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COP27 was a win for the loss and damage cause; here is what transpired and the road ahead

Sharm El-Sheikh has established a loss and damage fund; but there is no guarantee that the fund that takes shape eventually will even remotely resemble what was originally demanded

The world’s developing countries achieved a political win at the 27th Conference of Parties (COP27) to the United Nations Framework Convention on Climate Change (UNFCCC) on Novemer 20, 2022 at Sharm El-Sheikh, Egypt.

They did this by securing the establishment of a fund “for responding to loss and damage whose mandate includes a focus on addressing loss and damage”.

“It is a historical day in climate change negotiations when it has been acknowledged after 30 years that increasing disasters causing loss and damage (both economic and non-economic) are affecting communities and countries which are least responsible for it. And these are caused due to historical cumulative emissions,” Kunal Satyarthi, joint secretary of the National Disaster Management Authority and India’s negotiator for loss and damage at COP 27 told Down to Earth. “The efforts have begun by creating a funding arrangement to address such loss and damage.”

The decision adopted at the closing plenary in the early hours on November 20 at Sharm El-Sheikh covered the following key elements:

  • Acknowledges that existing funding arrangements fall short of responding to current and future impacts of climate change.
  • Establishes new funding arrangements for responding to loss and damage, including with a focus on addressing loss and damage — and this includes the establishment of a new fund.
  • Focuses language on assisting developing countries that are “particularly vulnerable” to the adverse effects of climate change.
  • Talks about including funding arrangements both “under and outside the Convention and the Paris Agreement”. The latter would include initiatives like the Global Climate Risk Shield which are outside the governance of the UNFCCC.
  • Establishes a transitional committee to help with the operationalisation of the new funding arrangements, which will be “chaired by two co-chairs, one from a developed country Party and one from a developing country Party”.
  • Talks about “identifying and expanding sources of funding” which will be “from a wide variety of sources, including innovative sources”.
  • Decides that the next Glasgow Dialogue will “focus on the operationalization of the new funding arrangements”.

How it happened

The fund was a clear demand by the biggest negotiating bloc within UNFCCC climate negotiations — the G77 and China.

The bloc, representing about 80 per cent of the world’s population, precipitated 30 years’ worth of struggles to secure payments for loss and damage by demanding that a facility be established at COP26 in Glasgow.

The effort was unsuccessful last year. However, the pressure escalated in the following months, resulting in the establishment of a formal agenda item for loss and damage funding arrangements at COP27.

Negotiations on the agenda item in Egypt unveiled many points of divergence between the recipient (developing countries) and donor groups (developed countries).

Late into the hours of November 19, when observers awaited the conclusion of the Heads of Delegation consultations with the COP27 Presidency, rumours leaked out of negotiation rooms that the United States (US), European Union (EU), Switzerland and the United Kingdom (UK) were walking away from a new fund owing to concerns about the phrasing put forth in the draft decision.

Other reports suggested that their concerns were simply procedural and resolvable, and not related to the substance of the text. One source said they did not want the term “especially those that are particularly vulnerable”, preferring to use the term “particularly vulnerable” instead from the UNFCCC.

Already, on the morning of November 19, EU Chief Frans Timmerman had threatened to “walk out” of the talks if their demand for tougher emission cuts for all was not met in exchange for a loss and damage fund. “We cannot accept that 1.5 degrees Celsius dies here and today,” he said.

However, at the Closing Plenary which commenced at around 4 am on the morning of November 20, no such theatrics ensued, and the decision was adopted by the COP and CMA seemingly seamlessly.

The road ahead

While the political commitment to establish the fund is crucial, and must be considered a significant win, many unknowns remain. These will ultimately determine whether communities on the ground receive the support they need. Some of them are as follows:

  • It is not clear whether the new fund will be housed within the UNFCCC or outside of it — the G77 demands the former.
  • The definition of “particularly vulnerable” is a bone of contention, with experts commenting that such distinctions only serve to sow divisions among developing countries, and that the fund should be open to all developing countries.
  • Details on who will pay into the fund are scant. The adopted decision omits the reference to the principles of equity and common but differentiated responsibilities enshrined within the UNFCCC and Paris Agreement, as well as reference to historical cumulative emissions. This makes it tricky for payment obligations to be placed on developed historically polluting countries in accordance with the polluter-pays-principle as originally envisioned. Already, groups like the EU spoke about broadening the donor base, alluding to large emitters like China. Many island nations have also called for China and India to pay into any future loss and damage fund, including Antigua and Barbuda, Mauritius, and Jamaica.

The current achievement is monumental. Getting steadfast blockers of climate reparations such as the US to pass the decision would have involved deft tactical maneuvering and unwavering solidarity on the part of the G77 and its allies.

And developed countries’ past resistance should inform the process of handling battles concerning the above grey areas, which will commence in the coming months.

There is no guarantee that the structure and modalities of the fund that take shape will even remotely resemble what the G77 originally demanded. Risks include efforts to narrow down the recipient pool, bring in unaccountable sources of financing like the private sector, or waste time on petty fights concerning the donor base.

For now, however, those who have tirelessly worked to achieve the establishment of this fund must be allowed to derive joy from their win.

“We established the first-ever dedicated fund for loss and damage, that has been so long in the making. And the “implementation COP” held in Africa is where the fund is finally established,” said COP27 President Sameh Shoukry victoriously at the Closing Plenary this morning.


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