COP28 adopts loss & damage fund: Why is this a historic moment?

COP28, the annual climate conference is on – it will run until 12 December – and it kicked off on a very auspicious note on Thursday (30 November). A whopping 196 parties adopted the decision to operationalise the Loss and Damage fund, which has been 30 years in the making. The initial funding is estimated to be $475 million – host UAE pledged $100 million, the European Union promised $275 million, $17.5 million from the US, and $10 million from Japan. Notably, the fund was first agreed upon during COP27, held in Sharm El Sheikh, Egypt, but only became operational on Thursday, almost a year later. Shortly after the announcement was made, Environment Minister Bhupender Yadav termed it as a landmark decision that India strongly supported. “A positive signal of momentum from COP28 in UAE on the first day itself… Landmark decision on operationalisation of the Loss and Damage Fund was adopted in the opening plenary of COP28. India strongly supports the decision to operationalise the Loss and Damage Fund.” Joe Thwaites, senior advocate for International Climate Finance at NRDC (Natural Resources Defense Council) called it a historic achievement. The Loss and Damage Fund will provide urgent assistance to vulnerable communities living on the frontlines of the climate crisis they did little to cause. All wealthy and high emitting countries now have a responsibility to step up and contribute to the fund, he said. Here is a look at the development of the idea of “loss and damage,” and what we know about the fund. History of the loss and damage fund Before diving into the history of the loss and damage fund, let’s understand what this means. Loss and damage refers to the irreversible cost of extreme weather and slow-onset disasters such as sea level rise, ocean acidification and melting glaciers caused by global heating. The idea is to hold the biggest fossil fuel polluters liable for the pain and suffering already caused by climate breakdown. Climate finance for loss and damage is considered separately, and in addition to, securing funds for mitigation and adaptation to help developing nations prepare for what is coming. It refers to the costs, both economic and physical, that developing countries are facing from climate change impacts. In the early 1990s, the Alliance of Small Island States, a group of low-lying coastal and small island countries, began calling for the establishment of a loss and damage fund as the United Nations was creating a framework to deal with climate change on an international level. [caption id=“attachment_13452442” align=“alignnone” width=“640”] A portion of the Shimla-Kalka heritage railway track that got washed away following heavy rainfall on the outskirts of Shimla, Himachal Pradesh. Research reveals that 55 vulnerable countries have already suffered a total loss worth $525 billion in the past 20 years. File image/AP[/caption] Since then, the idea has always been a part of annual UN climate summits. However, it was often talked about on the margins of negotiations, something developing nations and activists would push for while many rich nations used their weight to squash the idea. Finally, at last year’s climate talks in Egypt, a commitment was made to establish this fund – which many dubbed as the most important outcome of the meet. Since then, a series of meetings had taken place to try to secure international agreement about how the fund would work, who would commit to it, and who would be eligible to receive funds. According to research, 55 vulnerable countries have already suffered a total loss worth $525 billion in the past 20 years. Moreover, this number will climb to $580 by 2030. This clearly underlines the importance of such a fund. The funding Initially, the loss and damage fund will be hosted by the World Bank, despite the initial resistance to it. The money will come in from rich nations such as the United States, the United Kingdom and the European Union, as well as some developing countries. However, it is still unknown as to how large will be the fund or who shall replenish it in the coming years. Right after it was agreed upon on the first day of COP28, several countries pledged money to the fund. The COP28 host country, the United Arab Emirates, pledged $100 million, as did Germany. The United Kingdom has pledged $75 million, while the US committed $17.5 million to the fund and Japan contributed $10 million. The US has been criticised for its $17.5 million-contribution, with some experts and advocacy groups saying it was “embarrassing” and “striking” for how small it is compared to the pledges of other nations. Ani Dasgupta, president & CEO of World Resources Institute, told CNN: “Given the size of its economy, there is simply no excuse for its contributions to be far eclipsed by others.” Mohamed Adow, director of Power Shift Africa, also questioned the US contribution, calling it far too small. “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,” Adow said in a statement. “In particular, the amount announced by the US is embarrassing for President Biden and (US climate envoy) John Kerry. It just shows how this must be just the start,” he told CNN. [caption id=“attachment_13452452” align=“alignnone” width=“640”] On the first day of COP28, on Thursday, 196 parties approved the loss and damage fund, which will help vulnerable countries cope with the impact of climate change. AP[/caption] Recipients of the fund Now, that we have understood who shall provide the money for the loss and damage fund, let’s look at who shall gain from it. The fund will assist “developing countries that are particularly vulnerable to the adverse effects of climate change,” though there will be room for middle-income countries that are severely affected by climate disasters to also get paid. [caption id=“attachment_13452462” align=“alignnone” width=“640”] The fund will assist “developing countries that are particularly vulnerable to the adverse effects of climate change". Countries like Pakistan, which suffered terrible floods last year would be a good candidate for the funding. File image/AP[/caption] Concerns around the loss and damage fund Apart from the size of the fund, there are other concerns surrounding it. There is concern about the World Bank’s role in overseeing the fund. Developing countries had earlier expressed opposition to this idea, questioning the World Bank’s environmental credentials and the transparency of its operations. Analysts also note that while initial funding seem generous, it is a long way from covering the full range of climate change effects. Lastly, countries have made pledges, which may not actually translate to countries putting their hands in their pocket. The Green Climate Fund announced in 2009 – designed to help developing states with their transition away from fossil fuels and to help with adaptation initiatives – included a commitment for developed states to provide $100 billion per year by 2020. They fell well short of this goal. As Ambassador Pa’olelei Luteru, Alliance of Small Island States Chair was quoted as telling New Indian Express: “The work is far from over. 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.” With inputs from AP and agencies