Countries clinch loss and damage fund agreement despite US opposition

Negotiators have reached an agreement on how to operate a new fund to help vulnerable nations recover from climate disasters. But the United States, the world’s largest historical emitter of carbon emissions, has refused to support the framework. After two additional days of difficult negotiations in the United Arab Emirates, the 24-member committee tasked with hammering out details for a loss and damage fund agreed to a take-it-or-leave-it outcome moments before the meeting was due to close on Saturday evening. The committee recommended that the fund be hosted by the World Bank — a previous red line for developing countries — for an interim four-year period if the bank is willing and able to meet a set of conditions on the fund’s governance. The fund will be able to receive voluntary contributions from a wide variety of sources, including the private sector and other innovative mechanisms, and developing countries will be eligible to access money based on allocation rules, which are yet to be developed. However, no financing target was agreed upon — a disappointment for low-income nations. Funding will be used to address climate-related emergencies and slow-onset events such as sea level rise. It may complement humanitarian actions after an extreme event, support the relocation of displaced communities, and provide long-term funding for recovery and reconstruction. Committee members said they accepted the arrangements “in the spirit of compromise” and “with a heavy heart,” despite both developed and developing countries expressing strong reservations. “This was a challenging but critical outcome. It was one of those things where success can be measured in the equality of discomfort,” said Avinash Persaud of Barbados, who represented Latin America and the Caribbean region at the meeting. “This is an important step forward and will bring positive momentum to other climate actions,” he said. The committee’s recommendations for operating the fund still need to be approved by countries at the 28th United Nations Climate Change Conference of the Parties, or COP 28, which starts in Dubai at the end of the month. The issue, which is critical to help restore eroded trust between developed and developing nations, is widely seen as a benchmark for success at COP 28. While the U.S. didn’t veto the consensus vote, its negotiator Christina Chan said that the country “can’t agree to this text.” In a last-minute objection, Chan demanded that it be made clearer that developed countries’ contributions to the fund would be made voluntarily. The approved recommendations “urge” developed countries to provide support and “encourage other parties” to contribute “on a voluntary basis.” Who should contribute finance has been one of the most fiercely contested issues. Developed nations want China and other large emerging economies — such as the Gulf States which have become rich from extracting fossil fuels — to contribute too. “It’s very difficult to understand how billions are being mobilized for doing war … but not for climate change.” --— Alpha Kaloga, lead negotiator for loss and damage, African Group of Negotiators The U.S. repeatedly argued that high-income countries have no obligations to provide loss and damage funding and pushed back against language suggesting they bear financing responsibility toward climate victims. Developing countries accused the U.S. of flouting equity principles that underpin U.N. climate negotiations: that high-income countries should support lower-income ones to address climate change. The text “invites” developed countries to take the lead in providing resources to start operationalizing the fund, but stops short of demanding they continue to do so beyond the fund’s first capitalization. Brandon Wu, director of policy and campaigns at ActionAid USA, warned against creating a fund that “requires almost nothing of developed countries,” which are “shamelessly walking away from all of their responsibilities.” Last month, the talks collapsed after developing countries accused the U.S. and other developed nations of insisting on the fund being hosted at the World Bank, where they are the largest shareholders. Angela Rivera Galvis, representing Colombia during the negotiations, said developing countries made “a huge concession” in accepting the World Bank as an interim host for the fund, despite concerns about the fund’s independence and the bank’s lack of “climate culture” and high hosting fees. To host the fund, the World Bank will need to demonstrate it can meet a set of conditions, including ensuring the fund’s autonomy to set its own rules and allowing countries and communities to access funding directly. Over the next year, two check-in stages will ensure that the bank is working to meet the conditions. If it isn’t, an exit clause allows for the creation of a standalone loss and damage fund. At the end of the four-year interim period, countries will decide whether to keep the fund at the World Bank based on an independent performance assessment. Developing countries said such safeguards were needed to ensure that the fund wouldn’t be locked at the World Bank without a real exit strategy. Heike Henn, Germany’s representative, said high-income countries felt they gave a lot of ground too. Their demand to include thematic subfunds — for funding slow-onset events, or recovery and reconstruction, for example — to which money would be earmarked was dropped. A call for nonstate actors such as Indigenous peoples to have a seat on the board was rejected, although civil society observers will be allowed to participate in the fund’s meetings. The fund’s board will include 26 members with a majority of seats going to developing countries. Despite tensions, Germany’s climate envoy Jennifer Morgan said the committee had “reached a historic agreement for more solidarity” and that her government was “actively working towards contributing to the new fund.” Alpha Kaloga, a lead negotiator for loss and damage for the African Group of Negotiators, told Devex that COP 28 should ensure that money is put on the table to operate the fund. “It’s very difficult to understand how billions are being mobilized for doing war … but not for climate change,” he said. He added the U.S. position raised the possibility it could reopen negotiations on the fund’s arrangements at COP 28, which he warned would be like “opening Pandora’s box.” Update, Nov. 7, 2023: This article has been updated with the correct spelling of Alpha Kaloga’s name.