Lessons of COP26 for COP27 and beyond

Although the reactions to the agreement reached at COP26 in Glasgow largely focused on the use of coal, financing was also a major topic.

One of the central points in this regard was an unfulfilled promise from 2009, when developed countries pledged to provide US$100bn a year by 2020 for developing countries to adapt to climate change.

BNamericas spoke with Lorena González, senior researcher at the financial center of the World Resources Institute, about how this aspect was addressed in the final agreement, the position of Latin America in the negotiations, and the issues that will be central to next year’s summit.

BNamericas: How was the issue of financing addressed in the agreement reached at COP26?

González: We have a decision that is unprecedented in several ways.

First there are some specific mentions on the urgency of scaling climate finance in line with what the science tells us, and this is a new indicator. It's not that we haven't had these kinds of benchmarks before, but now we have them in the same paragraph, and that's a step in the right direction.

We have several specific requests and several wordings that also go beyond what was previously agreed on.

For example, in the case of US$100bn a year for developing countries there is a recognition that it is to “note with regret” that the goal has not yet been reached. This is an unusual sign in the type of language that the convention normally uses.

And on the other hand, there is also language that it is imperative and urgent that this support from developed countries go beyond US$100bn per year.

I would say that this is the basis around how the issue of financing was treated in the decisions, both of the COP and the CMA [countries that have ratified the Paris Agreement], in this sense of creating a text that goes beyond what had been previously agreed.

BNamericas: Where do you think the COP26 agreement could have advanced more in financing?

González: As in any negotiation, not all parties got everything they wanted, and it’s important to recognize that.

In the case of the wording on the goal of US$100bn per year, developed countries sought to obtain a specific proposal regarding the aggregate figure for the period 2020-25, which would offset the years 2020 and 2021, when it was not met. 

The forum of the most vulnerable countries, the CVF [Climate Vulnerable Forum], had put a figure of US$500bn in total for the period 2020-2024, as a specific request in that area.

Developing countries wanted this to be reflected in the Glasgow decisions, but it ended up being one of the things missing in the final text.

Deep down, there is a call to go beyond US$100bn annually, there is also a call to meet this goal as soon as possible, but there is no such feeling that there will be compensation for the years in which the goal was not reached.

BNamericas: How was financing treated in the agreements that were reached outside of the formal negotiations at COP26?

González: There were a lot of bilateral agreements and new initiatives, although we’re still waiting for specific details, since generally these announcements are made with general information and then it’s necessary to collect the details.

For example, we saw various initiatives by non-state actors, many of them related to financing, adaptation and transportation. One of the announcements that attracted the most attention was a specific fund to support South Africa's energy transition, for US$8.5bn.

We also saw specific additional funds from the UK, to facilitate access to climate finance for developing countries.

There were several resource mobilization initiatives, particularly for adaptation issues. Records were broken in the case of the Adaptation Fund, reaching US$351mn for next year, which is almost triple the initial amount that the fund had put on the table for next year.

BNamericas: And how does Latin America in particular benefit?

González: There is no regional focus on Latin America that has been consolidated, and that is an area of opportunity that the region has.

When we see approaches in Glasgow that came from the African continent or the islands as a whole [island nations], the Latin American region has not positioned itself that way when it comes to accessing financial resources.

There is an opportunity regarding projects that can be developed together. The region has started to explore this possibility but it’s still lacking.

Costa Rica, as the spearhead in many sustainability issues, has launched a joint initiative with Denmark to set a deadline for ending oil and gas exploration, which is a platform that seeks to mobilize a large amount of resources in the future.

If countries begin to shore up these initiatives, to stop investing in exploration and development of these technologies in the oil and gas sector in particular, then those resources will be available for other types of investments.

There are several sectoral aspects to be aware of.

BNamericas: One of the conflictive issues in the COP26 negotiations was a fund for losses and damage caused by climate change. How did that end?

González: There was a specific proposal by the G-77 plus China, that is, all developing countries supported it, to create a fund dedicated to compensating for these losses, which in many cases are actually irreparable or difficult to quantify due to the lack of technical development.

This proposal was on the table, and varied responses were received. The general feeling of developing countries was that there was openness from many developed countries to consider this option. However, it resulted in a formulation that leads to a new process for another dialogue to evaluate financial options to address damage and losses in the context of the Paris Agreement.

At the end of the day, we’re moving from a very clear, very precise proposal from developing countries to a process in which we’re not clear about what will result, but which we hope will include concrete recommendations.

BNamericas: How do you expect the financing issue to be addressed at the next COP to be held in Egypt?

González: It seems to me that financing is going to be one of the priority issues for the Egyptian presidency [of COP27]. Undoubtedly, pending issues such as financing for adaptation and resources for loss and damage will be a priority.

Progress towards the US$100bn per year goal will also be assessed, as well as assessing the needs of developing countries, regarding more loans that don’t add to debt levels and how to consider climate vulnerabilities that increase capital costs.