COP27 – It’s All About the Money

Contributed by Robert Lyman © 2022. Robert Lyman’s bio can be read here.

The 27th conference of the parties to the Framework Convention on Climate Change (UNFCCC) will take place in Sharm El-Sheikh, Egypt, from November 6 to 18, 2022. COP27, as it will be known, will be attended by about 40,000 people, including representatives of the 196 member countries, a huge media contingent and thousands of environmentalist campaigners.

The agenda for the conference is typical of those for other international organizations in that it will deal with many “housekeeping” items and reports from subgroups that have been meeting in dozens of places since the last conference in Glasgow, Scotland. Much of the real business of the conference, however, will take place in the backrooms in which relatively small numbers of senior political advisors and UN secretariat members will tussle over the key issues that are really in play.

These do not concern the plans of the countries to reduce greenhouse gas emissions or to set new targets for emissions reductions. They concern money. Lots of it.

In the lead-up to the Glasgow conference, the developing countries declared their expectations for how much the richer countries (mainly in the Group of 20) should contribute annually to support climate mitigation and adaptation in the developing countries. For years, the agreed target was $100 billion per year up to 2025, a target that was never reached. (in 2021, it is estimated that the richer countries provided about $75 billion in various forms of bilateral and multilateral climate aid). India, probably the largest single recipient, announced in 2021 that it would not even think about meeting the emissions reductions proposed in its national plan without an up-front commitment of at least one trillion dollars from donors. The African Group, after using the Global Environment Facility’s financing ratio, concluded that developed countries should contribute “at least” US $1.3 trillion per year between 2025 and 2030, with further increases beyond that time.

The subgroup meetings have so far been unable to make any progress in narrowing the wide divergence in views between the developed and developing countries. It is likely that, in the period leading up to COP27, there will be a barrage of news announcements about one or another weather event that is allegedly unprecedented, directly caused by rich country emissions, and likely to pose an existential crisis for the planet, to set the stage for environmentalists and the media to pressure western leaders.

There never has been an agreement on the apportionment of payment obligations among “rich” countries or the apportionment of receipts by the developing countries. It is not even clear whether China would qualify as one of the recipients.

If the apportionment of payment obligations were done on the basis of the Gross Domestic Products of the countries concerned, the United States’ share could be 30%, or US $390 billion per year. That is about half what the United States now spends annually on Medicare,

Similarly, Canada’s share could be 3%, but 3% of US $1.3 trillion is today about $54 billion per year in Canadian dollars. That is two thirds as high as the Canadian federal government’s $84 billion equalization payments to the provinces. It is also about $1400 per year for every Canadian.

If past experience is a guide, there is virtually no possibility that the richer countries will agree to make such payments. Absent such agreement, the developing countries will continue to resist incurring the massive costs and losses of economic development opportunities that would be entailed in radical emissions reductions. The UN’s ambitious goals for “decarbonization” simply will not be met.

It will be interesting to see when the implications of this will become clear to the public in countries like the United States and Canada.

Related: “Who Cuts? Who Pays? Show me the Money!” Look back at COP-21.

1 Comment

  1. David Wojick

    Excellent analysis, with useful numbers. Here is my less precise version, but including “loss and damage”. I expect to enjoy COP27.

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