The transitional committee for the loss and damage fund has failed to come to an agreement on how the initiative should work

The historic loss and damage fund brought hope when an agreement was made at COP27, almost a year later division has stunted the implementation of the programme as developing and developed economies disagree
November 2, 2023

The implementation of the much-lauded loss and damage fund

The result of decades of pressure from developing countries that are vulnerable to climate change, the creation of a Loss and Damage Fund was, for many, the high point of the United Nations Climate Conference (COP 27). The fund's objective is to give money to countries that are most affected and at risk from climate change. Although the historic move was applauded, the fund's success will rely on how soon it takes off. Over the course of the previous year, representatives from 24 different countries were entrusted with cooperating to determine the structure of the fund, which countries should contribute, and where and how the funds should be allocated.[i]

There was, at the time of the loss and damage agreement at COP27, a division between the attitudes of developing economies for whom the loss and damage fund would support the financial cost of climate crisis impacts and the developed economies who were set to pay for it. According to Chatham house, what caused many affluent countries to shift their attitudes was not so much a shift in perspective about the utility of a fund as it was a readiness to achieve an agreement. There was a considerable chance that there would be no COP27 agreement on loss and damage money, the mitigation work programme, or the cover decision, according to one developed-economy's negotiator who claimed the talks were "going nowhere.". The negotiator stated that the change in their negotiating party's stance resolved the impasse, although they still do not view a new fund as the "best" course of action. Similar doubts or hesitations about the fund were expressed by other negotiators from industrialised nations. According to a developing country negotiator, affluent countries appeared more receptive to hearing the needs and worries of poor countries during the COP27. In fact, wealthy nations consented because the fund was crucial for the developing world, even though they continued to doubt its worth.[ii]

Polarisation remained as the transitional committee set out to clarify the fund

The transitional committee’s fourth meeting occurred on the 20th of October. This meeting was intended to be the final in a series of four but due to the time constraints faced by negotiators to read the final text, it was agreed that a fifth meeting would be held in November prior to COP28.

Following the transitional committee meeting, accusations were thrown around following the breakdown of negotiations to establish a new fund to assist vulnerable nations in recovering from climate-related disasters. A number of controversial topics remained unanswered during the meeting in Egypt. Negotiators from developing nations accused the United States specifically for demanding that the proposed fund be housed at the World Bank, an organisation presided over by more developed economies, during tense negotiations that were partially broadcast online. The last hours of the negotiations, which came to an end in the early hours of Saturday the 21st of October, disappointed both the developed and developing sides.[iii]

Lien Vandamme, an observer at the talks for the Centre for International Environmental Law said:

“If wealthy nations do not come to the next meeting prepared to let go of this unrealistic proposal, meet their international obligations, and set up a stand-alone, rights-based and resourced fund, they might as well not show up at all,”[iv]

The allocation of resources, eligibility, and sources are other contentious concerns in the negotiations. One resource-related concern is the identity and amount of contributors to the Fund. It was decided twelve years ago at COP17 that rich nations would contribute financially. This terminology is now considered a red line in the Global North. Some emerging economies are catching up to wealthy nations in terms of GDP. As the world's greatest emitter, China, for example, today has a GDP larger than the European Union (EU). Nonetheless, developed nations contributed the majority of historical emissions and pollute several times more per person. Thus, the question of who pays has grown more contentious in the context of historical responsibility, especially in relation to Loss and Damage.[v]

COP28’s success could rely on the success of the loss and damage fund

The already full agenda of the COP28 conference next month will be further burdened by the failure to reach an agreement. This entails taking a "stock take" of how nations are addressing climate change and establishing an objective to support governments in their efforts to adapt to the effects of global warming.

Preety Bhandari, senior adviser in the global climate programme and the finance centre at the World Resources Institute said:

“Whether or not the loss and damage fund becomes fully operational is a key measure of success for the COP28 summit,”

Bhandari went on to comment that without an agreement from the transitional committee negotiations in Dubai were set to be “very rocky”

“The entire COP28 negotiations could get derailed if developing countries’ priorities on funding for loss and damage are not adequately addressed.”

She added.[vi]


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Oscar Pusey
Research Analyst

Oscar is a recent graduate with a background in earth science. He is currently studying an MSc focussing on disaster responses, emergency planning and community resilience. His postgraduate research project will assess the link between climate crisis risk perception and attitudes to green energy projects. “Adapting to the climate crisis through the pursuit of net zero requires community engagement and understanding. Zero Carbon Academy’s goals closely align with this approach and I’m excited to have the opportunity to research and communicate a variety of topics relating to our environment and sustainability”.

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