(Bloomberg) — They got there in the end. After dawn on Sunday morning in Egypt, bleary-eyed ministers adopted a final agreement for COP27 and completed more than two weeks of UN climate negotiations in the Sinai peninsula.
The deal included a historic provision to set up a fund to help poorer countries face the harm caused by climate change, and that outcome was understandably celebrated by nations on the front line of a warming world. “A mission 30 years in the making has been accomplished,” said Molwyn Joseph, the minister from Antigua and Barbuda and chair of the AOSIS group of small island nations.
But beyond loss and damage — the COP-world term for paying up for climate catastrophes — the final deal was a clear disappointment for those wanting to ratchet up the ambitions of last year’s Glasgow agreement. The statement didn’t include a commitment to broaden the pledge to phase down unabated coal emissions to cover all fossil fuels, and there was no reference to global greenhouse gas emissions peaking by 2025.
The endgame was clearly tough for the European Commission climate chief Frans Timmermans, who had taken center stage at the summit, proposing a grand bargain on loss and damage in exchange for more emissions ambition and then threatening a late walkout by the European Union.
In the end, the EU and its allies had to settle for some technical changes to the so-called work program on mitigation. Now that the books have closed on COP27, here’s a look at eight key takeaways from two weeks of climate talks involving nearly 200 countries.
1. A new fund for loss and damage
Climate change causes inequities and exacerbates them. The rich countries gained their wealth from fossil fuels, leaving poor countries who haven’t benefited from those emissions with huge bills from the resulting climate impacts. After decades of calls to compensate climate victims in the developing world, COP27 finally produced an agreement to create a fund that would address loss and damage.
But this breakthrough comes with enormous question marks. No sums of money were actually committed at Sharm El-Sheikh, and the rules of how the fund would work were left to be decided at next year’s COP28 in the United Arab Emirates. Henry Kokofu, Ghanaian politician and head of the Climate Vulnerable Forum, warned that without further concrete steps there is a risk of simply creating “an empty bank account.”
2. Possible changes coming to multilateral lenders
For the first time, a COP meeting included a call to reform the global financial architecture so that it better aligns with climate goals. The idea is to tweak the mandates of multilateral development banks such as the World Bank and international financial institutions, such as the International Monetary Fund, to ensure that greater financing flows to energy-transition projects and efforts to adapt to a warming planet.
“The moment is right,” said Laurence Tubiana, chief executive officer of the European Climate Foundation. “Climate impacts are beginning to be understood as a macroeconomic risk.”
3. The fight for the nitty-gritty
The issue that held up negotiations and made COP27 the second-longest UN climate summit was the “mitigation work program.” The idea is to ensure that countries set clear targets, plans and metrics to reduce emissions on pace to meet climate goals. So far, commitments have not followed the same standard, with countries using different criteria and baselines for their targets. Without a common system, those pledges may not turn into actual emissions reductions.
Climate-forward countries wanted to run the program until 2030. But opposition from laggards led to a compromise of running it until 2026, with a chance to extend it. If the program succeeds, it could have stronger implications than countries simply agreeing to political statements of phasing out all fossil fuels.
4. Weak rules for carbon markets
Countries agreed at COP26 to create the rules that would allow nations to trade carbon credits. That means that Norway, for example, could pay to preserve Indonesian forests, and in return scrub emissions from the Norwegian carbon ledger. At COP27, negotiators outlined a more detailed framework for how such a carbon market would work, including allowing corporations to buy credits from governments.
But experts warned the rules are still not strict enough. “The carbon market spirit of Glasgow turned into the offsetting ghost of Sharm El-Sheikh, which risks haunting effective climate action for years to come,” said Sam Van den plas, policy director at Carbon Market Watch.
5. The 1.5C goal remains in grave jeopardy
Despite attempts by big powers like the US, India and the European Union, the Sharm El-Sheikh agreement failed to raise ambitions on reducing emissions. That could mean the world misses the 1.5 degrees Celsius warming target enshrined in the 2015 Paris Agreement. Calls to phase out all fossil fuels (not just coal) and to peak global emissions by 2025 (which is likely to happen anyway, according to the International Energy Agency) were shot down by many nations who export oil.
While the phase-down of all fossil fuels didn’t make it to the final text, momentum grew around an idea that wasn’t even on the cards before the summit. As many as 80 countries now support it, Timmermans said, with the EU and others expected to lobby on the issue during the year ahead.
As the world grapples with an energy crisis and high fossil-fuel prices fill the coffers of major producers, the political clout of carbon powers was on display at COP27. Annalena Baerbock, the German foreign minister, expressed frustration at “being stonewalled by a number of large emitters and oil producers.” That fight is likely to get harder as COP28 heads to the United Arab Emirates, an oil and gas giant.
6. Thawing US-China relations
The US and China started working together on climate again at COP27. The US climate envoy John Kerry and his counterpart Xie Zhenhua said on Saturday that they had resumed formal cooperation, which had been suspended after House Speaker Nancy Pelosi’s visit to Taiwan earlier this year.
7. Methane momentum continued
More countries signed up to the methane pledge launched in Glasgow last year. There are now 150 nations that have pledged to cut emissions of the super-powerful greenhouse gas 30% by the end of the decade. Even China said it has developed a draft plan to curb methane emissions, though it’s stopped short of joining the global pledge.
8. Showing some of the money
A constant theme of these talks has been “show me the money” — or climate finance — for developing nations, and there has been some real progress in recent weeks on funding cleaner energy transitions. During COP27, two new Just Energy Transition Partnership funding deals were announced, shifting Vietnam and Indonesia away from coal power. South Africa also got final sign-off from its donors on its own $8.5 billion JETP plan and Indonesia is set to work out an even bigger $20 billion deal to move away from coal.