Climate change fund: $319mn available for Loss and Damage
The fund was fully operationalised at UN climate meet in Baku last year. It is meant to assist developing countries in dealing with loss and damage associated with climate change
New Delhi: A road map for the start-up phase of the fund for responding to Loss and Damage was put up for agreement by the Board of the Fund which includes representation from developed and developing country parties on Thursday at its 5th board meeting in Barbados, but experts say some of the provisions pose significant concerns over potential dilution of its purpose and effectiveness.
The draft text states that current resources available for Loss and Damage is $319 million. It also decides to establish the Barbados Response Action Plan to respond to loss and damage, consisting of a first set of interventions for the calendar years 2025 and 2026 for an amount of $250 million.
The fund was fully operationalised at UN Climate Conference (COP29) in Baku last year. It is meant to assist developing countries in dealing with loss and damage associated with climate change, especially extreme weather events.
“Loss and damage” is a term used in UN climate negotiations to refer to the consequences of climate change that go beyond what people can adapt to; for example, the loss due to rising sea levels or the loss of homes and lives during extreme floods. It covers both immediate climate disasters and slow onset events including cyclones, droughts and heatwaves, sea level rise, desertification, glacial retreat, land degradation, ocean acidification and salinisation, according to World Resources Institute.
The meeting had started on April 8 with observers raising several concerns about an attempt to dilute the provisions of the fund, with fears that there may be a turning back on its agreed mandate. Thursday’s decision invites developing countries to designate a national authority or national focal point for the purpose of submitting funding requests.
Observers pointed to certain clauses, especially on exploring engagement with the private sector in contributing to the fund; testing other financial instruments, other than grants; exploring new partnerships for funding arrangements, among others. Observers said these could open doors to multilateral development banks and other financial bodies taking calls on what to fund and on arrangements such as blended finance and insurance. Civil society organisations who were present as observers sought clarification that only “non-debt” financial instruments are to be accessed. They also stressed that community engagement particularly with indigenous communities and those most vulnerable will be key in fair disbursal of the funds.
A key area of worry, they said, was that the Barbados Response Action Plan talked about transfer of funds through approved partners including multilateral development banks, International Monetary Fund, other funds such as Global Environment Facility and Green Climate Fund in the initial iteration of the text. That was later excluded due to opposition from certain board members like from Brazil. The observers include civil society organisations from different countries including India. They said the start-up phase risks compromising the fund’s legitimacy and effectiveness. The draft text had also stated that the Barbados programme will be funded through grants but will also test financial instruments including blended finance. But following protests by civil society organisations, the text was improved, yet did not clarify that only non-debt instruments will be utilised.
These developments come against the backdrop of a significant setback to the fund’s governance. HT reported on March 7 that the US, the largest historical emitter of greenhouse gas emissions, has withdrawn from the board.
The dilutions introduced in the draft text may be a result of an overall shift in the focus of climate talks, observers said. With the US withdrawing from most climate action policies, there is disruption and plans have dampened.
The US is the second largest carbon dioxide emitter in the world currently (after China), but historically remains the largest polluter. The US is responsible for 20% of historical CO2 emissions globally between 1850 and 2022, with per capita emissions of 18 tCO2e/capita compared to the global average of 4.7 tCO2e/capita, according to the United Nations Environment Programme’s Emissions Gap report of 2024.
Until now $768.40 million has been pledged to the fund. Out of these, $17.50 million was pledged by US; $100 million by UAE; $108.3 million by France; $110 million by Italy, among others. But resources presently available (ready for disbursal) is $319 million only as per fund’s documents.
The UN Climate Conference (COP27) in Egypt’s Sharm El Sheikh in 2022 had culminated with a decision to create a Loss and Damage fund which will provide support to developing countries in efforts to avert, minimise and address loss and damage associated with the adverse effects of climate change in the light of continued global warming.
The Board of the Fund for responding to Loss and Damage made progress towards the fund’s full operationalisation at its third meeting in Baku, hosted by the COP29 Presidency of Azerbaijan last year.
If countries continue with their current environmental policies, it would lead to 3.1 degrees Celsius warming over pre-industrial levels, the United Nations report flagged last year, revealing that countries will almost certainly collectively fail to achieve the Paris Agreement’s goals.
