Cop27: Deal reached to set up fund for developing countries hit by climate crisis

EU, which threatened to walk away from negotiations, criticises weak outcome on key 1.5-degree ambition

A historic breakthrough has been made at Cop27 in Egypt following agreement to set up a loss and damage fund whereby the world’s richest countries – the biggest carbon emitters – will make payments to developing countries.

The commitment, finally nailed down early on Sunday, is contained in the “cover decision” of the two-week long UN summit in Sharm El Sheik and is the culmination of a 30-year campaign by poor countries who are least responsible for the climate crisis.

The final hours of Cop27 were marked by acrimony and stalling of progress with the EU threatening at one point to walk away without agreement. It sought a loss and damage targeted at the most vulnerable countries and tied into countries committing to greater emissions reduction ambition.

The world’s least developed countries and small island states will receive support for damage already but also future disasters such as storms, floods and droughts made worse by climate disruption.


The key breakthrough came on Saturday afternoon when the EU and G77 bloc of 134 developing countries agreed to a loss and damage fund under a compromise. The US and China ensured this was accepted in the final communique.

The question of who pays will be ironed out next year, while “vulnerable developing countries” – as proposed by the EU – will benefit.

Minister for Climate Eamon Ryan said the outcome was both historic and progressive with agreement reached on what had become the litmus test for this global summit.

“This is not perfect. 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 is a signal of trust between the 198 parties to the UNFCCC that we are serious about climate change and that we are serious about protecting the most vulnerable countries and communities.”

“This is a political agreement. It is not a contract. It is not a work plan. The really hard work starts when we leave Sharm-El-Sheikh, when we begin to put in place the mechanisms and the expert groups that are needed to bring this agreement to life,” Mr Ryan said.

UN secretary general António Guterres welcomed the decision to establish a loss and damage fund “and to operationalise it in the coming period”.

“Clearly this will not be enough, but it is a much-needed political signal to rebuild broken trust. The voices of those on the front lines of the climate crisis must be heard,” he added.

He welcomed an important step towards justice but finally making good on the long-delayed promise of $100 billion a year in climate finance for developing countries remains outstanding, as does a credible roadmap to double adaptation finance.

This would require changing the business models of multilateral development banks and international financial institutions, Mr Guterres said. “They must accept more risk and systematically leverage private finance for developing countries at reasonable costs.”

He warned: “Our planet is still in the emergency room. We need to drastically reduce emissions now – and this is an issue this Cop did not address. A fund for loss and damage is essential – but it’s not an answer if the climate crisis washes a small island state off the map – or turns an entire African country to desert.”

“In a year of multiple crises and climate shocks, the historic outcome on loss and damage at Cop27 shows international co-operation is possible, even in these testing times. Equally, the renewed commitment on the 1.5 degree global warming limit was a source of relief,” said chair of the Elders leaders group Mary Robinson.

“However, none of this changes the fact that the world remains on the brink of climate catastrophe,” she said. “Progress made on mitigation since COP26 in Glasgow has been too slow. Climate action at Cop27 shows we are on the cusp of a clean energy world, but only if G20 leaders live up to their responsibilities, keep their word, and strengthen their will. The onus is on them.”

“All climate commitments must be transformed into real-world action, including the rapid phase out of fossil fuels, a much faster transition towards green energy, and tangible plans for delivering both adaptation and loss and damage finance. We avoided backsliding and made progress in Sharm El-Sheikh. Now leaders must stop sidestepping and fulfil their promises to safeguard a liveable future,” she said.

UN climate chief Simon Stiell told exhausted delegates as the gavel was brought down on the final deal at 7am, after an all-night negotiating session: “It wasn’t easy at all. But this outcome will benefit the most vulnerable around the world.”

Sherry Rehman – climate change minister of Pakistan where suffering in record floods in September became emblematic of the devastation developing countries are facing – hailed the “historic” deal to applause in the conference hall.

“This is not about accepting charity,” she said. “This is a down payment on investment in our futures, and in climate justice.”

Weak elements

Frans Timmermans, vice-president of the European Commission, spoke of the tortuous negotiations, which included some countries trying to unpick the 1.5-degree goal, and to abolish the requirement established in Glasgow for countries to update their emissions plans every year.

“Too many parties are not ready to make more progress today in the fight against the climate crisis,” he said. “There were too many attempts to roll back what we agreed in Glasgow. This deal is not enough [on cutting emissions].”

Mr Timmermans said the language on 1.5 degrees was too weak. “We are disappointed we didn’t achieve [more],” he said. “We have all fallen short.”

Alok Sharma, the UK’s president of COP26, spoke in clear frustration of having to defend commitments agreed last year from sustained attack by other countries. “We had to fight relentlessly to hold the line,” he said. “We had to battle to build on the key outcomes of Glasgow.”

He listed commitments that he championed that were removed at the behest of laggard countries and fossil fuel producers: “Peaking emissions by 2025 is not in this text. Follow-through on the phasedown of coal is not in this text. The phasedown of all fossil fuels is not in this text,” he said.

“The text on energy was weakened but is at least in. 1.5 degrees was weak, and it remains on life support.”

Fossil fuel issues

A proposal from India to stipulate the phasing down of all fossil fuels was also mauled by oil-producing countries at the talks, and watered down to a phasing down of coal, “which reflected exactly the commitment made in Glasgow”, he noted. The wording was the subject of furious discussions in the early hours of Sunday morning.

Deep divisions over the final 48 hours of talk threatened to derail the world’s chances of better efforts limiting the climate crisis as negotiators struggled to keep more than 190 nations working together. A row over phasing out fossil fuels surfaced on Saturday evening.

Some parties – including Saudi Arabia, Brazil and at some points China – had threatened to unpick this 1.5-degree commitment, weakening the temperature goal and removing the requirement made at Glasgow for countries to update their emissions-cutting plans each year.

There was a strong welcome for the loss and damage outcome on all sides. “Spirits are high,” said Jean Su, energy justice director at the Center for Biological Diversity. “Climate-vulnerable nations and civil society are beaming at a big step forward on creating a loss and damage fund.”

The EU and US indicated they wanted to expand the donor base amid resistance from other wealthy countries. Whether China and other large emerging economies such as Qatar, Kuwait and Singapore will contribute to the fund will be the subject of further discussion.

The EU proposal on loss and damage was a pivotal intervention. But after it failed to secure broad agreement, it warned on Saturday it was prepared to walk away if it did not get a good deal – raising the risk that talks would collapse. It flagged early in the day its key priority was “to keep 1.5 degree alive” by building on COP26 ambitions agreed in Glasgow.

Timmermans said a loss and damage fund had to be targeted at the most vulnerable, to be set up quickly and based on analysis of the world of today while broadening its donor base to maximise funds and include countries which had become wealthy in the past 30 years – often with high oil revenues

He warned that if not enough was done to not curb emissions, “there is no amount of money on this planet that will be to address the misery that will occur through natural disasters that we are already seeing”. Such extreme events would increase exponentially if not enough was done to reduce emissions, he added.

He said this represented a bridging of a gap between the Global North and the Global South while sticking to the 1.5-degree target and the fund amounted to a systems change required to address the climate crisis.

A deal of loss and damage did not improve willingness to agree on other issues as was anticipated including the climate mitigation programme on increasing emission reductions up to 2030 and on adaptation to help countries become from climate resilient.

Christian Aid Ireland’s policy and advocacy officer Ross Fitzpatrick said: “After 30 years of tireless campaigning, wealthy, historically high-emitting countries have finally accepted the need for a political decision to establish a loss and damage fund. This is a significant win for countries on the front lines of the climate crisis and a beacon of hope that funding needed in the aftermath of climate disasters will finally be provided. But we should not let rich countries, particularly the US, off the hook for their attempts to stonewall progress at every opportunity.”

This should also not deflect from the fact that wealthy, historically high-emitting countries continue to abdicate their responsibility to meet the previous $100 billion per year target, promised to assist developing countries deal with the climate crisis over a decade ago, he pointed out.

“It is thanks to the unwavering efforts of developing countries and civil society that a fund has finally been agreed at this Cop,” Mr Fitzpatrick said. “Now we have to ensure that this decision translates quickly to actual money and support reaching developing countries suffering from a climate crisis not of their making.”

US-China move

In a notable positive outcome outside the negotiation rooms China and the US have renewed their partnership to tackle the climate crisis and are working closely and productively on ways of bringing down greenhouse gas emissions, China’s head of delegation said.

Xie Zhenhua said he and John Kerry, the US special presidential envoy for climate, had enjoyed “very constructive” discussions. “We have had a close and active dialogue, that was overall very constructive. [We want to] ensure the success of Cop27 and exchange opinions on our differences.” – Additional reporting Guardian

Kevin O'Sullivan

Kevin O'Sullivan

Kevin O'Sullivan is Environment and Science Editor and former editor of The Irish Times