HomeCarbon CreditsKey Highlights of COP27 Climate Summit

Key Highlights of COP27 Climate Summit

The progress in advancing the global climate change agenda wasn’t only represented in the headlines of this year’s annual UN climate change summit known as COP27. It’s also represented in the efforts of the world leaders behind the scenes.

There were no big decisions due to land at the COP27 conference. But due to multiple crises in 2022, several breakthroughs were reached. Here are some of the key highlights concluded within the two-week summit in Sharm El-Sheikh, Egypt.

COP27 Climate Summit Delivers Several Breakthroughs

The biggest breakthrough came in support for climate victims.

Nations closed the COP27 climate summit with a hard-fought deal to provide financial support from developed countries to poorer ones suffering from climate disasters. They call it compensation for “loss and damage” of the climate crisis. It can be worth up to $1.7 trillion by 2050 according to a study.

This conclusion was seen as a triumph in responding to the disastrous effects of global warming on vulnerable countries. But many nations said this brought a lot of pressure on them to give up tougher pledges to tackle warming for the loss and damage fund to push through.

Developing countries, especially the small islands and other vulnerable nations got the loss and damage fund they have long fought for. The deal is a win for them over the EU and the US, the countries who had long resisted the idea of setting up this fund. But who pays and who benefits remains a battle for COP28.

However, there was little to stop polluters that caused more damage. A proposal to phase out all fossil fuels discussed at last year’s COP26 went nowhere.

And while India decided to turn the heat onto other fossil fuels, along with 80 other countries, Egypt opted out and openly struck gas deals on the sidelines.

Under this new framework, the country will use the proceeds from carbon credits to fund new clean energy projects and help developing nations end their use of fossil fuels. It allows state bodies to earn carbon credits by cutting their power sector’s emissions if they stop using fossil fuels and go for renewable sources instead.

International Trading for Carbon Credits

Carbon credits or offsets allow countries or firms to pay others to cut carbon emissions to make up for their own.

COP negotiators have been discussing how to make international trading of carbon credits work since the 2015 Paris Agreement. In Glasgow’s COP26, they outlined the broad framework for a new global carbon trading scheme. In Egypt’s COP27 climate summit, they filled in some details in a draft text.

By the end of the first week of COP27, negotiators agreed to put off decisions on which projects should be eligible to generate carbon credits. In the second week, they made progress on determining how country-to-country trading would go about.

They also clarified how nations could authorize a project within their jurisdictions to sell those credits outside their borders.

Their agreement creates a two-tier carbon market, specifying the rules on who buys the credits and for what purposes. And though they had finalized most of the guidelines for how the credits under the old trading system can be tied with the new rules, its launch is off as the debate continues into COP28 next year.

According to Dirk Forrister, the chief executive of the International Emissions Trading Association (IETA) said that:

“The texts provide key elements to implement high-integrity carbon markets that can help deliver net-zero ambitions for all countries. We expect further decisions at COP28 and beyond.”

In the new second-tier market, carbon credits are called “mitigation contributions”. An entity can buy credit from another country, and the host doesn’t have to tweak its emissions inventory.

On the Sidelines of COP27 Climate Summit

Some nations have approved at the COP27 climate summit the first-ever voluntary cooperation known as the Internationally Transferred Mitigation Outcome (ITMO). It’s a carbon emissions trading system where nations can buy or trade carbon credits from other countries. This opens doors to creating new carbon markets and more emissions reductions.

Also, India revealed for the first-time its long-term strategy to reach net zero emissions by 2070. While Canada launched its carbon pricing initiative called the Global Carbon Challenge at the summit.

Meanwhile, Cambodia agreed to sign deals with international corporate buyers for about 15 million tonnes of carbon credits from the country’s landmark REDD+ projects.

REDD+ is a kind of climate change mitigation strategy. It allows communities and governments to gain payments for emissions reductions achieved through forest protection projects.

COP’s Old-Time Favorites and Late-Comers

The most vulnerable nations hit by climate disasters say the annual COPs focus too much on ways to cut emissions. But they don’t pay enough attention to climate adaptation. Early warning systems for climate disasters are some of the adaptation measures.

This concern has been on the table since the Paris Accord started. COP delegates agreed to double the amount of adaptation financing by $40 billion by 2025 in Glasgow.

And though there is some progress in defining a global goal on adaptation, the decisions still fall short of the funding goal. For the director of the Red Cross Red Crescent Climate Center:

“Too little, too late’ is what developing countries are arguing, as climate change is already exacerbating flood events, drought and sea level rise…”

Instead of reaching a final agreement, nations at COP27 adopted a framework that laid out the questions that need answers at a future COP.

The late-comers to the debate are agriculture and food, which accounted for of global GHG emissions. Yet talks on reducing these emissions are quite new in the COP agenda.

At the COP27 climate summit, countries authorized a group’s workshops on how to deal with climate-related agricultural issues for 4 more years. These include best practices in livestock, water use, and soil management, as well as food security.

But apart from conducting workshops, nations must translate them into measures that can be done in practice. Over 100 organizations signed a letter urging COP27 delegates to expand the scope of emissions to waste and food consumption. However, the debate kept its focus on agriculture.

Emissions from the food system have to go down, too, for the world to limit global warming. And as the head of advocacy at World Wildlife Fund (WWF) U.K. said, “you can just phase out fossil fuels, you can’t phase out food”.

Most Popular

CORSIA Carbon Credit Demand To Be 14x Larger Than Supply

The surplus of CORSIA-eligible carbon credits is projected to turn negative by 2030 unless new supplies become available, according to an analysis by Abatable. Currently,...

Wired for Change: AI, Energy, and the Decarbonization Dilemma

AI is a powerful force driving innovation across industries in today's rapidly evolving technological landscape. However, as AI capabilities expand, so does its appetite for...

U.S. Raises Tariffs on $8B China Imports: EVs, Batteries, and Solar Cells Included

The Biden-Harris Administration's Investing in America agenda has successfully spurred more than $860 billion in business investments. In line with this, the White House...

Yara Clean Ammonia Signs Historic Deal with India’s Greenko ZeroC to Ramp Up Green Ammonia Supply

Yara Clean Ammonia, the world’s largest trader and distributor of ammonia, has forged a long-term deal with India-based Greenko ZeroC (formerly known as AM...

What Is COP28? Key Issues to Watch Out at 2023 Climate Summit

After a record-breaking year of devastating effects of climate change, from record wildfires in Greece and Canada to floods in Libya, the United Nations...

Climate Disclosure: New Corporate Standards for a Net Zero World

As part of the world’s continued efforts to combat climate change and transition towards net zero, one important piece of the puzzle is new...

Carbon Pricing: Understanding The Economics and Trends of Fighting Climate Change

As global temperatures continue to rise, the urgency surrounding climate policies has intensified, thrusting carbon pricing into the limelight of climate discussions. The race to...

The EU Corporate Sustainability Reporting Directive (CSRD): Key Things to Know

Companies operating in the European Union will have to deal with new non-financial and sustainability reporting requirements starting January 2024 with the EU's Corporate...