COP27: Agreement on loss and damage fund but insufficient action on emissions

On the night of Saturday 19 to Sunday 20 November 2022, COP27 in Sharm El-Sheikh came to an end. A COP that ends with an important outcome for trust and international solidarity, but insufficient to adequately address the root cause of global warming. What is missing is a commitment to a safe and socially sustainable exit from fossil fuels.

In fact, alternatives to fossil fuels are already widely available, but what is lacking is both the will and the political priority to implement them. The Sharm text is in line with what the international scientific community says: accelerating renewables and energy efficiency is the best answer to the global energy crisis.

Losses and damage

From the Sinai desert comes a result that has always been sought but never before achieved: agreement on a fund for losses and damages. Postponed, however, are discussions on who pays and who receives. In this, China’s role is to be reviewed and redefined in light of its global economic and political weight. On country access and eligibility, it will be important to ensure that financial flows reach the most vulnerable countries, which are currently excluded from many of these funds.

Climate finance

Of note is the commitment to seek the involvement of the heads of international financial institutions and other relevant bodies under the leadership of the UN Secretary-General in order to identify effective financing for the goal. Also noteworthy is the invitation to the international financial institutions to consider contributing new and innovative approaches at the upcoming 2023 spring meetings of the World Bank and International Monetary Fund.

Significant is the clear signal linking the need to reform the global financial system, also present in the final policy text, and the goals of the Paris Agreement: revising international rules to mobilise the volumes needed for climate action. Next year’s international financial meetings therefore become critical. It will be important to support and leverage the Bridgetown initiative of Barbados, now supported by France, which presents an ambitious reform agenda. The G7 and G20 countries are called to action. The Italian G7 Presidency in 2024 will be crucial to implement these reforms.


The sore point, however, was ‘mitigation’, or commitments and actions to reduce emissions. Indeed, the primary cause of climate change, the use of fossil fuels, was not explicitly and decisively addressed. This will have to change at COP28 in Dubai in a year’s time. While there is a lack of a clear commitment on decreasing and moving away from fossil fuels, mainly due to the restraint of corporations and oil and gas producing countries that are pushing to slow down the transition, renewables enter the text of a COP for the first time. Accelerating on renewables and making them the pivot of the transition, also in response to the global energy crisis is the message coming out of the Sharm text. Indeed, the text is explicit about the need to transform energy systems to make them more secure and sustainable. There is ambiguity, however, about the term ‘low-emission energies’ cited as a solution but without indicating which energies fall under this definition.

In Sharm we saw an explicit attempt by companies and oil and gas producing countries to slow down a necessary and now inevitable transition. Worryingly, the super-profits generated this year by the energy crisis are being channelled into new hydrocarbon exploration and production, especially new gas and infrastructure in the Mediterranean and Africa, incompatible with both climate and energy security. This in the face of the great potential for clean, readily available and safer alternatives in these regions.

A fund for the most vulnerable

It is therefore a victory for the most vulnerable countries that shows the importance of the COP as the only global forum that represents and gives voice to the demands of all countries, especially the most vulnerable. Europe played a listening and pioneering role in arriving at the compromise that allowed the creation of the fund. And it did not want to break the package despite the fact that most of its proposals on mitigation were not given due consideration.

Europe, in fact, played a leading and compromising role, especially with an ambitious initial offer on the loss and damage fund. Unlike at COP26 in Glasgow, Europe tried to play a leading role this year, with its offer on loss and damage breaking the negotiating deadlock of the past few days. The insistence on stronger commitments on mitigation is also to be interpreted as a sign that Brussels is serious about the energy transition: accelerating on renewables and energy efficiency is the solution identified by the EU to respond to the energy and climate crises.


Italy, which was present with a strong diplomatic delegation headed by the Special Envoy for the Climate, Alessandro Modiano, played its part through European action. The COP was also the first opportunity for President Meloni and Minister Pichetto Fratin to present Italy’s political position. At the moment this is being established in the wake of the Draghi government and the multilateral rules adopted so far. We should wait to see the concrete choices on the energy and financial front, in addition to the encouraging ones presented in Sharm and Bali such as the Italian Climate Fund, managed by Cassa Depositi e Prestiti, and the contribution to the decarbonisation of Indonesia and Vietnam. Attention now returns to the capitals, on the path that will lead climate diplomacy to COP28 in Dubai.



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