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COP27: Climate Wisdom – A New Dawn In Egypt

The concept of ‘environmental compensation’ which became the talking point in Egypt negotiations is already a very established mechanism in many countries across the world

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The ‘city of peace’, Sharm el-sheikh became the city of ray of hope yesterday with a new dawn for climate justice and climate equity for the world.

The world has waited too long for the consensus on the climate compensation fund and after number of intense negotiations and discussions, the COP27 (27th Conference of Parties) at the red sea resort town in Egypt resulted in a historic agreement being sealed by the creation of a loss and damage fund (L&D) on Sunday.

A mission thirty years in making, being blocked for long by the rich or the developed countries was finally and successfully accomplished at the COP27 in Egypt.

The concept of ‘environmental compensation’ which became the talking point in Egypt negotiations is already a very established mechanism in many countries across the world.

Infact in India way back in 1996 in the historic judgment of Indian Council of Enviro-Legal Action v. Union of India [(1996) 3 SCC 212]. The Apex Court for the first time applied and defined the ‘Polluter Pays Principle’ where the polluter is absolutely liable to compensate for the harm/pollution caused to the environment. 

According to this principle, the polluter has to not only compensate the victims of pollution but also compensate for the restoration of environmental degradation caused.

Thereafter, the concept of climate compensation was further defined and affirmed in the judgment of Vellore Citizens’ Welfare Forum vs. Union of India [(1996) 5 SCC 647], that the polluter pays principle and the precautionary principle forms an intrinsic part of the environment laws of India.

As an amplification of this very concept of climate compensation, in a first, at the global level, the Loss and damage fund is being created as a down payment for the future as a dedicated fund to help developing countries, particularly those most vulnerable to the impacts of climate change to deal with climate related losses and damages. 

Based upon the concept of Common but differentiated responsibilities (CBDR), a fundamental principle which was agreed upon years ago even in 2015 Paris Agreement that rich nations must bear a larger burden of tackling climate change since they emitted more green-house gases over the decades, the result of which has to be suffered by the developing or under-developed countries. 

Infact, the Sunday Egypt declaration for climate justice is a huge achievement as United States and many other countries were fundamentally against compensating vulnerable countries on account of higher emissions by developed nations.

In an attempt to run away from their historic responsibility of irretrievable damage to the environment, the developed countries at the COP27, were even pushing to include high income countries and emerging economies like China and India and wanted to narrow the beneficiaries to only most vulnerable such as island nations and under-developed countries. 

This year’s COP resulted in deep dwelling upon the differentiation between developing and developed countries as the USA and EU kept pushing to China being a contributor to any fund being created as the largest current emitter in the world and second-largest historical emitter of green-house gases. 

A transitional committee constituting 23 members, 10 from developed and 13 from developing countries will now decide upon the modalities and answer questions about how payouts will be made under the fund and its sources, which will be further considered at the COP28 to be held in November 2023 at the UAE. 

Further, guided by the pragmatic suggestions from India, the COP27 even agreed to transition out all fossil fuels and not just coal which was lacking in the earlier COP26. This was supported by nearly 80 countries including the US and EU but faced opposition from the inclusion of oil and gas from a few developed countries 

The agreement however fell short and did not include a wider target on all fossil fuels, as proposed by India and several other nations. 

The COP27 with the Tagline – Together for implementation was initially meant to focus on how commitments would translate into reality but in vain. 

And since many are considering the COP27 and calling it ‘a missed opportunity’ from India’s perspective, the victories included the cop27’s endorsement of the sustainable lifestyle mission and a clause regarding energy transitions, which did not single out particular fossil fuels.

As an Indian it is a proud moment that as a fifth largest economy India is voluntarily marching towards drastically reducing carbon emissions, shunning all fossil fuels in future, embracing non-conventional energy like never before and emphasizing in Egypt that our planet has no more patience.

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.


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Sudhir Mishra

The author is Founder and Managing Partner, Trust Legal.

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Simran Gupta

Associate, Trust Legal

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