COP27 in Context

RFF University Fellow Robert N. Stavins spoke with RFF Senior Fellow Raymond J. Kopp about international climate policy and prominent issues at the most recent United Nations conference on climate change.

Robert N. Stavins: Let me start by asking you about the Paris Agreement. In the agreement, two elements are intended to advance climate ambition. That’s important, because I think most people would say that, logically, there are two necessary conditions for ultimate success.

One is adequate scope of participation by countries. We’ve got that: We’ve gone from 14 percent of emissions from participating countries included under the Kyoto Protocol to 97 percent under the Paris Agreement. Sufficient ambition is the other necessary condition. Are there ways in which the Paris Agreement can advance ambition? And has it been successful so far in doing that?

Raymond J. Kopp: There are a couple of ways this can happen. One is the Global Stocktake. The Global Stocktake is a mechanism by which all of the nationally determined contributions (NDCs) from the countries participating in the United Nations Framework Convention on Climate Change (UNFCCC) are evaluated, to determine whether the globe is on a path to keeping global temperature increases below 1.5°C above pre-industrial levels. The idea is that, if we look at those commitments and do an analysis of whether we’re on target, then if we’re not on target, there’s an opportunity for countries to increase their levels of ambition for reduced emissions in the next five-year increment.

The second portion of this is the ratchet mechanism. The idea is that, if there’s a gap, we’re going to try to reduce that gap by having all countries increase their ambition, by increasing the amount of emissions they’re going to commit to through their NDCs. This is a mechanism; we’ll see how it’s going to take place. The mechanism will not be formally deployed until 2023.

But a synthesis report already has come out from the UNFCCC Secretariat that gives us an idea of what those gaps look like with respect to hitting the targets—and they’re not encouraging. We already know that there’s going to be a major gap. We’ve known that for quite some time. I haven’t seen a lot of countries step forward to increase their ambition in the recognition of that gap. So, the jury’s out on how effective this mechanism is going to be.

Increased ambitions are not the sole focus, but they’re a big part of the discussions at COP27 in Sharm El-Shiekh. What’s your guide, Ray, to what we should look and listen for at COP27? What are the big issues?

I would pay attention to this Global Stocktake issue, because this is going to come out next year, and there’s going to be a significant gap that needs to be filled in terms of reduced emissions. People are going to be looking for countries to really increase their ambition in their NDCs.

The other big issues are not surprising. These are perennial issues. The first ones will be about finance in two forms: First, finance to help developing countries mitigate their emissions. The developed world has committed to producing $100 billion annually to be able to do that and has yet to deliver on that particular promise. A second piece is on adaptation. Again, funding will be needed to support building resilience in developing countries.

Right now, there is a bit of a lack of trust between the developing world and the developed world, with respect to the deliverability of those funds going forward. For developed countries, there is the problem that, to be able to hit those particular targets, you need a lot of private investment—not just government funds. The private investment has been lacking considerably—certainly on the mitigation side, but most certainly on the adaptation side.

I think there are going to be a lot of conversations about how we guarantee that these funds are going to be made available, recognizing that they’re likely not going to come completely from governments. Private industry is going to have to step up. Then, how do you get private industry more actively involved in funding projects in developing countries? We can talk about the risk that’s associated with those rates of return and how governments can de-risk those activities.

But finance is going to be a huge deal.

In addition to finance, which has been targeted toward mitigation and adaptation, there’s the reality that certain climate impacts are inescapable and cannot be adapted for. The poster child would be the loss of land of a small island state, in which case climate change is existential and not just costly. That’s where this phrase “loss and damage” comes up, and some climate activists now are referring to “reparations” for previous emissions from some of the largest emitters: the United States, China, the European Union, and Russia. What should we watch for in the debates about loss and damage?

Every COP, this issue becomes more salient, and both sides unsurprisingly have become more vocal about it, because we are now seeing the impact of climate change—not only in the developing world, where it is severe and people are at most risk, but here in the United States.

I can speak from the perspective of a developed country—at least, from the United States. There’s always going to be opportunities for the United States to provide aid to countries that are suffering horrific damages associated with climate change. One of the issues is this: Is it going to be taking the form of aid, which means it’s more of a voluntary contribution on the part of the United States? Or is there some formal liability that the United States bears that is associated with these damages?

The idea that the United States is legally liable for these damages has been shunned, and I think the idea will continue to be shunned by the United States. I can’t speak for the European Union and others. But mechanisms by which aid can flow in a way that is more consistent with the needs on the ground are going to be important.

Then, of course, there’s the idea of attributing a particular loss to climate change rather than just natural weather variation. You can always argue that a loss has nothing to do with climate change. These are scientific issues that can be worked out. But this issue about aid versus liability has been around since the beginning of the debates over loss and damage a decade ago. I don’t see it going away. It’s a hugely important issue.

A question I always get from the press at the end of each year’s Conference of the Parties is, Was the conference a success or a failure? If you get that question at the end of COP27, what would be the criteria? What’s going to make COP27 a success or a failure?

I think I look at these things the same way you do, Rob. This is not a single event; this is a process. The question to look at is this: Over the last several years, is the process working?

Look at the progress we have already made. Now, is that due to the UNFCCC, or is it due to a variety of other factors? Certainly a lot of other factors are involved, but COP27 is an opportunity for the world to come together and talk about these things. The UNFCCC has put together an enormous amount of transparency in reporting. These things may not sound all that exciting, but they’re fundamental to an understanding of where we are with respect to climate change and how to reduce emissions going forward.

We’re talking about the ability to look at the NDCs, unpack those, understand what a country needs to be able to hit its particular target, and then understand whether the global community can provide that information. Those things are part of the process going forward. And the process continues.

We’re making advances on building carbon markets and on transparency. There is a lot more discussion about options for finance.

I do think, in general, that COP is a successful enterprise. Is it moving at the pace necessary to hit the 1.5°C target? No. But it is a process, and it’s moving forward. At the end of the day, I don’t necessarily go back and give these individual COPs a grade, but “Has progress been made?” is always something that I look for, and I expect there would be some progress made here. I would love to see more progress made on the loss-and-damage issue and try to get more focus on the middle ground here. If that came out, then I would consider this to be a tremendous success.

Stepping back, then, from COP27 and from the UNFCCC, are you optimistic or pessimistic about future climate change policy—not just in the United States, but around the world?

I’m of mixed minds on that. Tremendous progress has been made in decarbonizing developed economies, and there’s just no getting around that. There’s still an enormous amount of work to be done to electrify developing countries. We’ll see how that plays out.

One of the issues that is coming up is around the interplay between emissions-reduction policies that target the industrial sector. These would be the sectors producing basic commodities—iron, steel, chemicals, and what have you—that are traded internationally. The issues can be boiled down quite simply: If you are a developed country, you are producing these internationally traded products, and you are hoping to decarbonize those industries through policies. If those policies raise the cost of products, then you lose competitiveness in the international market.

You see this with the European Union’s carbon border adjustment mechanism. The European Union imposes very high carbon prices on its manufacturing sector and its electricity sector, and they fear that they’re losing manufacturing to countries that don’t have those aggressive policies. They’re putting in border measures or tariffs to limit the leakage of these emissions from the European Union to elsewhere. This is a big issue. It’s a big issue in the United States, as well, plus Japan, Korea, and other developed countries that are working on internationally traded commodities.

This is going to be talked about in this COP, and when we move to Dubai for COP28, I think to the discussion will be really important there. These things are just gaining traction now, but I think Dubai will focus heavily on what we call “border measures,” or this nexus between climate policy and international trade.