COP28 opens with the launch of climate ‘loss and damage’ fund
The initial corpus of the fund will be over $400 million, well short of the $400 billion estimates suggest will be needed every year.
On the opening day of COP28, 196 parties adopted the decision to operationalise the Loss and Damage fund, approving the draft text adopted by the transitional committee in Abu Dhabi earlier this month — a move widely seen as a win for developing countries.
The initial corpus of the fund will be over $400 million, well short of the $400 billion estimates suggest will be needed every year, causing some experts to question the long-term sustainability and viability of the fund.
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The UAE, the COP28 presidency, pledged $100 million to the fund, Germany, $100 million, the UK £40 million to the fund and £25 million for other funding arrangements for loss and damage, the US $17.5 million, Japan, $10 million, and the EU, €225 million. The money is expected to help poor and developing countries deal with the impact of the climate crisis.
The World Bank will be interim trustee of the fund which will be conferred with legal personality and capacity as necessary for discharging its roles and functions; in particular, it will have the legal capacity to negotiate, and conclude and enter into a hosting arrangement with the World Bank, the text stated.
The fund will address the needs of developing countries that are particularly vulnerable to the adverse effects of climate change in responding to economic and non-economic loss and damage associated with this, including extreme weather events and slow onset events, the text added.
When asked why US, among top emitters contributed less than others and how the fund can be filled, UNFCCC executive secy, Simon Steill said that more pledges are expected soon, especially at the leaders’ summit on December 1 and 2.
The fund will provide finance for addressing a variety of challenges associated with the adverse effects of climate change, such as climate-related emergencies, sea level rise, displacement, relocation, migration, insufficient climate information and data, and the need for climate-resilient reconstruction and recovery. The text stated that developed countries are “invited” to make contributions. Developing countries have said the actual needs are closer to $400bn per annum. All developing countries are eligible to directly access resources from the fund.
The decision to operationalise the fund was adopted unanimously.
HT reported on November 5 that the Transitional Committee on Loss and Damage reached an agreement on operationalising the Loss and Damage fund late on November 4 night in Abu Dhabi, but with the US objecting to the outcome.
The final text was adopted but the US and developing countries also had several reservations to the text.
The US wanted to withdraw support to the text because it insisted that the text should make it clear that contributions to the fund are voluntary in nature. Developing countries said the funding arrangements are very weak and take away from the historical responsibility of rich nations.
Union environment minister, Bhupender Yadav congratulated the COP28 Presidency on the adoption and described it as a landmark decision in addressing the impacts of climate change.
Avinash Persaud, developing country negotiator and special climate envoy to Barbados PM Mia Mottley said in a statement: “This is a hard fought historic agreement. It shows recognition that climate loss and damage is not a distant risk but part of the lived reality of almost half of the world’s population and that money is needed to reconstruct and rehabilitate if we are not to let the climate crisis reverse decades of development in mere moments.”
“The Presidency’s main focus is on translating visions and aspirations into real practical actions that will make a difference. Next is the realisation of the GST,” said COP28 President Sultan Al Jaber.
“We understand that its interim host will be the World Bank. The fund should be fully funded at scale. Developed countries, particularly US, should lead in funding and money should be disbursed to the people on the frontlines. The fund should find a landing zone in the global stocktake. Human rights should be embedded in it,” said Rachel Cleetus, policy director with the Climate and Energy program at the Union of Concerned Scientists.
“Developed countries worked hard to make sure that contributions to the #LossAndDamage Fund remain voluntary. Let me tell you, that there is nothing voluntary about the devastating impacts and loss of lives that people are experiencing as a result of #LossAndDamage,” she added.
“Amid the historic decision to operationalise the Loss and Damage Fund within a year of its establishment, addressing underlying concerns becomes critical. On one hand, rich countries have pushed for the World Bank to host this Fund under the guise of ensuring a speedy response. Conversely, they have attempted to dilute their financial obligations and resisted defining a clear finance mobilisation scale. The absence of a defined replenishment cycle raises serious questions about the Fund’s long-term sustainability. Therefore, a robust system, particularly integrated with the Global Stocktake process and the new climate finance goal, is needed to ensure that COP28 results in a meaningful outcome,” said Harjeet Singh, head of global political strategy at Climate Action Network International.
“The responsibility now lies with affluent nations to meet their financial obligations in a manner proportionate to their role in the climate crisis, which has been primarily driven by decades of unrestrained fossil fuel consumption and a lack of adequate climate finance delivered to the Global South,” he added.
“Loss and Damage pledges are welcome, but this is not the end goal. We want a financial mechanism that is able to ensure that developing countries will have access to adequate, grant-based, and additional finance to address loss and damage on the ground,” said Grace Ineza, Global coordinator of Loss and Damage Youth Coalition in a statement.
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