‘Significant gulfs’ remain after meeting for loss and damage fund

With about three months to go until the 28th United Nations Climate Change Conference, or COP 28, crunch talks tasked with agreeing a climate loss and damage fund have ended with governments in disagreement about key ideas for the institution. What the fund should do, who should pay into it, who should receive money from it, governing principles, funding targets, and even the name remain areas of division among countries. Proposals on the fund were published at the meeting, which began in the Dominican Republic on Aug. 29, by various countries, bringing rifts into the light of day. A document by co-chairs of the talks summarizing all the different ideas runs to 21 pages. “We insist on a comprehensive approach that addresses the full range of loss and damage — from slow onset impacts to recovery and rehabilitation from extreme events,” said chair of the Least Developed Countries group, Madeleine Diouf Sarr. “Loss and damage is not just an environmental setback; it’s unraveling decades of development efforts. Our future hinges on immediate, substantial, and sustained financial commitments.” “In a world where loss and damage from climate change is no longer a distant threat but a living reality, this fund is a foundational necessity, not an option.” --— Madeleine Diouf Sarr, chair, Least Developed Countries group But despite the “significant gulfs,” Barbados representative Avinash Persaud told Devex that negotiators were “making progress” and that he saw an “avenue for the operationalization of the fund by COP 28,” which could be nudged along by early pledges from donors made on the basis that a working fund was established at COP 28. New funding vision The loss and damage fund is important to global development policy because it could — if its advocates succeed — be a significant new avenue for international funding. This has been one of the sticking points in talks. For Persaud, loss and damage funding is neither development or humanitarian funding but something else entirely. But he said that lower-income countries get the impression that higher-income countries feel the fund should “refocus and rechannel existing funding and even draw in the private sector, as opposed to using this as a vehicle for new and additional funding.” He instead wants the fund to be “something new, and about making sure that countries are being able to respond better … without taking on oceans of debt.” Persaud, an architect of the influential Bridgetown Agenda to reform international finance, including to tackle the global debt crisis, has repeatedly called for the fund to deliver $100 billion a year in grants to countries particularly hit by climate loss and damage. “This isn't about more loans to countries already overly indebted because of past climate-related loss and damage,” he said. So far, that funding has not been forthcoming. These remarks were echoed by Sarr, who also insisted on grant-based funding: “We support the developing countries’ proposal of a minimum $100 billion mobilization by 2030. In a world where loss and damage from climate change is no longer a distant threat but a living reality, this fund is a foundational necessity, not an option.” The “starting point” of $100 billion “needs to be continuously scaled up to meet the genuine needs of our people, which already run in the hundreds of billions and are amplified with every increment of global warming,” she said. “The principal gulf is that we developing countries see very clearly that loss and damage is something that's happened or inevitably going to happen,” like through sea level rise, said Persaud. “It's about early reconstruction or rehabilitation in response,” he explained, whereas many higher-income countries see loss and damage, humanitarian relief, and long-term resilience building as “all part of the same thing,” he said. Unfulfilled promises Financing losses and damages caused by climatic events like extreme weather or desertification is one of the most contentious areas of international climate policy, and has a particularly sensitive history in negotiations. Many higher-income countries are fearful of opening the door to “climate reparations,” as the issue has been dubbed by some U.S. politicians. Meanwhile, many global south governments argue their countries did the least to cause climate change but are suffering the worst impacts — due to their geographies, strained economies, and other vulnerabilities. These countries have been largely unable to adapt to the changing environment because of unfulfilled climate finance promises made by the global north, a key issue causing distrust in the climate negotiations. But a milestone deal at last year’s COP 27 saw the world agree to create a dedicated “Loss and Damage Fund” to help countries recover from the destructive impacts of climate change. The United Nations Framework Convention on Climate Change, or UNFCCC, has since run meetings, known as the Transitional Committee, to agree on the fund. The third iteration of these talks in the Dominican Republic — which partially excluded civil society activists — took place in advance of a final committee meeting and a ministerial meeting set to happen before COP 28, where it is hoped the fund can be launched. But to attain that, negotiators “would need to achieve consensus on positions that are still very far apart,” said Olivia Rumble, director at Climate Legal, a specialist consultancy. “Developing countries are saying, ‘can we keep the distinction of developed versus developing when it comes to contributions?’” said Rumble, which is why they want the fund to sit as a financial mechanism under UNFCCC, like the Green Climate Fund or Adaptation Fund. What is “critical” about the fund being run out of UNFCCC is the institution’s commitment to equity, and common but differentiated responsibilities — acknowledging the varying ability of countries to respond to climate change — “would then also apply to the fund,” she added. Rumble said a proposal the United States submitted to the meeting which advocated housing the fund within the World Bank was therefore a “red flag,” due to “huge frustrations around the operational philosophy and approach by the World Bank to development finance.” “What developing countries are really hoping for is a move away from a project by project approach … which is slow and tedious and often doesn't really work in a disaster context, to something that has a more rapid release mechanism, particularly for urgent disasters,” she added. “There have to be some questions raised about whether the World Bank is the most appropriate institution … to house those types of funds.” Meanwhile, the global mistrust that has tainted all aspects of international climate talks has not abated. Lien Vandamme, senior campaigner at the Center for International Environmental Law, said “real political will from wealthy nations” to set up a fund that respected human rights had been “absent.” She said it was “unacceptable” that parts of the talks were closed to civil society, as it “sets a bad precedent for the crucial role” such groups will “need to play in every stage of the negotiations, design, and implementation of the fund to ensure it meets the needs and priorities of those most affected by the climate crisis.” But Persaud said a key area of progress at the meeting was “a lot more listening on both sides” and negotiators were working in “good faith.”