‘Major breakthrough’: COP28 opens with loss and damage funding agreement
The opening day of COP28 has already delivered a milestone moment, with a dedicated loss and damage fund officially set up that major nations including the UK, Germany and the UAE will all pay into.
The Blue Zone has only just opened in Dubai for COP28 and official programming for the World Leaders Summit doesn’t commence until Friday (1 December), but negotiators have already delivered a major breakthrough in the form of a loss and damage fund.
COP27 saw wealthy nations U-turn on their historic opposition to the creation of a dedicated global funding pot for loss and damage. But the fund is yet to be operationalised, because nations continued to dispute which nations should be eligible to pay in and which should be able to receive payments out. A key sticking point is the status of China.
However, on Thursday (30 November), a host of wealthy nations agreed to the calls from small island states to set up dedicated funding streams for loss and damage.
Loss and damage refers to the impact to economies, infrastructures and societies from climate-induced events. Small island states have been rallying for dedicated funding for years and major nations agreed to do so at COP28.
The UAE had committed $100m to the fund, a figure that has been matched by Germany. The UK has pledged £40m to the Fund and £20m for other funding arrangements for loss and damage. The US has committed $17m – a move that has been criticised for not being sufficient enough – and Japan $10m.
Commenting on the agreement, Ambassador Pa’olelei Luteru, AOSIS Chair said: “The work is far from over. After the gavel drops at COP28, we cannot rest until this fund is adequately financed and starts to actually alleviate the burden of vulnerable communities. Success starts when the international community can properly support the victims of this climate crisis, with efficient, direct access to the finance they urgently need.”
Extra talks on the logistics of the fund took place between 3-5 November in Abu Dhabi, and after a string of lengthy meetings, including the latest round which was tabled as an emergency, governments have finally agreed on a blueprint regarding how a global loss and damage fund should be operationalised. However, there was still much to agree on at COP28.
The World Bank has agreed to act as administrator for at least four initial years. Additionally, nations that should pay in have been named, including the US, UK and EU. These wealthiest nations will be “urged” to contribute their fair share, while rapidly developing nations with major economies, like China, will be “encouraged” to pay in. There is not yet a set target for how much should be provided and by when.
Members of a “Transitional Committee” called for the fund to operate in line with the principles of the Paris Agreement, which has notably seen the $100bn in promised annual climate finance largely ignored by wealthy nations.
What has also been agreed is that the $100bn a year in loss-and-damage funding by 2030 should act as the floor of the fund, with more finance encouraged. Indeed, developing countries say the actual needs are closer to $400bn each year.
The UN’s latest adaptation gap report, published on Thursday (2 November), warns that current annual levels of international climate adaptation funding could need to increase eighteen times over without more concerted climate mitigation efforts. $21bn was provided in 2021 and up to $387bn could be needed in 2030.
WRI’s Ani Dasgupta said: “It is very encouraging that some countries stepped forward today with pledges to get the loss and damage fund off the ground. We hope that world leaders will announce additional funds in the coming days. These pledges represent a dramatic turn of events compared to just two years ago when it wasn’t certain if developed countries could ever be convinced to back a loss and damage fund.
“While inadequate to the scale of what is needed, these early contributions will play a critical role in restoring trust between developed and developing countries as the UN climate talks get underway. This progress on loss and damage today is one of many puzzles pieces that need to fall into place for the climate summit to be a success.”
Mohamed Adow, Director of Power Shift Africa, said: “It’s great to see the Loss and Damage Fund established. At the start of COP27 in Egypt last year many people said it wouldn’t even be agreed, let alone created within 12 months. That just shows how this UN process can act quickly when countries work together.
“The initial funding pledges are clearly inadequate and will be a drop in the ocean compared to the scale of the need they are to address. In particular, the amount announced by the US is embarrassing for President Biden and John Kerry. It just shows how this must be just the start.
“The most pressing issue now is to get money flowing into the fund and to the people that need it. The pledged funds must not just be repackaged commitments. We need new money, in the form of grants, not loans, otherwise it will just pile more debt onto some of the poorest countries in the world, defeating the point of a fund designed to improve lives.”
Fanny Petitbon, Head of Advocacy for CARE France, said: “Today is a landmark day for climate justice, but clearly not the end of the fight. We hope the agreement will result in rapid delivery of support for communities on the frontlines of the climate crisis. However, it has many shortcomings. It enables historical emitters to evade their responsibility. It also fails to establish the scale of finance needed and ensure that the Fund is anchored in human rights principles.
“The Loss and Damage Fund must not remain an empty promise. We urgently call on all governments who are most responsible for the climate emergency and have the capacity to contribute to announce significant pledges in the form of grants. Historical emitters must lead the way. Financial commitments must not be about robbing Peter to pay Paul: funding must be new and additional.”
Mariana Paoli, Christian Aid’s Global Advocacy Lead, said: “This time last year, at the start of COP27 in Egypt, the Loss and Damage Fund was not even on the agenda for that meeting. So it’s a testament to the determination of developing country negotiators that we now already have the fund agreed and established.
“The fact the World Bank is to be the interim host of the fund is a worry for developing countries. It needs to be closely scrutinised to ensure vulnerable communities are able to get easy and direct access to funds and the whole operation is run with far more transparency than the World Bank normally operates on. These were the conditions agreed by countries and if they are not kept to, a separate arrangement will be needed.”