COP27: U.S. must pay for its pollution; natural gas gets nod as transition fuel

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For the first time ever, rich nations, including a top-polluting U.S., will pay for the climate-change damage inflicted upon poorer nations.

These smaller economies are often the source of the fossil fuels CL00, +0.19%, minerals PICK, -0.20% and other raw materials behind the developed world’s modern conveniences and technologicial advancement, including many practices responsible for the Earth-warming emisisons. And yet the developing world shoulders the worst of the droughts, deadly heat, ruined crops and eroding coastlines that take lives and eat into economic growth.

The deal, called “loss and damage” in summit shorthand, was struck as the U.N.’s Conference of Parties, or COP27, gaveled to a close near dawn Sunday in Egypt. Official talks ended Friday, but negotiations extended into the weekend.

Read: Historic compensation fund approved at U.N. climate talks

It was a big win for poorer nations which have long sought money — sometimes viewed as reparations — because they are often the victims of climate-worsened floods, famines and storms despite contributing little directly to the pollution that heats up the globe. It took last-minute, pre-summit negotiations to even get the topic on the official agenda.

“Three long decades and we have finally delivered climate justice,” said Seve Paeniu, the finance minister of island nation Tuvalu, according to the Associated Press. “We have finally responded to the call of hundreds of millions of people across the world to help them address loss and damage.”

‘Three long decades and we have finally delivered climate justice.’

— Seve Paeniu, finance minister for Tuvalu

Pakistan’s environment minister, Sherry Rehman, said the establishment of the fund “is not about dispensing charity.” Pakistan, hit by devastating drought and more, dominated climate-change headlines this year.

“It is clearly a down payment on the longer investment in our joint futures,” she said, speaking for a coalition of the world’s poorest nations.

According to many conference participants, the U.S. was a late-stage roadblock to establishing this official payout language, though it signed off in the end. U.S. participation was also impacted once chief climate negotiator John Kerry tested positive for COVID-19, although he continued to work from his hotel.

How does COP27 ‘loss and damage’ work? And where’s China?

According to the agreement, the fund would initially draw on contributions from developed countries and other private and public sources such as international financial institutions, including the World Bank and the International Monetary Fund.

While major emerging economies such as China wouldn’t automatically have to contribute, that option remains on the table. This is a key demand by the European Union and the U.S., who argue that China and other large polluters currently classified as “developing” countries have the financial clout and responsibility to pay their way.

The fund would be largely aimed at the most vulnerable nations, though there would be room for middle-income countries that are severely battered by climate disasters to get aid.

Getting serious about methane

Attention on methane, a more-potent but shorter-lasting greenhouse gas than carbon, was considered a major win at the summit. Some 150 countries have now signed on to the voluntary Global Methane Pledge, an official effort to cap the release of the GHG whose reduction presents perhaps the easiest way to reduce the global warming.

Read more: Natural gas-focused methane pact expands at climate summit, minus China

With the pledge, countries representing 45% of global methane emissions have vowed to reduce their emissions by 30% by 2030. If methane-reduction pledges are met, the result would be equivalent to eliminating the GHG emissions from all of the world’s cars, trucks, buses and all two- and three-wheeled vehicles, according to the International Energy Agency.

China, the world’s largest polluter by some measures, has not signed the deadline-based pledge, but has agreed to reduce methane emissions.

Still largely voluntary

COP27 talks wrapped without concrete progress on the contentious issue of shifting an overall 1.5 degrees Celsius temperature limit from a voluntary marker to an established requirement of nations. Most voluntary pacts among nations and private entities, including a vow by Amazon.com AMZN, -0.75%, Ford Motor F, +0.58%, Apple AAPL, +0.38% and others signing on to a “First Movers” pledge, loosly use the 1.5-degree limit set in 2015 when talks took place in Paris.

Private banks, insurers and institutional investors representing $130 trillion said they would align their investments with the goal of keeping global warming to 1.5 degrees Celsius, toward a pledge to net-zero emissions economy-wide by 2050. Advocacy groups cheer the pledge and its expanding roster but are also keeping up pressure on the signatories to speed up progress toward this goal and to stop undermining the pledge with fossil-fuel investment.

Read: Here’s where the big U.S. banks stand up and fall down on climate change

The Egypt pact was also void of firmer language on emissions cutting and the desire by some officials to target all fossil fuels NG00, +1.16% for a phase-down.

Natural gas, which is relatively cheaper to produce than other fossil fuels, has been the major alternative to more-polluting coal in electricity generation. Still, it has its own emissions risk.

In the U.S., for example, electricity is the most common energy source used for cooking — electricity often powered by gas. Still, about 38% of U.S. households use natural gas directly for cooking, according to the U.S. Energy Information Administration.

Natural gas providers also own an established pipeline infrastructure that may serve alternative energy, and is pushed by the industry as a viable alternative alongside solar, wind ICLN, -0.15%   and other means. The industry also promotes its efforts to cap methane leaks.

Related: World’s richest nations stick to 1.5-degree climate pledge despite energy crunch

‘It is more than frustrating to see overdue steps on mitigation and the phase-out of fossil energies being stonewalled by a number of large emitters and oil producers.’

— Germany’s Foreign Minister Annalena Baerbock

With fossil fuels in their sight, the European Union and other nations fought back at what they considered backsliding in the Egyptian presidency’s overarching cover agreement and threatened to scuttle the rest of the process, while advancing their own draft. The package was revised again, removing most of the elements Europeans had objected to but adding none of the heightened ambition they were hoping for, the AP said.

Egypt has played a unique role as host, representative of Africa, which sits at the front lines of those hurt by climate change and yet, remaining loyal to its own fossil-fuel ambitions and those of OPEC nations.

Germany’s Foreign Minister Annalena Baerbock voiced frustration.

“It is more than frustrating to see overdue steps on mitigation and the phase-out of fossil energies being stonewalled by a number of large emitters and oil producers XOM, -0.87% BP, -0.90%, ” she said.

The agreement includes a veiled reference to the benefits of natural gas as low- emission energy, despite many nations calling for a phase down of natural gas, which does contribute to climate change.

Fossil-fuel industry’s presence

At least 636 representatives of the fossil fuel industry registered to attend the summit, a 25% increase over the industry’s presence last year, according to an analysis released by three advocacy groups.

More fossil fuel lobbyists are on the roster than any single national delegation, besides the UAE who has registered 1,070 delegates compared to 176 last yearaccording to a report from Corporate Accountability, Corporate Europe Observatory (CEO) and Global Witness (GW).

 Frances Colón, senior director for International Climate Policy at the Center for American Progress, found plenty of fault with this round of talks.

“The final text reflects the outsized and corrupting presence of fossil fuel and big agricultural lobbyists at COP27, compounded by a lack of ambition from key, high-emitting countries,” she said, in a statement. “The agreement makes only a passing reference to the 1.5-degree Celsius warming goal and does not include any new language on phasing down or phasing out all fossil fuels RB00, -0.09% — the only way to reach emissions reduction goals and secure a livable future.”

Colón also worried that the official statement did not adequately advance efforts. World leaders failed to reference the twin, interlocking crises of nature loss and climate change, and declined to link COP27 to next month’s U.N. biodiversity summit in Montreal.

‘The agreement makes only a passing reference to the 1.5-degree Celsius warming goal and does not include any new language on phasing down or phasing out all fossil fuels — the only way to reach emissions reduction goals and secure a livable future.’

— Frances Colón of the Center for American Progress

While the new agreement doesn’t ratchet up calls for reducing emissions, it does retain language to keep alive the voluntary global goal of limiting warming to 1.5 degrees Celsius (2.7 degrees Fahrenheit). The Egyptian presidency kept offering proposals that harkened back to 2015 Paris language which also mentioned a looser goal of 2 degrees.

This year’s pact also neglected to toughen the main sticking point from the previous COP, in Glasgow last year. At that time, China and India united to dig in unless coal language was softened. Nations this year did not expand on last year’s call to phase down global use of “unabated coal” even though India and other countries pushed to include oil and natural gas in language from Glasgow.

“We joined with many parties to propose a number of measures that would have contributed to this emissions peaking before 2025, as the science tells us is necessary. Not in this text,” the United Kingdom’s Alok Sharma said.

Climate campaigners are concerned that pushing for strong action to end fossil fuel use will be even harder at next year’s meeting, which will be hosted in Dubai, located in the oil-rich United Arab Emirates.

The Associated Press contributed.

This article was originally published by Marketwatch.com. Read the original article here.

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