Sharm el-Sheikh, Egypt · 20 November 2022 — The 27th UN Climate Change Conference (COP27) concluded on 20 November 2022 with a historic agreement to establish a dedicated fund for loss and damage — financial assistance for vulnerable developing countries suffering the irreversible impacts of climate change. The decision, reached after two extra days of negotiation beyond the scheduled close, marked the culmination of nearly three decades of advocacy by developing nations and was widely described as a landmark in climate justice.
However, the conference drew sharp criticism for failing to strengthen commitments on fossil fuel phase-out. The final cover decision retained language from the previous year's Glasgow Pact on the 'phase-down of unabated coal power' but did not extend it to oil and gas, despite a push by the European Union and a coalition of climate-vulnerable nations.
The Loss and Damage Breakthrough
Loss and damage refers to the destructive impacts of climate change that exceed what communities can adapt to — including sea-level rise submerging coastal areas, desertification rendering land unfertile, and extreme weather events destroying infrastructure and livelihoods. Unlike mitigation (reducing emissions) and adaptation (preparing for impacts), loss and damage concerns impacts that are already irreversible.
Developing countries, particularly the Alliance of Small Island States (AOSIS) and the African Group, had been calling for a dedicated funding facility since the 1990s. Their argument: the countries least responsible for greenhouse gas emissions are bearing the most severe consequences, and the wealthy nations whose industrialisation caused the problem should bear the financial burden.
At COP27, the issue moved from the margins to the centre of the agenda. The European Union made a surprise offer on 17 November to support a dedicated fund, breaking a long-standing deadlock. The United States, which had historically opposed loss and damage funding over liability concerns, shifted its position under pressure from the EU proposal and the broader negotiating bloc of developing countries known as the G77 plus China.
The final decision text established the fund and created a transitional committee — comprising 24 members from developed and developing countries — tasked with developing recommendations on the fund's operationalisation, including its institutional structure, governance, eligibility criteria, and funding sources. The committee's recommendations are to be presented at COP28 in Dubai in 2023.
The Santiago Network
In addition to the fund, parties agreed on arrangements to fully operationalise the Santiago Network on Loss and Damage, a mechanism established at COP25 in Madrid in 2019 to provide technical assistance to developing countries for averting, minimising, and addressing loss and damage. The agreement at COP27 established a secretariat and advisory board for the network, though the specific host institution was left to be determined.
Fossil Fuel Language: A Step Backward?
While the loss and damage outcome was celebrated, the conference's treatment of fossil fuels drew widespread disappointment. More than 80 countries, led by the EU and the small island states, pushed for the cover decision to include language calling for the 'phase-out of all fossil fuels' — extending beyond the coal-only 'phase-down' language from the Glasgow Climate Pact at COP26.
The proposal faced resistance from major oil and gas producing nations, including Saudi Arabia and Russia. The final text retained the Glasgow language on 'phase-down of unabated coal power' and added a reference to 'low-emission and renewable energy' but did not mention oil or gas phase-out.
The 1.5°C Target and Global Stocktake
The conference took place against the backdrop of the latest scientific assessments. The Intergovernmental Panel on Climate Change (IPCC) had confirmed in its 2021–2022 reports that limiting global warming to 1.5°C above pre-industrial levels — the threshold enshrined in the Paris Agreement — requires greenhouse gas emissions to peak before 2025 and be reduced by 43 per cent by 2030 compared to 2019 levels.
The UN Environment Programme's Emissions Gap Report 2022, released just before COP27, found that current national commitments (Nationally Determined Contributions, or NDCs) would still put the world on track for approximately 2.8°C of warming by 2100. The report concluded that an 'unprecedented system-wide transformation' was needed to close the gap.
At COP27, parties began the first Global Stocktake under the Paris Agreement — a comprehensive assessment of collective progress toward the agreement's goals. The stocktake is scheduled to conclude at COP28, with its findings expected to inform the next round of NDC updates in 2025.
Climate Finance and the $100 Billion Pledge
The conference also addressed the long-standing commitment by developed countries to mobilise $100 billion per year in climate finance for developing countries by 2020 — a pledge first made at COP15 in Copenhagen in 2009 and reaffirmed in the Paris Agreement.
According to the OECD's analysis presented at COP27, developed countries had mobilised $83.3 billion in 2020, falling short of the target. The final decision text 'urges' developed countries to 'fully deliver' on the $100 billion goal through to 2025 and calls for continued efforts to scale up adaptation finance, which remains significantly below mitigation finance.
| Finance Commitment | Status at COP27 |
|---|---|
| $100 billion/year by 2020 | Not met ($83.3 billion in 2020) |
| Adaptation finance doubling (from 2019 levels) | Pledged but not yet delivered |
| Loss and damage fund | Agreed in principle; operationalisation deferred to COP28 |
| New Collective Quantified Goal (post-2025) | Drafting process underway |
Africa's Role and Expectations
As the first COP held in Africa since COP22 in Marrakech in 2016, COP27 was framed by the Egyptian presidency as an 'implementation COP' with a focus on translating pledges into action. African negotiators emphasised the continent's disproportionate vulnerability to climate change despite contributing less than 4 per cent of global emissions.
The African Group of Negotiators pushed for concrete outcomes on adaptation finance, loss and damage, and technology transfer. The establishment of the loss and damage fund was seen as a direct response to advocacy from African and other developing-country blocs, though the absence of specific funding commitments was noted.
Looking Ahead
COP27 produced a historic outcome on loss and damage but left significant gaps on mitigation ambition and fossil fuel transition. The conference's final cover decision was widely criticised by environmental groups and climate-vulnerable nations for not going further on emissions reductions.
The focus now shifts to COP28 in Dubai, where the transitional committee's recommendations on the loss and damage fund will be considered, the first Global Stocktake will conclude, and parties will face renewed pressure to align their commitments with the 1.5°C target.
For developing countries, the test of the loss and damage agreement will be in the details: who contributes, who benefits, how much money is mobilised, and how quickly the fund becomes operational. As the Pakistani negotiator Sherry Rehman noted during the conference, 'Loss and damage is not charity — it's a down payment on our common future.'
Sources:
- UNFCCC, COP27 Reaches Breakthrough Agreement on New 'Loss and Damage' Fund for Vulnerable Countries, 20 November 2022
- UNFCCC, Sharm el-Sheikh Implementation Plan, 20 November 2022
- UNEP, Emissions Gap Report 2022, 27 October 2022
- WRI, COP27: Key Outcomes from Sharm el-Sheikh, November 2022
- Climate Action Network International, COP27 Final Outcome Analysis, 20 November 2022
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