COP27: Why it’s important to watch
As political leaders prepare to gather in Sharm el-Sheikh, Egypt, for the UN Climate Change Conference – or COP27 – in November, Wai-Shin Chan, Head of HSBC’s Climate Change Centre of Excellence, explains what’s at stake.
It’s a chance to gauge the political mood after a turbulent year
The talks will indicate whether the Russia-Ukraine war and price crises have distracted governments, businesses and the public from climate action in the short term. It could be that extreme weather – from heatwaves in Europe to floods in Pakistan and droughts in China – will serve as a reminder of the urgency to act.
Negotiators have a challenge on their hands
The issue of loss and damage – the destruction already being caused by climate change in parts of the world – almost derailed COP26, and we expect it to be just as tricky this year. One priority is to make the Santiago Network fully operational. This network is designed to provide tools and technical assistance to vulnerable economies, and an agreement on its terms of reference is expected in Egypt.
Money will be a sticking point (again)
The need for a “provision of funds” by developed nations for loss and damage was acknowledged at COP26, but there weren’t any details on what form, source and amount this would take. Developing nations will be after a funding facility, while developed nations will baulk at the idea of being obliged to provide even more financing. After all, they missed their 2022 promise of providing USD100 billion in climate finance, and developing countries will want assurance on how this will come to fruition by next year.
With Egypt at the helm, the spotlight will be on adaptation
The African continent is highly vulnerable to the effects of climate change, so a key focus will be on preparing for its impacts. There will be much emphasis on the global goal on adaptation, a two-year programme which aims to drive collective action. No major decision is due on this until next year, but negotiators will be looking to flesh out its key components and targets.
Recap: COP26 – What was achieved
COP26 was a modest success with a mix of compromise, disappointment and progress, in our view. Crucially, the Paris Rulebook (the operational guidelines of the Paris Agreement) was finalised, especially the key issues of Article 6 and common timeframes for climate pledges.
Progress remains vital
Last year’s event in Glasgow felt the delayed ‘post-2020’ pressure and there were many critical decisions to be made there. This conference is less pressured. But progress is still vital as parties implement actions from COP26. There’s also next year’s global stocktake, which will measure how far we’ve come since the Paris Agreement. Hosts Egypt say a successful conference means “progress across the board” on all climate issues “in a balanced and equitable manner”.
Energy transition still matters
The spike in energy prices may have sharpened the short-term need to find fossil fuels, but it has not lessened the importance of energy transition and renewable infrastructure in the long term. We think investors and businesses will be watching for signals about the speed at which climate action is being taken as opportunities to tackle the issue are potentially unlocked.
Find out more in Global Research’s report (opens in new window)