Dr. Arvind Kumar*
In an agreement on a loss and damage fund to help developing countries cope with the effects of climate change, COP28 began with a historic landmark deal. Developing nations that have contributed the least to the climate crisis have been facing the brunt of its devastating floods, drought and sea-level rise. The support of developed nations for the fund was established during last year’s climate summit in Egypt after several years of negotiations. During his address, Prime Minister Modiji voiced the concerns of the Global South and reiterated the urgency of making the means of implementation, particularly climate finance, available to the developing countries to achieve their climate ambitions and implement their NDCs. He welcomed the operationalisation of Loss and Damage Fund and establishment of the UAE climate Investment Fund at COP-28. India has been an ardently voicing for climate justice for global South all through India’s G-20 presidency.
The United Arab Emirates, whose Minister of Industry and Advanced Technology Sultan Ahmed al-Jaber is the president of COP28, pledged $100 million to the fund. Germany also pledged $100 million, while the European Union committed to $245.39 million, Britain promised “at least” $51 million, the United States agreed to give $17.5 million and Japan $10 million.
What was the need for the loss and damage fund?
Why is this agreement so crucial for vulnerable countries?
Half of the world’s population today is highly vulnerable to the risks of climate change, which pose a severe threat to development gains and economic prosperity, including through the potential for significant damage to lives, livelihoods, human health, culture, nature and biodiversity, among others. Global mean temperature has increased by 1.09°C compared to pre-industrial levels with significant variation across the Earth’s surface. Current levels of action on climate change are inadequate; further warming and long-lasting changes are projected in many components of the Earth system, which will amplify current risks and generate new risks. It is today unequivocal that climate change has started to disrupt human and natural systems. Climate-related extreme events have created significant losses and damages. For instance, the 2023 droughts, floods and storms in India caused around USD 6 billion in damages.
Canadian wildfire season resulted in 15 million hectares of land being burned, with the economic impacts estimated at 20 billion. In June 2023, as thousands of wildfires raged in Canada, the skies in New York turned orange with haze and smoke. For the first time, New York topped the list of cities with the worst air quality, and health advisories were issued advising residents to stay indoors. It was a dramatic reminder that environmental crises have no boundaries and should be a concern for us all. In addition, the extreme temperature events of 2022 and 2023 (e.g. the North American heatwave, the European winter heatwave, the Indian heatwave) demonstrate how the intensity of the extremes is already changing at 1.09°C of warming. There is robust scientific evidence that climate change made these events more likely, and many types of extreme weather events are more likely to occur as a result of climate change. These factors are leading to more destructive climate impacts and higher risks of loss and damage.
The extent of loss and damage
Just hours before, the World Meteorological Organization released a provisional report detailing that 2023 had “shattered” climate records and would breach 1.4 degrees Celsius of warming — dangerously close to the 1.5 degrees Celsius that had been internationally agreed upon as the threshold to prevent the worst and potentially irreversible climate change impacts, as outlined in the Paris Agreement. This has been the hottest year ever for humanity. So many terrifying records were broken. We are paying with people’s lives and livelihoods. Science tells us we have around six years before we exhaust the planet’s ability to cope with our emissions before we blow through the 1.5-degree limit. The African continent for example, contributes the least to climate change yet is the most vulnerable to its impacts. African countries that contribute so little will have to spend up to five times more on adapting to the climate crisis than on healthcare. G20 countries, meanwhile, represent around 75 per cent of global greenhouse emissions. Meanwhile, Pakistan has seen US$30 billion in damages from severe flooding but emits less than 1 per cent of global emissions. Some traditional financing instruments could be used to deal with loss and damage. Social protection, contingency finance, catastrophe risk insurance and catastrophe bonds can provide a certain buffer and rapid pay-outs after disasters. However, a broadened donor base and innovative finance tools would be needed to respond to the magnitude of loss and damage.
The proposal falls short of delivering climate justice to countries facing the worst impacts of climate change and are the least responsible for causing the problem. But the draft deal – arrived at after nearly a year of talks that ended with an emergency meeting – is the only one on the table that could crystallise the long-standing demand for a loss and damage fund. The 24-member Transitional Committee, led by co-chairs from Finland and South Africa, recommended the Fund be temporarily hosted by the World Bank for four years, after which it can be reviewed and located elsewhere. The Fund will have its own Secretariat and a Board comprising 26 members, 12 from developed countries and 14 from developing ones. One of the issues with the draft recommendation is that there is no seat allotted to civil society or frontline communities on the Board. Access to the fund without giving communities on the frontlines of climate change a voting board position will be harder to achieve. This is a very delicately negotiated text. There’s a real concern that if it’s challenged at this stage, the whole thing could unravel. The absence of a defined replenishment cycle also raises serious questions about the fund’s long-term sustainability.
Way Ahead
The agreement to create a fund specifically for losses and damages at the COP27 was considered a step towards climate justice for countries disproportionately suffering the impacts of climate change. The issue of delivering actual finance for loss and damage is very important in terms of climate justice. It’s a recognition of a collective failure to deliver on climate finance in the past, and also a reflection of the fact that we have not met our mitigation goals. But the draft text doesn’t strongly call on developed countries – who have failed to deliver timely climate finance in the past – to contribute to the Loss and Damage Fund. Developing countries said they agreed to the present formulation “in the spirit of compromise”. The most important thing is that the money be new and additional, and not adaptation finance that is being repackaged as loss and damage funding.
But for the fund to be effective, the root cause of climate change must be tackled – and that involves reducing emissions. Unless emissions are drastically reduced, more and more countries will face the devastating effects of climate change. The world urgently needs to find more resources for mitigation, adaptation and loss and damage so that climate change will not erode humanity’s chances to deliver on the Sustainable Development Goals.
*Editor, Focus Global Reporter
