Key takeaways from the Bonn climate conference

Brendan Bateman, Cloe Jolly
07 Jul 2023
Time to read: 6 minutes

The "Bonn battles" saw developed and developing countries debating over familiar issues. Further consensus will be necessary to ensure COP28 delivers meaningful progress on climate change.

With six months to go before the 28th meeting of the Conference of the Parties (COP28) convenes in Dubai, the 58th meetings of the United Nations Framework Convention on Climate Change's (UNFCCC) Subsidiary Body for Implementation and Subsidiary Body for Scientific and Technological Advice took place in Bonn from 5 to 15 June 2023 (referred to as SB58).

SB58 saw delegates tasked with laying the groundwork for the political decisions required at COP28 at the end of the year, including on critical issues such as loss and damage, mitigation, adaptation, the new collective quantified goal on climate finance and the first Global Stocktake under the Paris Agreement.

In a portent of what may happen at COP28, SB58 got off to a rocky start with negotiators failing to even agree an agenda for the 58th meetings until the penultimate day of the conference. While Heads of Delegation were able to sort out some of the disagreements in consultations, the proposed inclusion of an agenda item on the Sharm el-Sheikh Mitigation Ambition and Implementation Work Programme (MWP) was perhaps the greatest point of contention. Further, while most of the SB58 negotiations did not focus directly on finance, as is always the case, money permeated nearly every aspect of the conference.

Mitigation money matters

The MWP, which aims to "urgently scale up mitigation ambition and implementation in this critical decade", was established at COP26 in November 2021, in recognition that countries' collective efforts are well short of what is needed to meet global climate goals. At COP27 in November 2022, parties agreed that the MWP should begin immediately.

The European Union (EU) and the Environmental Integrity Group (EIG) submitted a request to add this item ahead of SB58. This prompted the Like-minded Developing Countries (LMDCs) to propose a counter item three days into the conference, on "urgently scaling up financial support from developed countries in line with Article 4.5 of the Paris Agreement to enable implementation for developing countries in this critical decade".

While the vital importance of mitigation is widely acknowledged, the economic toll of implementing climate change mitigation actions could be a significant burden to many developing countries and, given limited resources, paying for mitigation, adaptation and loss and damage – as well as other key public infrastructure – is simply not realistic for many countries.

For this reason, the LMDC's argued that they could not accept the inclusion of the MWP on the agenda without the new financial support item.

The EU, together with the EIG, the United States, Norway, New Zealand, Australia, Canada and Japan pushed back, arguing that finance was already part of a number of different agenda items and would be within the MWP. However, the failure of developed countries to meet their $100bn a year by 2020 goal (set at COP15) was commonly referenced throughout the conference (the new collective quantified goal on finance is to be set by 2024).

Lengthy discussions ensued but, ultimately, neither item was included in the adopted agenda. However, countries agreed to capture the discussions on MWP in an informal note to be issued by the SB Chairs.

There is expected to be further dialogue on the MWP, ahead of COP28, and questions about the phase-out of fossil fuels – and the economics of such within a just transition – remains open.

Adaptation and GGA

There were four key areas of negotiation with respect to adaptation at SB58: the global goal on adaptation (GGA), the Adaptation Committee, the Nairobi work programme and national adaptation plans (NAPs).

Despite adaptation being a key pillar of the Paris Agreement, a number of key challenges, particularly financing, have held back adaptation efforts. In fact, adaptation lags behind mitigation largely because it does not attract private sector funding.

Beyond financing, adaptation is also harder to measure than mitigation. It is easier to measure emissions and their reduction than to measure adaptation in how much resilience a community has, how sustainable an ecosystem is or whether species are thriving or declining. Measuring adaptation requires a mixture of qualitative and quantitative metrics. More so, for the GGA, these metrics must be applicable to the varied experiences of communities around the world.

A two-year program was established at COP26, designed to develop a clear framework for the GGA ahead of COP28, where it is intended to be adopted. The last of six workshops took place at SB58, focusing specifically on metrics, indicators and methodologies for formally establishing a global adaptation framework. Ultimately, there was limited progress on the development of a framework to guide the achievement of the GGA.

Discussions over other adaptation items were somewhat more productive. Talks undertaken within the Nairobi work programme focused on addressing the gaps in adaptation efforts faced by countries. NAPs were also put forward as a new agenda item for SB58 and discussions focused on the challenges of implementing an NAP for developing countries arising from technical considerations, capacity constraints and the need for appropriate financing. Forty countries have already completed their NAPs and around 100 more are working on them.

Global stocktake

COP28 will see the conclusion (outputs) of the first global stocktake (GST). This is a central element of the Paris Agreement – providing an overview of where the world is, where it needs to go and how to get there, if it is to address the risks of dangerous climate change – and will be used as a mechanism to ratchet up the commitments of the Parties in their Nationally Determined Contributions (NDCs). It is well understood, and was acknowledged at SB58, that nations are not on track to meet their NDCs and that these targets themselves are not enough to limit warming to 1.5C.

An indicative draft framework for the GST was published during the second week of SB58.

The most contentious was the collective purpose and long-term goals of the Paris Agreement, which included subsections on mitigation, adaptation, finance flows and means of implementation and support.

The developing countries, led by the G77 and China, highlighted the historical responsibility of developed countries for emissions and called for an equitable share of the "carbon space". The United States and other developed countries pushed back on these comments.

In the leadup to COP28, there will be a summary report of the technical dialogue on the GST published by 15 August 2023 and a factual synthesis report produced by 8 September 2023, which will bring together all the assessments that have formed part of the dialogue.

Loss and damage from climate disasters

COP27 saw the creation of a loss-and-damage fund to support victims of climate disasters. While this was seen as a fundamental and positive change for developing countries, questions such as where the money for the fund will come from, how it will be distributed and who will receive it, were left open.

The COP27 loss-and-damage decision involved setting up a Transitional Committee to develop both the fund itself and other “funding arrangements” to support relevant action. The Committee held its first meeting in March and its second just before SB58. There will be two more meetings before COP28, as well as a ministerial meeting.

Ideas are split along familiar lines with developed countries wanting to focus on funding arrangements outside the fund itself (a "mosaic of solutions" approach that could include finance from multilateral development banks, insurance scheme and humanitarian organisations) and developing countries, by contrast, wanting to see the loss-and-damage fund set up as an operating entity of the UNFCCC (funded by contributions from developed countries and delivering grants rather than loans). There were also discussions about supplementing this money with new sources of finance, such as taxes on aviation, shipping or fossil fuels.

Overall, there is agreement that existing systems, largely based on loans, would not be sufficient and the question of who would be eligible is still open (though there is a suggestion that funding should be open to all developing countries, but with different triggers, meaning some countries would be able to access funds more readily than others).

The Transitional Committee will make recommendations for consideration and adoption at COP28 on how to operationalize the new loss-and-damage fund and funding arrangements.

Just transition

One of the most significant outcomes from COP27 was the launch of a work programme on just transition pathways. Negotiators at SB58 were tasked with establishing the scope of the programme, including what it would end up producing.

There was some debate over what the work programme might contain, with developing countries calling for a broad spectrum covering international co-operation, climate finance, technology transfer and even an "International Tribunal of Climate Justice and Mother Earth".

Conversely, some developed countries see it as addressing the just transition of the workforce in accordance with nationally defined priorities (in alignment with the language from the preamble of the Paris Agreement). The is a more limited interpretation of the work programme's role and climate justice groups interpreted this as meaning developed countries would only support just transitions on their own soil.

An informal note was prepared capturing the range of opinions presented during discussions on the work programme. This note is not agreed and will be debated at future UN climate talks. Parties did agree to hold a workshop to try settle the contents of the work programme prior to COP28.

Article 6 – Carbon markets

Article 6 of the Paris Agreement covers international carbon markets and other “co-operative approaches” that nations could use to help meet their climate targets. Carbon markets have been the subject of great scrutiny, with suggestions made that many of the offsets purchased by corporations are not making a meaningful impact on emissions. Many nations and civil society groups want to ensure that the Article 6 rules are sufficiently robust to ensure the integrity of Article 6 carbon credits.

The Article 6.4 Supervisory Body has been established to draft the rules for a new international carbon market, which is likely to begin operating in 2024 and will replace the Clean Development Mechanism market.

The negotiations on this topic at SB58 focused on very technical aspects of designing processes for, amongst other things, the authorisation, transfer, registration, report and review of mitigation outcomes (ITMOs) and tradeable units (Article 6.4 emissions reductions or A6.4ERs). The outcomes from SB58 are largely procedural with a series of additional technical activities to be undertaken by Parties in preparation for the adoption of decisions at COP28. The Supervisory Body is also due to make recommendations on certain technical matters to be agreed and approved by all Parties at COP28.

Next steps: to COP28 and beyond

The most recent findings of the Intergovernmental Panel on Climate Change highlighted the need for rapid cuts in fossil fuel use to limit warming to 1.5C. The future of fossil fuels will therefore be a central focus under the Dubai Presidency at COP28, with the COP28 president explicitly acknowledging for the first time that the phasedown of fossil fuels is inevitable. The heated debates at SB58 will therefore likely continue at COP28, particularly in discussions on energy transition and just transition, and the need for parties to scale up mitigation ambition rapidly in response to the outcome of the GST.

Get in touch

Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.