls for greater accountability from governments and corporates alike
- A more sophisticated finance discussion (incl. packages for Indonesia and Egypt) and momentum for reform of the IMF and MDBsbut a +$3Tn finance gap remains
- Engagement from business, finance and sub-national governments remained high with a determination to lead evident across sectors
- Context for negotiations was challenging, the mandate narrow, and expectations low so progress on loss & damage was an unexpected win but COP28 faces a heavy lift
- Parties failed to increase national ambition (agreed at COP26) and little was done to close the policy gap. So the goal of limiting global average temperatures to 1.5°C by 2100 remains, but it is very unlikely given emissions must fall 45% by 2030 but are set to rise 11%
After COP26, parties agreed for concrete climate actions to keep the global warming within 1.5°C limit but some unintended things have derailed the progress and even making it harder to get back on track. Such issues are Russia’s war with Ukraine, worldwide Food insecurity, rising energy prices, risk of global recession etc.
Some emissions projections have also been considered which projects that Emissions will increase 11% above 2010 levels based on current policies and must fall 45% below 2010 levels by 2030 for a 50% chance of limiting global average temperatures to 1.5°C above pre-industrial levels as required under the Paris Agreement.
The COP also emphasised on several vital questions including the means to increase food productivity and resilience whilst reducing its impact on climate & nature?, How can we reduce the water-related impacts of climate change, and leverage it for mitigation?, How can we leverage nature for climate action, whilst protecting our planetary boundaries?, How to make our health systems more resilient to climate change and reduce their impact?, How can we phase out fossil fuels in a just way? What is the role of gas?, How should the financial mechanism be structured and who should contribute? And How should we track progress on and ensure that pledges are kept?
9 key topics from COP27: achievements and remaining challenges
- Adaptation & Resilience | Urgency and the importance of data, planning, finance & private sector participation established but funding falling short
- Loss & Damage | Commitment to set up a financial support structure for the most vulnerable by COP28 was an unexpected win
- Finance | Scaling private finance will be critical to reaching the $3.4Tn required, with public finance playing a crucial role to unlock it
- Food systems |Emerging investment made to catalyse adaptation solutions in food & agriculture, though mitigation potential remains understated
- Energy Transition | Strengthening country ambitions backed by concrete announcements, but commitments still far below need
- Heavy Industry | Step forward for cement decarb. But tangible action at scale yet to be seen; methane reductions roadmap builds on existing pledges
- Green Hydrogen | Strong pre-COP momentum in nascent market continues with additional targets, initiatives and funding
- Carbon markets | Strong surge in voluntary initiatives and greater scrutiny over integrity of credits
- Standards | Increasing expectations & clarity on net zero standards and climate-related disclosure; regulators expected to follow suit.
