COP27 Latest: US Fossil Fuel Pledge Seen as Political Dynamite

(Bloomberg) -- The COP27 global climate summit in Egypt will continue on Saturday, adding an extra day to negotiations, to allow delegates more time to agree on divisive issues such as how to compensate the poorest countries for the damage caused by climate change and how fast the world should bring down greenhouse gas emissions.

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The European Union tried to break the deadlock late on Thursday, offering a new fund for loss and damage (the term used for the cost of climate change impact) in exchange for stronger ambition to mitigate emissions. Early on Friday morning, the Egyptian presidency published a draft agreement that offered no firm proposal on the first part and fell short on the second.

Delegates expect the talks in the Red Sea resort of Sharm El-Sheikh to go into overtime as they strive for a last ditch compromise. The next plenary session to take stock of progress is scheduled for 1 p.m. local time.

The EU proposal would include a commitment to immediately establish a new loss and damage response fund with details worked out over the next year as well as a commitment to examine debt and reform the multilateral development banks. The block wants large developing world emitters such as China to pay in. In exchange, countries would vow to peak global emissions before 2025 and phase down all fossil fuels — not just coal, which was spelled out in the Glasgow climate pact last year.

“If this proposal by the European Union on the fund is to be accepted, then only in a package deal with serious, serious plans on mitigation,” the bloc’s climate chief, Frans Timmermans said. “This is our final offer.”

US Embrace of Fossil Fuel Phase Down Seen as Political Dynamite (6:46 p.m.)

Veteran political strategists and energy advisers are warning that a US embrace of COP27 language to phase down fossil fuels and a fund to compensate victims of climate change would be political dynamite for the Biden administration, potentially jeopardizing Democrats’ chances on the campaign trail in two years.

“The idea of giving American taxpayer cash to foreigners because of some imaginary damages will be toxic to voters,” said Republican strategist Mike McKenna. And “anything that causes energy prices to rise damages the economy.”

In particular, it would be fraught for the US to sign off on the European Union’s proposed pledge that lumps natural gas in with coal and oil and targets all of the fossil fuels for a phase down, given natural gas will be needed for decades to displace coal, said Paul Bledsoe, a former climate aide in the Clinton White House now with the Progressive Policy Institute.

The political risk surrounding the issue were made more apparent by the backlash that was prompted by US President Joe Biden’s pre-election comment that coal plants across America will be shut down and replaced by wind and solar power.

“The EU plan is full of political danger, and unless substantially revised before US agreement, has the potential to become a major attack issue for Republicans against Biden in 2024,” Bledsoe said. “Does the EU really want the return of a GOP President and US Trump-style climate isolationism?”

Calls for Reforming Multilateral Development Banks Grow (5:30 p.m.)

The draft political decision coming out of COP27 calls on multilateral development banks and international financial institutions to align their spending with climate goals. That’s a big win, Laurence Tubiana, chief executive officer of the European Climate Foundation, said in an interview on the sidelines of the conference. “The moment is right,” she said. ”Climate impacts are beginning to be understood as a macroeconomic risk.”

While these reforms have been talked about for years, there are two major developments forcing a change finally. Developing countries are under stress from rising inflation, growing debt burdens and currencies declining in value against the dollar. At the same time, developed countries are failing to meet their climate-finance contributions to developing countries. Tubiana thinks that reforming MDBs and IFIs could go a long way in solving both problems.

Forest Nations Demand Compensation for Tree Conservation (3:09 p.m.)

A group of more than 50 countries forming the Coalition for Rainforest Nations is demanding the issue of compensation for preserving forests be put back into the cover text at the COP27 climate conference.

“The role of forests and peatlands was removed from the cover decision,” said Eve Bazaiba, vice prime minister of the Democratic Republic of Congo, which holds about 60% of the Congo Basin tropical forest. “So we are asking ourselves, what are we doing here?”

Bazaiba told reporters there needs to be a recognition by large industrialized countries that forested nations should be compensated for keeping their trees and peatlands, which store carbon, intact. The financial details of any procress could be worked out later and could span from loss and damage payments to other mechanisms, she said.

The press conference was also attended by government officials from Honduras and Papua New Guinea, two other forested nations.

COP27 Presidency Defends Summit Handling, Dangles Monday Finish (2:45 p.m.)

Wael Aboulmagd, special representative for the COP27 presidency, said he doesn’t “think we have much to worry about,” adding at this point of climate talks no one is supposed to be comfortable.

“These are 197 countries with very different levels of aspiration and capacities, and expectations when it comes to support,” he said in a press conference on Friday afternoon. “We think we are following a very, very clear game plan.”

A document released yesterday confused delegations when it was mistaken as a draft of the final COP27 declaration. Egyptian officials later clarified it was just a collection of ideas. “It spoke for itself and we clarified it at least five, seven times throughout the day,” he said.

Aboulmagd later suggested negotiations could go on beyond the weekend. “I’d take Monday if I were guaranteed a meaningful outcome,” he said.

Ten-Year-Old Ghanaian Girl’s Climate Speech Gets Standing Ovation (2:12 p.m.)

As national ministers stoically laid out their concerns with a proposed climate pact text Friday, it was the address of a 10-year-old from Ghana that most clearly conveyed the stakes if COP27 negotiations fail.

“As we sit here,” Nakeeyat Dramani said, “the fate of the most vulnerable will be the fate of the world.”

Dramani, who spoke on behalf of Ghana and is an ambassador for the Climate Vulnerable Forum, beseeched delegates five, six and seven times her age to “not leave our communities exposed.”

“Spare a thought for our children and our grandchildren” and “remember yourself at my age,” she said. “If all of you were to be young people like me, wouldn’t you have already agreed to do what is needed to save our planet?

Dramani’s entreaties came at the end of a sobering “stocktake” session assessing the state of negotiations on the final official day of the UN climate summit. She was met by a standing ovation and nearly a minute of enthusiastic applause.

Developing Countries Hold Firm on Loss and Damage Fund (12:46 p.m.)

Pakistan’s climate change minister, Sherry Rehman, speaking on behalf of the G77 group of developing countries, said that anything other than the establishment of a loss and damage fund at COP27 climate talks would be “untenable,” holding firm on a position established long before climate talks started two weeks ago. She said that the first of three options outlined in a draft document last night was the only one that would be acceptable.

“We need to have decisions that are as simple and as fast as possible,” Rehman said. “We look forward to a productive day ahead.”

Egypt’s Shoukry Confirms Talks to Continue on Saturday (1:30 p.m.)

COP27 President and Egyptian Foreign Affairs Minister Sameh Shoukry encouraged delegates to look for “the highest common denominator” on the main issues debated at the gathering in Sharm El-Sheikh, confirming that talks will continue beyond their scheduled end on Friday.

The presidency is aiming at publishing on Friday night a new draft text for the final decision that should be approved by all countries at the end of the gathering, Shoukry said. “What we do here impacts real people, impacts real life -- we should always keep that in mind,” he said.

Sri Lanka in Talks for $1 Billion Debt-for-Nature Swap (1:14 p.m.)

Economic conditions forced Sri Lanka to default on its debt earlier this year, after running out of essentials like food and fuel. As part of discussions with creditors, Anil Jasinghe, minister of environment, confirmed that the South Asian country is exploring a debt-for-nature swap possibly valued at $1 billion. It will involve canceling that much debt in return for restoring degraded eco-systems, he said in an interview with Bloomberg.

The idea of climate and environment-focused debt relief has come up a number of times at COP27 as developing countries deal with inflation, currency risks and climate impacts. Apart from debt-for-nature swaps, other ideas include debt repayment suspension in the event of extreme weather impacts and concessionary loans for building renewable energy projects.

Germany’s Baerbock Says Biggest Emitters Should Contribute to Fund (12:55 p.m.)

Annalena Baerbock, Germany’s foreign minister, said the onus was not just on developed countries to contribute to a new loss and damage facility, but that more recent high emitters should do so, in a thinly veiled reference to China. She said that rich countries would be the priority to pay for any new facility. The EU’s position is that a deal hinges on others coughing up too. More work needed to be done to cut emissions to keep global warming below 1.5 degrees Celsius, she added.

We need a financing system that includes the biggest emitters,” she said at a press conference at COP27. “We all have an interest in substantially reducing emissions.”

Climate Vulnerable Nations Back Creation of Loss and Damage Fund (12:33 p.m.)

The Climate Vulnerable Forum, which represents 58 countries with a combined population of 1.5 billion, has thrown its weight behind the first of three options on the loss and damage issue put forward by the COP presidency in the latest text. The text around the option, which suggests the creation of a separate loss and damage fund, will however need to be strengthened with a firm commitment on funding, Henry Kokofu. the head of Ghana’s Environmental Protection Agency and special envoy of the Ghana Presidency of the CVF, said in a statement. “Without an actual commitment to funding, we may well just end up with an empty bank account,” he said.

Anti-Fossil Fuel Campaigners Blast Most Recent Version of Text (11:58 a.m.)

Anti-fossil fuel activists are blasting the current draft text for skirting any commitments to pivot away from oil and gas, despite increasing pressure from both producers and developing nations for a pledge to “phase down” their use.

“This would be a crucial breakthrough, but the newest draft text fails to heed this call,” said Collin Rees, a campaign manager at Oil Change International. “If the Egyptian presidency continues to block the inclusion of all fossil fuels in the final text, it will be a shameful moment and mark this COP as a step backward from Glasgow.”

Draft Text Charts Path for New Finance Goal in November 2024 (11:03 a.m.)

Negotiators are closing in on a final plan for climate finance that aims to soothe frustration over rich countries’ continued failure to provide $100 billion annually and charts a path for the funding later this decade. Draft text released Friday morning would acknowledge that “substantive progress” is still needed on a new collective finance goal and requests a series of technical expert dialogues to help that along next year.

Under that proposed language, which could be incorporated into a final political decision at the end of the summit, there also would be a high-level ministerial dialogue next year, meant to help drive deliberations on a new climate finance goal in November 2024.

Vanuatu and 17 Other Countries Launch Climate Resolution (10:23 a.m.)

With talks set to drag through the weekend, a group of countries is taking matters into their own hands, announcing an aim to take a climate resolution to the International Court of Justice. The group, which includes Vanuatu as well as Germany and Portugal, will take the resolution to a vote at the United Nations General Assembly next month, in an attempt to outline countries’ legal obligations under the Paris agreement.

“International law is the guardrail we have ourselves established to ensure we cooperate for the good of humanity and for the good of our own sustainable development,” said Ralph Regenvanu, Vanuatu’s climate minister. “The advisory opinion is not a silver bullet to resolve our climate challenges, but it will be a useful tool to use to increase our climate ambition.”

Germany’s Baerbock Says Pushing ‘Massively’ for China to Pay (9:00 a.m.)

Foreign Minister Annalena Baerbock said in an interview with German broadcaster ZDF that China is “massively” pushing for China and other major polluters to contribute to a loss and damage fund. She called the EU proposal outlined by Timmermans yesterday “a big step forward.”

Asked whether she expected the talks to end today, Baerbock said she has “packed for the whole weekend.”

--With assistance from Mirette Magdy and Salma El Wardany.

(Adds comments from political insiders; an earlier version corrected speaker in presidency conference)

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