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Last-chance saloon for loss and damage deal before COP28

‘If loss and damage doesn’t succeed, COP doesn’t succeed.’

Two activists are holding paper banners demanding loss and damage funds. The woman on the foreground is wearing a white head covering and a black face mask that has the words "Loss and damage" on it in white. She holds a banner that says "Pay up 4 loss and damage" Dominika Zarzycka/NurPhoto
Protesters call for a loss and damage fund outside the COP27 conference centre in Sharm El-Sheikh, Egypt on 17 November 2022. A year after a landmark agreement was reached, progress towards the setting up of a fund have been painfully slow.

Countries have a final chance to make progress on loss and damage funding before December’s pivotal COP28 climate summit – or risk another year of delays that could deepen global mistrust, a leading negotiator warns.

Negotiations to set up a fund to help countries recover from the destructive impacts of climate change have been ongoing since a landmark agreement to create the body at COP27 last year. But months of talks have been sluggish, with major and persisting disagreements between countries – characterised by campaigners as a split between the Global North and the Global South – on who’s eligible for funding, who pays, and how the money is dispersed.

“If loss and damage doesn’t succeed, COP doesn’t succeed,” Avinash Persaud, negotiator for Barbados, told The New Humanitarian, describing the high stakes ahead.

An emergency meeting has been scheduled for 3-4 November, after late October talks failed to produce a consensus on what recommendations to send to political decision-makers at COP28. Such a consensus would boost the chances of getting the fund up and running, negotiators said, amid hopes of a 2024 rollout. Without agreement on the fund before COP28, the issue risks being deferred for another year – further straining the mistrust that grips climate negotiations, especially among vulnerable countries.

“All of us involved in this knows how much more difficult it could get to get to an agreement at the COP,” said Georg Børsting, negotiator for Norway. “If you can’t solve such a complex issue in a group of 24, handing over to a COP of 190 parties, it gets even more tricky.”

Developing countries' concerns about a US proposal for the World Bank to house the loss and damage fund was one major reason the October talks ended without agreement, climate activists say. But numerous other disagreements remain, most contentiously around who will provide – and be eligible for – the fund’s financing, negotiators told The New Humanitarian.

“No one is expecting $100 billion from developed countries into the fund every year, but we are expecting them to take a lead alongside other sources.”

“Those countries that have emitted the most should lead the capitalisation [of the fund],” Persaud said, while adding that developed countries are not the only ones who should contribute.

Persaud, who rose to prominence for his key role in designing the Bridgetown Agenda for international financial reform spearheaded by Barbadian Prime Minister Mia Mottley, has campaigned against the prospect of a fund dispersing loans that could further increase the debt burden of lower-income countries.

While he has previously called for the fund to be financed to the tune of $100 billion per year in grants, Persaud said: “No one is expecting [$]100 billion from [developed] countries into the fund every year, but we are expecting them to take a lead alongside other sources. There is a possibility that we can reach agreement on that.”

But the scale of such funding demands is still a hard sell for the higher-income nations that are expected to foot the bill, said Norway’s Børsting. “To expect you can raise this from public funding alone, I don’t think is realistic,” he said.

In the UN climate system, countries are defined as “developed” or “developing” by criteria set in 1992, leaving wealthy and high-polluting nations like Saudi Arabia and China in the lower-income category. Higher-income countries have therefore been keen to widen potential contributors to the loss and damage fund, and narrow down who can potentially access the money.

Børsting said it was “very clear” the fund should be for “particularly vulnerable developing countries”, referring to the Least Developed Country group and Small Island Developing States. While some have worried this would exclude middle-income countries like Libya and Pakistan – both struggling from recent climate disasters – Børsting said he foresees an “allocation system” to access funding after emergencies.

What the fund will actually pay for has also not yet been settled, with some calls for it to go beyond disaster recovery to support non-economic damages like cultural heritage losses, and to be triggered by slow-onset climate events, like desertification, as well as disasters.

“Our concern is we will end up with a fund that does everything for everyone,” said Børsting. “The fund should focus on priority gaps in the landscape of existing funding arrangements,” he added.

The emergency 3-4 November meeting will be taking place against an increasingly strained geopolitical backdrop, with worsening tensions amid the conflict in Israel-Gaza.

New evaluations of climate-related losses and damages include the UN Food and Agriculture Organization’s recent estimate that the world has lost around $3.8 trillion in crops and livestock production due to disaster events over the last three decades, while insurers Lloyds have predicted there could be $5 trillion of food and water losses in the next five years due to extreme weather.

Edited by Irwin Loy.

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