John Kerry Archives - An Economic View of the Environment

A Key Political Advisor Reflects on Progress and Prospects for Climate Policy

In my monthly podcast series, “Environmental Insights: Discussions on Policy and Practice from the Harvard Environmental Economics Program” (produced by the Harvard Environmental Economics Program), I’ve had the pleasure of engaging in conversations with individuals who have played very important roles in environmental and climate change policy, whether from within academia, government, NGOs, or private industry. My most recent guest was certainly no exception, because I was joined by John Podesta, who has held numerous important positions in the U.S. government, starting with leading staff positions in the U.S. Senate, and then – more prominently – in the White House, serving in key roles under three U.S. presidents: Clinton, Obama, and Biden. Along the way, he founded the Center for American Progress and served as its first President and CEO.

Since my podcast and this blog are focused exclusively on environmental and energy policy, I should note up front that among his many government positions, he served as Senior Advisor to President Biden where he oversaw more than $750 billion in clean-energy investments under the Inflation Reduction Act, and then succeeded John Kerry as U.S. Special Presidential Envoy for Climate. I hope you will listen to our conversation here.

In the podcast, John Podesta shares his insights on climate policy, the challenges of securing bipartisan support, and the global push toward clean energy. He begins with some reflections on the Inflation Reduction Act:

“It was an investment-led strategy, private sector-led, although government-enabled strategy to boost investment, innovation, job creation, cost reductions, and it covered every emitting sector of the economy, unlike efforts in the past that really just focused on power production or transportation when very little attention was being paid to the emissions that [were] the result of land use or industrial process,” he remarks. “The world saw [the IRA] as the United States really getting in the game in a very positive way… Even our European colleagues… did not see this as a zero-sum game and we thought that the improvements, the innovations, the ability to create a green hydrogen industry was going to benefit the world, including Europe and European companies.”

John maintains that the IRA also served U.S. international relations interests in important ways:

“It gave us a way to partner with others who were also worried about economic domination in these [clean energy] sectors, that they would be left out and left behind, and notwithstanding that some cheap Chinese clean technology was flooding the market,” he says. “It was kind of undermining domestic investment in places like Brazil, like India. And they saw the U.S. as a reliable partner in saying that we need to… share a vision, but we also need to attend to our own domestic populations and make sure we’re building strong economies.”

But Podesta goes on to describe how everything changed when the Trump administration came to power, which he characterizes as undermining much of the climate progress that had been made during the Obama and Biden administrations.

“We’re in a period of under President Trump with ideology that is definitely hostile to the development of the clean energy economy and indeed in dealing with climate change… I sometimes describe this administration as the Empire Strikes Back. We saw a huge boost in investment in clean technology, and now we’re seeing reversal of that with a substantial loss of jobs, prices rising. And it’s interesting because it’s happening in the middle of the first time in a generation… of increasing demand for electricity,” he says “We see this booming demand for electricity, and [Trump has] taken off the table the cheapest, cleanest, reliable, and deployable sources of energy. Maybe the iconic example is the war we see on offshore wind in the Northeast and New England.”

On the upside, Podesta remarks, international efforts to reduce emissions and address climate change are moving in the right direction.

“The overall picture across the globe is to spur investment innovation in these technologies as opposed to polluting fossil fuels and that is happening virtually everywhere except the United States… and a couple of others who are resisting that trend. But I think at a political level, and certainly at a technical and scientific level, the damage that is resulting from a warming planet is obvious and people are trying to do something about it,” he says. “Whether that’s in the big economies in Europe or the big economies in Asia, the push is towards trying to develop cleaner resources and less polluting resources, trying to invest in adaptation and resilience, trying to find a way to get financial flows going to support that transition.”

For this and much more, please listen to my complete podcast conversation with John Podesta, the 70th episode over the past five years of the Environmental Insights series, with future episodes scheduled to drop each month. You can find a transcript of our conversation at the website of the Harvard Environmental Economics Program. Previous episodes have featured conversations with:

Gina McCarthy, former Administrator of the U.S. Environmental Protection Agency
Nick Stern of the London School of Economics discussing his career, British politics, and efforts to combat climate change
Andrei Marcu, founder and executive director of the European Roundtable on Climate Change and Sustainable Transition
Paul Watkinson, Chair of the Subsidiary Body for Scientific and Technological Advice (SBSTA) within the United Nations Framework Convention on Climate Change
Jos Delbeke, professor at the European University Institute in Florence and at the KU Leuven in Belgium, and formerly Director-General of the European Commission’s DG Climate Action
David Keith, professor at Harvard and a leading authority on geoengineering
Joe Aldy, professor of the practice of public policy at Harvard Kennedy School, with considerable experience working on climate change policy issues in the U.S. government
Scott Barrett, professor of natural resource economics at Columbia University, and an authority on infectious disease policy
Rebecca Henderson, John and Natty McArthur University Professor at Harvard University, and founding co-director of the Business and Environment Initiative at Harvard Business School.
Sue Biniaz, who was the lead climate lawyer and a lead climate negotiator for the United States from 1989 until early 2017.
Richard Schmalensee, the Howard W. Johnson Professor of Management, and Professor of Economics Emeritus at the Massachusetts Institute of Technology.
Kelley Kizier, Associate Vice President for International Climate at the Environmental Defense Fund.
David Hone, Chief Climate Change Adviser, Shell International.
Vicky Bailey, 30 years of experience in corporate and government positions in the energy sector.
David Victor, professor of international relations at the University of California, San Diego.
Lisa Friedman, reporter on the climate desk at the The New York Times.
Coral Davenport, who covers energy and environmental policy for The New York Times from Washington.
Spencer Dale, BP Group Chief Economist.
Richard Revesz, professor at the NYU School of Law.
Daniel Esty, Hillhouse Professor of Environment and Law at Yale University.
William Hogan, Raymond Plank Research Professor of Global Energy Policy at Harvard.
Jody Freeman, Archibald Cox Professor of Law at Harvard Law School.
John Graham, Dean Emeritus, Paul O’Neill School of Public and Environmental Affairs, Indiana University.
Gernot Wagner, Clinical Associate Professor at New York University.
John Holdren, Research Professor, Harvard Kennedy School.
Larry Goulder, Shuzo Nishihara Professor of Environmental and Resource Economics, Stanford University.
Suzi Kerr, Chief Economist, Environmental Defense Fund.
Sheila Olmstead, Professor of Public Affairs, LBJ School of Public Affairs, University of Texas, Austin.
Robert Pindyck, Bank of Tokyo-Mitsubishi Professor of Economics and Finance, MIT Sloan School of Management.
Gilbert Metcalf, Professor of Economics, Tufts University.
Navroz Dubash, Professor, Centre for Policy Research, New Delhi.
Paul Joskow, Elizabeth and James Killian Professor of Economics emeritus, MIT.
Maureen Cropper, Distinguished University Professor, University of Maryland.
Orley Ashenfelter, the Joseph Douglas Green 1895 Professor of Economics, Princeton University.
Jonathan Wiener, the William and Thomas Perkins Professor of Law, Duke Law School.
Lori Bennear, the Juli Plant Grainger Associate Professor of Energy Economics and Policy, Nicholas School of the Environment, Duke University.
Daniel Yergin, founder of Cambridge Energy Research Associates, and now Vice Chair of S&P Global.
Jeffrey Holmstead, who leads the Environmental Strategies Group at Bracewell in Washington, DC.
Daniel Jacob, Vasco McCoy Family Professor of Atmospheric Chemistry & Environmental Engineering at Harvard.
Michael Greenstone, Milton Friedman Distinguished Service Professor of Economics, University of Chicago.
Billy Pizer, Vice President for Research & Policy Engagement, Resources for the Future.
Daniel Bodansky, Regents’ Professor, Sandra Day O’Connor College of Law, Arizona State University.
Catherine Wolfram, Cora Jane Flood Professor of Business Administration, Haas School of Business, University of California, Berkeley, currently on leave at the Harvard Kennedy School.
James Stock, Harold Hitchings Burbank Professor of Political Economy, Harvard University.
Mary Nichols, long-time leader in California, U.S., and international climate change policy.
Geoffrey Heal, Donald Waite III Professor of Social Enterprise, Columbia Business School.
Kathleen Segerson, Board of Trustees Distinguished Professor of Economics, University of Connecticut.
Meredith Fowlie, Professor of Agricultural and Resource Economics, U.C. Berkeley.
Karen Palmer, Senior Fellow, Resources for the Future.
Severin Borenstein, Professor of the Graduate School, Haas School of Business, University of California, Berkeley.
Michael Toffel, Senator John Heinz Professor of Environmental Management and Professor of Business Administration, Harvard Business School.
Emma Rothschild, Jeremy and Jane Knowles Professor of History, Harvard University.
Nathaniel Keohane, President, C2ES.
Amy Harder, Executive Editor, Cypher News.
Richard Zeckhauser, Frank Ramsey Professor of Political Economy, Harvard Kennedy School.
Kimberly (Kim) Clausing, School of Law, University of California at Los Angeles
Hunt Allcott, Professor of Global Environmental Policy, Stanford Doerr School of Sustainability.
Meghan O’Sullivan, Jeane Kirkpatrick Professor of the Practice of International Affairs at Harvard Kennedy School.
Robert Lawrence, Albert Williams Professor of International Trade and Investment, Harvard Kennedy School.
Charles Taylor, Assistant Professor of Public Policy, Harvard Kennedy School.
Wolfram Schlenker, Ray Goldberg Professor of the Global Food System, Harvard Kennedy School.
Karen Fisher-Vanden, Professor of Environmental & Resource Economics, Pennsylvania State University
Max Bearak, climate and energy reporter, New York Times
Vijay Vaitheeswaran, global energy and climate innovation editor, The Economist
Joseph Aldy, Teresa & John Heinz Professor of the Practice of Environmental Policy, Harvard Kennedy School
Nicholas Burns, Roy and Barbara Goodman Family Professor of the Practice of Diplomacy and International Relations, Harvard Kennedy School
Elaine Buckberg, Senior Fellow, Salata Institute for Climate and Sustainability, Harvard University
Anna Russo, Junior Fellow, Harvard University

“Environmental Insights” is hosted on SoundCloud, and is also available on iTunes, Pocket Casts, Spotify, and Stitcher.

An Ambassador’s Insights about China-U.S. Relations

Bilateral efforts between the United States and China to address climate change have come to a virtual standstill asU.S.-China relations have taken a turn for the worse in recent months, with a trade war emerging, precipitated by U.S. President Donald Trump’s tariff initiatives. That is part of the assessment offered by Nicholas Burns, the Roy and Barbara Goodman Family Professor of the Practice of Diplomacy and International Relations at Harvard Kennedy School and former U.S. Ambassador to China – in the latest episode of my monthly podcast, “Environmental Insights: Discussions on Policy and Practice from the Harvard Environmental Economics Program.” The podcast is produced by the Harvard Environmental Economics Program. I hope you will listen to our conversation here.

Nick Burns, whose esteemed career in the civil service has spanned more than 30 years, explains that the Biden administration had two major priorities for U.S.-China relations while he served as U.S. Ambassador from 2022 to 2025.

“Competition for us was the main focus of our efforts with China, but we also knew…that we have to live in peace with China. The idea of a war would be catastrophic for both countries and the world, and there are some issues where our interests are aligned and we need to work together for the benefit of both of our countries and the world. I thought that signature issue was climate change, and that China and the United States could…work together both in the Paris Agreement process and also bilaterally,” he remarks.

“I am someone who deeply believes in the Paris Agreement, that we need to remain committed to working with China and the other 193 or 194 nation states as part of the Conference of the Parties, and that this is an existential issue for the future of our planet, for the eight billion people who live on it.”

Nick notes that while the bilateral relationship may be primarily competitive, there are occasions when the two countries can work together as was the case when the United States and China negotiated and signed the Sunnyland Statement in 2023, affirming the two nations’ joint commitment to take actions to address climate change.

“[Former U.S. lead climate negotiator] John Kerry and [China’s former special climate envoy] Xie Zhenhua spent a lot of time together… to achieve that statement where… they held up climate change as an issue where it was definitely in the interest of both countries and that both of us had to play a leadership role,” he explains.

Nick Burns also describes in our podcast conversation his frustration with the Trump administration’s decision to withdraw the U.S. from the Paris Agreement, in effect removing the United States from international climate negotiations.

“I’m gravely disappointed to see the backsliding by the Trump administration on this issue. I guess we shouldn’t be surprised given what President Trump did in his first term, and he threatened to pull us out this time, which he’s now done, but that is not in our interest. In fact, it’s really harmed our ability to protect our own country from the ravages of climate change, and it’s harmed our global credibility as a leader in the world,” he remarks. “It’s going to rebound not just on this issue, but I think in others as well.”

Burns emphasizes the importance of maintaining substantive communications with China even when the two countries disagree on some major issues “because I think it’s fair to say this is our most important diplomatic relationship in the world. What happens in this relationship is going to drive a lot of history, our global history, in the next decade, two or three.”

Finally, Nick Burns urges that students from the Harvard Kennedy School and elsewhere should consider a career in the civil service, even if they are currently disenchanted with the present political environment in Washington.

“We need good men and women to go into public service in our country, to serve in the military, in the federal government, and especially in the State Department as we engage countries around the world. And I think that the pendulum will swing back towards an appreciation for nonpartisan public servants,” he says. “We’ve got to show the rest of the world and our own countrymen and women that we’re as committed as they are to taking on the challenge of climate and to meeting it the only way that’s going to be effective working with other countries, including China. So, if you’re a young person listening, trying to figure out what you want to do with your life, there’s so much good you can do.”

For this and much more, please listen to my complete podcast conversation with Nick Burns, the 67th episode over the past five years of the Environmental Insights series, with future episodes scheduled to drop each month. You can find a transcript of our conversation at the website of the Harvard Environmental Economics Program. Previous episodes have featured conversations with:

Gina McCarthy, former Administrator of the U.S. Environmental Protection Agency
Nick Stern of the London School of Economics discussing his career, British politics, and efforts to combat climate change
Andrei Marcu, founder and executive director of the European Roundtable on Climate Change and Sustainable Transition
Paul Watkinson, Chair of the Subsidiary Body for Scientific and Technological Advice (SBSTA) within the United Nations Framework Convention on Climate Change
Jos Delbeke, professor at the European University Institute in Florence and at the KU Leuven in Belgium, and formerly Director-General of the European Commission’s DG Climate Action
David Keith, professor at Harvard and a leading authority on geoengineering
Joe Aldy, professor of the practice of public policy at Harvard Kennedy School, with considerable experience working on climate change policy issues in the U.S. government
Scott Barrett, professor of natural resource economics at Columbia University, and an authority on infectious disease policy
Rebecca Henderson, John and Natty McArthur University Professor at Harvard University, and founding co-director of the Business and Environment Initiative at Harvard Business School.
Sue Biniaz, who was the lead climate lawyer and a lead climate negotiator for the United States from 1989 until early 2017.
Richard Schmalensee, the Howard W. Johnson Professor of Management, and Professor of Economics Emeritus at the Massachusetts Institute of Technology.
Kelley Kizier, Associate Vice President for International Climate at the Environmental Defense Fund.
David Hone, Chief Climate Change Adviser, Shell International.
Vicky Bailey, 30 years of experience in corporate and government positions in the energy sector.
David Victor, professor of international relations at the University of California, San Diego.
Lisa Friedman, reporter on the climate desk at the The New York Times.
Coral Davenport, who covers energy and environmental policy for The New York Times from Washington.
Spencer Dale, BP Group Chief Economist.
Richard Revesz, professor at the NYU School of Law.
Daniel Esty, Hillhouse Professor of Environment and Law at Yale University.
William Hogan, Raymond Plank Research Professor of Global Energy Policy at Harvard.
Jody Freeman, Archibald Cox Professor of Law at Harvard Law School.
John Graham, Dean Emeritus, Paul O’Neill School of Public and Environmental Affairs, Indiana University.
Gernot Wagner, Clinical Associate Professor at New York University.
John Holdren, Research Professor, Harvard Kennedy School.
Larry Goulder, Shuzo Nishihara Professor of Environmental and Resource Economics, Stanford University.
Suzi Kerr, Chief Economist, Environmental Defense Fund.
Sheila Olmstead, Professor of Public Affairs, LBJ School of Public Affairs, University of Texas, Austin.
Robert Pindyck, Bank of Tokyo-Mitsubishi Professor of Economics and Finance, MIT Sloan School of Management.
Gilbert Metcalf, Professor of Economics, Tufts University.
Navroz Dubash, Professor, Centre for Policy Research, New Delhi.
Paul Joskow, Elizabeth and James Killian Professor of Economics emeritus, MIT.
Maureen Cropper, Distinguished University Professor, University of Maryland.
Orley Ashenfelter, the Joseph Douglas Green 1895 Professor of Economics, Princeton University.
Jonathan Wiener, the William and Thomas Perkins Professor of Law, Duke Law School.
Lori Bennear, the Juli Plant Grainger Associate Professor of Energy Economics and Policy, Nicholas School of the Environment, Duke University.
Daniel Yergin, founder of Cambridge Energy Research Associates, and now Vice Chair of S&P Global.
Jeffrey Holmstead, who leads the Environmental Strategies Group at Bracewell in Washington, DC.
Daniel Jacob, Vasco McCoy Family Professor of Atmospheric Chemistry & Environmental Engineering at Harvard.
Michael Greenstone, Milton Friedman Distinguished Service Professor of Economics, University of Chicago.
Billy Pizer, Vice President for Research & Policy Engagement, Resources for the Future.
Daniel Bodansky, Regents’ Professor, Sandra Day O’Connor College of Law, Arizona State University.
Catherine Wolfram, Cora Jane Flood Professor of Business Administration, Haas School of Business, University of California, Berkeley, currently on leave at the Harvard Kennedy School.
James Stock, Harold Hitchings Burbank Professor of Political Economy, Harvard University.
Mary Nichols, long-time leader in California, U.S., and international climate change policy.
Geoffrey Heal, Donald Waite III Professor of Social Enterprise, Columbia Business School.
Kathleen Segerson, Board of Trustees Distinguished Professor of Economics, University of Connecticut.
Meredith Fowlie, Professor of Agricultural and Resource Economics, U.C. Berkeley.
Karen Palmer, Senior Fellow, Resources for the Future.
Severin Borenstein, Professor of the Graduate School, Haas School of Business, University of California, Berkeley.
Michael Toffel, Senator John Heinz Professor of Environmental Management and Professor of Business Administration, Harvard Business School.
Emma Rothschild, Jeremy and Jane Knowles Professor of History, Harvard University.
Nathaniel Keohane, President, C2ES.
Amy Harder, Executive Editor, Cypher News.
Richard Zeckhauser, Frank Ramsey Professor of Political Economy, Harvard Kennedy School.
Kimberly (Kim) Clausing, School of Law, University of California at Los Angeles
Hunt Allcott, Professor of Global Environmental Policy, Stanford Doerr School of Sustainability.
Meghan O’Sullivan, Jeane Kirkpatrick Professor of the Practice of International Affairs at Harvard Kennedy School.
Robert Lawrence, Albert Williams Professor of International Trade and Investment, Harvard Kennedy School.
Charles Taylor, Assistant Professor of Public Policy, Harvard Kennedy School.
Wolfram Schlenker, Ray Goldberg Professor of the Global Food System, Harvard Kennedy School.
Karen Fisher-Vanden, Professor of Environmental & Resource Economics, Pennsylvania State University
Max Bearak, climate and energy reporter, New York Times
Vijay Vaitheeswaran, global energy and climate innovation editor, The Economist
Joseph Aldy, Teresa & John Heinz Professor of the Practice of Environmental Policy, Harvard Kennedy School

“Environmental Insights” is hosted on SoundCloud, and is also available on iTunes, Pocket Casts, Spotify, and Stitcher.

What Really Happened at COP27 in Sharm El-Sheikh?

The Twenty-Seventh Conference of the Parties (COP27) of the United Nations Framework Convention on Climate Change (UNFCCC), held November 7-20 in Sharm El-Sheikh, Egypt, turned out to be important in several ways, but disappointing in others.

The Most Important Development During COP27 for Long-Term Climate Policy

Ever since Donald Trump was elected U.S. President in November 2016, a major question has been when would the United States and China return to the highly effective co-leadership they had played during the years of the Obama administration in the runup to the Paris Agreement. This was an important question at last year’s COP26 in Glasgow. It turned out that this year’s COP27 provided an answer, although in somewhat surprising fashion.

In my view, the most important development during COP27 held November 7-20 in Sharm El-Sheikh, took place six thousands miles away in Bali, Indonesia, when U.S. President Joe Biden and China President Xi Jinping met on November 14 on the sidelines of the G20 summit, shook hands, and engaged on in a three-hour conversation in which, among other topics, they signaled their return to the cooperative stance that had previously been so crucial for international progress on climate change. That three-hour meeting marked the end of the breakoff of talks that had been initiated by China in response to Speaker Nancy Pelosi’s trip to Taiwan in early August, and the two leaders’ intention to not allow disagreements regarding international trade, human rights, movement away from democracy in Hong Kong, and Taiwan’s security to contaminate their cooperation on climate change.

The discussion between the two heads of state quickly (and explicitly) trickled down to the heads of the respective negotiating teams at COP27 — John Kerry of the United States and Xie Zhenhua of China. They are longtime friends, but had not been engaged in discussions or cooperation on climate change because of the problems that had existed since August at the highest level between the two governments. After the Biden-Xi meeting in Bali, statements from both John Kerry and Xie Zhenhua indicated that the two countries will resume cooperation. I believe it is reasonable to anticipate that there may even be something of a return to the co-leadership on climate change policy which China and the United States had previously exercised, and which was absolutely essential for the successful enactment of the Paris Agreement (adopted by 196 Parties at COP21 in Paris, December 12, 2015, and entered into force on November 4, 2016), but cooperation that had disappeared long before Pelosi’s trip to Taiwan, namely with the beginning of the former Trump administration and throughout much of the first two years of the Biden administration.

The Most Contentious and Dramatic Decision at COP27

If the restart of China-U.S. climate cooperation was the most important development during the COP for long-term climate policy, the most dramatic and contentious decision reached within the halls of COP27 by the negotiators from 195 countries was the establishment of a fund for so-called “Loss and Damage,” an issue that has been kicked down the road since it was first floated in 1991 when Vanuatu, a small island nation in the Pacific, suggested the creation of a United Nations fund to help pay for the consequences of rising sea levels. For thirty years, action on this notion has been delayed, including with a clever approach in the Paris Agreement itself. One year ago, at the conclusion of COP26 in Glasgow, I predicted that this Loss & Damage issue would be the major focus of this year’s COP27. My predictions do not always come true, but this one did.

First, some background for those of you who are not UNFCCC/COP junkies. “Loss and Damage” refers to the range of impacts associated with climate change, since even if emissions are reduced to zero tomorrow morning, damages will continue due to the long lag time of greenhouse gases (GHGs) in the atmosphere, particularly CO₂ with its atmospheric half-life of more than 100 years. Most of the Paris Agreement targets reducing emissions (via the mechanism of the Nationally Determined Contributions), and the famous $100 billion commitment for finance from developed countries for developing countries targets mitigation and adaptation. But adaptation is not possible for all impacts – think about the very existence of small island states, or this year’s floods in Pakistan.

The controversy has been with regard to who should pay for such loss and damage, with the focus on those most responsible for climate change, namely the countries with the greatest contributions to the accumulated stock of GHGs in the atmosphere – the United States and other large, wealthy countries, plus – importantly – China.

This has been controversial because, on the one hand, it is absolutely (and understandably) viewed as essential by countries such as the small island states, whereas countries such as the USA, China, and the EU member states worry that talk of “loss and damage” raises the specter of compensation for bad weather and unlimited legal liability. Indeed, at some climate talks before the Paris Agreement (2015), debates on this issue nearly caused the talks to collapse.

But the issue was finessed in the Paris Agreement’s Article 8, which recognizes the importance of loss and damage, but then eliminates the most contentious aspects in Decision 52 (a document that accompanied the Paris Agreement), where the Parties agreed that loss and damage “does not involve or provide a basis for any liability or compensation.” Understandably, some countries were not satisfied with this “resolution.”

The developing-country voices regarding loss and damage – this time favoring the creation of a new fund for loss and damage payments – were more prominent at COP26 last year than at any previous COP, but on the final day of the talks last year the wealthy countries blocked such proposals, and instead agreed to talk more about it in the future by setting up a “dialogue” on the issue in future COPs.

That brief history will convey the significance of what happened at COP27, when China, the European Union, and a few other developed countries came out in support of a loss & damage fund; and, then, as the second week of the COP was approaching its close, John Kerry announced that the U.S. also supported (in principle) the creation of such a fund, reversing its long-standing opposition. It’s important to note that the agenda item on Loss & Damage, which was adopted at the outset of COP27 (and was the basis for the Loss & Damage decision), was agreed on the understanding (in the report of the meeting) that Loss & Damage does not involve compensation or legal liability, and, furthermore, that understanding is cross-referenced in the preamble to the Loss & Damage decision. Hence, the important caveat from Decision 52 accompanying the Paris Agreement was reiterated in the Loss & Damage decision produced at COP27.

Such a fund could – on the demand side – eventually amount to trillions of dollars per year. Note that the World Bank has estimated that this year’s floods in Pakistan caused $40 billion in damages. However, on the supply side, the few quantitative financial pledges stated thus far are in the tens of millions of dollars. COP27 established a transition committee to develop recommendations on funding arrangements at COP28 in 2023. The transition committee will have a majority of developing country representatives (which may not be a prescription for a pragmatic and effective process).

So, is the new Loss and Damage Fund an empty shell? China is important, as the world’s largest emitter, but not the greatest contributor to the atmospheric stock of greenhouse gases, a title held by the United States. And damages are a function of the existing stock, not the emissions in any year. However, depending on relative rates of economic growth and other factors, China may become the largest contributor to the stock in a decade or two. China’s announced position at COP27 was that it supports the creation of the Loss and Damage Fund, but that as a “developing country” it will not be responsible for any contributions to the fund. By the way, China’s definition of itself as a “developing country” links to the 1992 list of non-Annex I countries under the UNFCCC, when China’s per capita GDP was less than $400/year. The fact that its per capita GDP has grown by 3,330% since then is not considered relevant by China.

Interestingly, there is some convergence on the Loss and Damage Fund between China and the United States, although certainly not in regard to China’s self-proclaimed exemption from financial contributor status. Rather, the U.S. has a story that winds up in a similar place. It goes like this. “We support the Loss & Damage fund, but due to the new Republican majority in the House of Representatives, it is impossible for us to make any commitment of new funding.” (Minor caveat: What about a quick move via inclusion in the Omnibus Budget Bill in December, before the Republicans take control? Not going to happen.)

So, is the new Loss and Damage Fund an empty shell, or is it a principled first step toward equitable allocation of responsibility under the Paris Agreement? It may be both. How it will evolve in the future is difficult to say.

Other Developments and Issues at COP27

There were plenty of other debates and developments at COP27, but in my view they were of secondary consequence compared with the Biden-Xi rapprochement and the establishment of the Loss & Damage fund.

Of course, the UNFCCC, the Paris Agreement, and the annual COPs are ultimately and mainly about reducing emissions of GHGs. There have been many statements in the popular press and from some of the delegations of disappointment because the COP27 closing statement did not fully embrace the 1.5 C target (relative to pre-industrial temperatures), versus 2 C target of the Paris Agreement, nor did it state the intention – in what is really no more than a non-binding resolution – to phase out not just “unabated coal,” as in the Glasgow decision, but all fossil fuels.

These are valid, indeed important concerns. But I remember when the Business-as-Usual (BAU) predictions from the Intergovernmental Panel on Climate Change (IPCC) were as high as 7.0 C this century, then with Paris, 3 C; then with enhanced Paris & the Kigali amendments to the Montreal Protocol, 2.5 C; and now with the latest pledges from China and India, capping warming at 1.7 C this century may be feasible, according to the International Energy Agency. Much will depend upon future actions by the large emerging economies – China, India, Brazil, Korea, South Africa, Mexico, and Indonesia – as well as by the United States and other developed countries. But this COP need not cause excessive hang-wringing, let alone depression. This is a marathon, not a sprint.

Also, since I have written extensively – and worked at the annual COPs – on international linkage, trading, and Article 6 of the Paris Agreement, I should at least note that a variety of technical decisions regarding operationalizing the Article 6.2 mechanism were deferred to COP28. To some degree, this is good news, since developments with Article 6.2 since the Rulebook for it was completed at COP26 are not encouraging, nor are the interpretations of 6.2 that many policy participants seem to hold. More about this in the future.

In the meantime, there were also significant discussions and developments regarding a very important non-CO₂ GHG, namely methane. In this regard, in a previous blog post, I described a podcast conversation with my Harvard colleague, Professor Daniel Jacob, who specializes in this realm. And in my most recent previous blog post, I described my own activities and speaking engagements at COP27 regarding our work at Harvard on satellite-detection of methane concentrations, statistical estimation of related emissions, and development and implementation of appropriate public policies. This was an important focus of several bilateral meetings at COP27, as well as some of my speaking engagements (others were on carbon pricing). I’ll have more to say about our methane work and U.S. and global developments in future essays at this blog.

Next Year: COP28 in Dubai

This year was officially the “Implementation COP,” and next year’s COP28 in Dubai, United Arab Emirates (UAE), is officially the “Global Stocktake COP.” But if COP27 was, in effect, the “Loss & Damage COP,” we might anticipate that the incoming UAE presidency of COP28 will make it the “Carbon Removal COP,” with renewed attention to carbon capture & storage, carbon capture & utilization, direct carbon removal, as well as solar radiation management. If that happens, it will be controversial, like loss & damage was, but for different reasons and with very different parties.

Photos from COP27

Finally, I’m including a few photos below from some of my speaking engagements and meetings. You can find more photos and stories about activities at COP27 of the Harvard Project on Climate Agreements here.