Wealthy countries to pay trillions of euro in key Cop27 deal

A historic global agreement at the Cop27 climate summit is expected to generate trillions of euros for climate-vulnerable countries with wealthy states, including the world’s biggest carbon emitters, making payments for loss and damage caused.

Consensus was reached in the early hours of Sunday after a difficult weekend of negotiations involving almost 200 countries gathered at the United Nations climate summi in Sharm El-Sheik, Egypt.

While the deal was broadly welcomed, the summit was condemned, however, for backing down on greater cuts to greenhouse gas emissions and an end to fossil fuel use.

The United States and other wealthy countries had long blocked the loss and damage plan, for fear they could face unlimited liability for the emissions that are driving global warming. The European Union was first to offer potential to break an impasse by backing the issue, which was considered critical to the success of Cop27.

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The agreement makes clear payments are not to be seen as an admission of liability. It calls for a committee with representatives from 24 countries to work over the next year to figure out exactly what form the fund should take, which countries and financial institutions should contribute, and where the money should go.

This outcome had been reinforced by strong calls to reform international financial institutions to unlock more funds for climate action, especially in helping countries become more resilient in adapting to the inevitable consequences of global warming and in switching to clean energy.

The breakthrough on loss and damage contrasts, however, with the failure to step up emissions pledges. The EU and other countries said the commitments on limiting temperatures to 1.5 degrees represented no progress on agreements reached at the Cop26 conference in Glasgow last year.

Egyptian foreign minister and president of Cop27 Sameh Shoukry said: “We rose to the occasion. We worked around the clock, day and night, but united in working for one gain, one higher purpose, one common goal. In the end, we delivered. We listened to the calls of anguish and despair.”

Minister for Climate Eamon Ryan, who helped lead EU negotiations on loss and damage, welcomed the decision to establish new funding arrangements to assist developing countries.

“Progress on broadening the contributor base to now include the potential for innovative sources of funding could open the way for a landmark break from traditional thinking,” he added.

Such sources could potentially include sectors like aviation, shipping and the fossil fuel industry, said Mr Ryan. “There is now scope for exploring the potential for financing and debt relief for especially vulnerable countries from multilateral and development banks.”

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He agreed the mitigation elements on emissions ambitions were weak though a commitment to keep the key Paris Agreement target of containing global temperature to 1.5 degrees was “a crucial underpinning”.

“Without mitigation, the more adaptation we would have to do and the more loss and damage would cost,” warned Mr Ryan.

“We have to keep 1.5 alive to keep people alive. The EU would have liked it to have gone further and faster. However, what makes this a good deal is that it is an agreed deal. It’s a signal of trust between the 198 parties ... that we are serious about climate change and we are serious about protecting especially vulnerable countries and communities.”

European Commission president Ursula von der Leyen described the deal as “a small step towards climate justice”, but said much more was needed for the planet: “We have treated some of the symptoms but not cured the patient from its fever.”

She added: “I am pleased Cop27 has opened a new chapter on financing loss and damage and laid the foundations for a new method for solidarity between those in need and those in a position to help. We are rebuilding trust.”