The Uncertainty of the Loss and Damage Climate Negotiation Fund

Friday - December 22 2023, 16:38 UTC - 11 months ago

The long-awaited United Nations Climate Negotiation Fund met with critique from climate justice advocates and is still left with many unresolved details, such as which countries will be eligible to receive funding and how it will be funded. Initial pledges from countries have been relatively low, with the USpledging only $17.5 million, and the fund remains voluntary and not solely reliant on wealthy countries providing finance.

Shortly after the opening ceremony of the 2023 United Nations climate negotiations in Dubai, delegates of nations around the world rose in a standing ovation to celebrate a long-awaited agreement to launch a loss and damage fund to help vulnerable countries recover from climate-related disasters.

But the applause might not yet be warranted. The deal itself leaves much undecided and has been met with criticism by climate justice advocates and front-line communities.

I teach global environmental politics and climate justice and have been attending and observing these negotiations for over a decade to follow the demands for just climate solutions, including loss and damage compensation for countries that have done the least to cause climate change.

A brief history of loss and damage .

"Breakthrough" was the term often used to describe the decision at 2022’s COP27 climate conference to finally construct a loss and damage fund. Many countries rejoiced at this "long-delayed" agreement — it came 31 years after Vanuatu, a small archipelago in the Pacific, first proposed compensation for loss and damage for climate-caused sea level rise in earlier negotiations.

The agreement was only a framework, however. Most of the details were left to a transitional committee that met throughout 2023 to forward recommendations on this new fund to COP28. A United Nations report outlined at the committee’s second meeting found that funding from wealthy nations to help poorer countries adapt to the ravages of climate change grew by 65% from 2019 to 2020, to $US49 billion. That’s still far below the $160 billion to $340 billion the U.N. estimates will be needed annually by 2030.

As the meetings went on, developing nations, long wary of traditional financial institutions’ use of interest-bearing loans, which have left many low-income countries mired in debt, proposed that the fund be independent. Developed nations, however, insisted the fund be hosted under the World Bank and held up the recommendations until right before COP28.

Devil is in the details .

While any deal on funding for climate disaster damages was sure to be portrayed as a historic win, further investigation suggests that it should be welcomed with hesitation and scrutiny.

First, the fund contains no specifics on scale, financial targets or how it will be funded. Instead, the decision merely "invites" developed nations to "take the lead" in providing finance and support and encourages commitments from other parties. It also fails to detail which countries will be eligible to receive funding and vaguely states it would be for "economic and non-economic loss and damage associated with the adverse effects of climate change, including extreme weather events and slow onset events.

So far, pledges have been underwhelming.

Calculations of early commitments total just over US$650 million, with Germany and the United Arab Emirates pledging $100 million and the U.K. committing $75 million. The United States, one of the largest climate change contributors, pledged only $17.5 million in comparison. It’s a shockingly low starting point.

Also, any notion that this fund represents an equitable transfer of money from rich to poor is wrong. It’s important to note the fund is voluntary and not enforceable via law. There is also no consensus on whether any compensation goes directly from the fund to victims, or from corporations, countries or even individuals.