The recently concluded climate ministerial at Sharm-el-Shaikh was marked more by setbacks than gains. After two weeks of jawboning, COP 27 arrived at a consensus to create a loss and damage fund to make good the losses arising out of climate catastrophe. This breakthrough has taken time in coming, after having first being decided upon in 2013. Now, the funds are expected to follow, but the question remains on how loss and damage will be assessed, who will cough it up, and which countries can benefit from it.

The developed countries have been wary of this initiative, fearing that demands for compensation of loss could escalate into damages for historical responsibility for emissions. India supported the move, but is unlikely to benefit in terms of any money coming its way for extreme climate events. In fact, it would be lucky if it is not asked to contribute to the fund, with China being clearly in line for being asked to pitch in. The principle of ‘common but differentiated responsibility’ has not been spelt out for funding this body. The usual argument of current emitters being required to pay has been trotted out instead, but even here China, US and EU (27) are the top three, with India following.

The EU in particular has bemoaned that COP 27 marks a retreat from emission reduction goals. In fact, it seems that the target of curtailing global warming to 1.5 degrees Celsius over pre-industrial levels has virtually been shelved. This calls for reductions in global greenhouse gas emissions of 43 per cent by 2030 relative to the 2019 level, but the emission reduction plans of countries do not measure up. The Western countries have shown no indication of trying to reduce their carbon footprint (which should include emissions generated elsewhere because of their consumption) or transferring funds and technologies to the rest. In fact, it is suspected that their contributions to ‘loss and damage’ will be set off against their existing, unmet commitments (of the order of $100 billion a year). Climate finance remains pie-in-the-sky; it’s time to try something different.

At COP 27, the retreat on emissions was pronounced. India’s proposal, backed by the EU, to phase out all fossil fuels, not just coal, did not see the light of day, as oil and gas producing countries weighed in against it – besides actually pushing gas as a low emitting fuel. This turn of events seems linked to the Ukraine-war-induced spike in energy prices. If the war has incentivised coal and oil production, the demand for these fuels (besides their baseload power attribute) has also been triggered by the supply crunch in solar panels, owing to China’s zero Covid policy. While the IEA has said that the push to renewables will pick up because of the high energy costs, there can be no denying that, for now, renewables have taken a hit. Whether this situation prevails in COP 28 depends on whether the war carries on, and on how China’s economy shapes up.