World leaders are set to convene this weekend in a final, eleventh-hour endeavor to bridge the profound rifts between affluent and underprivileged nations concerning the allocation of resources to support individuals afflicted by the adverse consequences of climate-related disasters.
The discussions revolving around financial aid for “loss and damage,” which pertains to the rescue and rehabilitation of countries and communities grappling with the impacts of severe weather events, were initially initiated in March but regrettably descended into acrimony a fortnight ago.
In a determined attempt to address the lingering challenges, nations have reconvened in Abu Dhabi for a pivotal two-day conference that will conclude on Saturday night. The objective is to reach a consensus prior to the commencement of the UN Cop28 climate summit, scheduled for the conclusion of this month in the United Arab Emirates.
Crucially, achieving a compromise this weekend is deemed imperative to ensure progress in the realm of loss and damage at Cop28. Concerns have arisen that without a comprehensive agreement ahead of the summit, the deliberations might become entangled in the labyrinthine negotiations of Cop.
Harjeet Singh, the director of global political strategy at Climate Action Network International, remarked, “The meeting is a make-or-break moment that will determine the success or failure of the new loss and damage fund. We must bridge the trust gap, operationalize the fund, and provide the necessary support to those who need it most. We cannot afford to fail, as the lives and livelihoods of millions are at stake.”
However, significant disparities persist between developed countries, advocating for voluntary financial contributions and suggesting that large emerging economies like China and Gulf petrostates, in addition to traditional donors like the United States and Europe, should provide funding. On the other side, developing nations remain apprehensive about the fund’s governance and their access to the vital rescue funds they require.
Notably, all nations worldwide concurred at Cop27 in Egypt last year that a loss and damage fund should be established, marking a historic milestone that developing nations had fervently pursued for over a decade. These countries have contributed the least to the climate crisis, with minimal carbon footprints compared to their affluent counterparts, yet they bear the brunt of climate-induced disasters due to geographical vulnerabilities, subpar infrastructure, and limited resources.
Prominent examples include the devastating floods in Pakistan just over a year ago and the drought that inflicted severe hunger in the Horn of Africa. Both of these catastrophic events were intensified by the climate crisis, and loss and damage funds could have provided essential aid to the vulnerable populations in dire need. With the projections indicating an increase in the frequency of such disasters as global temperatures rise, hundreds of billions of dollars annually will be necessary for recovery efforts.
Key points of contention revolve around the governance of the fund, its funding sources, and criteria for accessing financial aid. While some developed nations, including the United States, advocate for the World Bank to host the fund, asserting that it offers a streamlined structure for resource collection and distribution, many campaigners vehemently oppose this notion. They suspect that wealthier nations favor the World Bank as it affords them more influence, while raising concerns about the bank’s operational costs, including a substantial hosting fee.
Accessing funds from the World Bank has been criticized for being sluggish and burdensome, with a significant portion provided as loans rather than grants. Furthermore, the bank’s past failure to prioritize climate finance led to the removal of its president, David Malpass, earlier this year.
The United States has indicated that having the World Bank host the fund is not a non-negotiable position. The location of the fund is not viewed as the primary issue, according to a representative from a developing nation closely involved in the talks.
The debate over who should access the fund is also nearing resolution, with a consensus emerging that the most vulnerable communities in developing countries should receive priority. Some governments argue that the fund should be open to all countries classified as developing in 1992 when the UN Framework Convention on Climate Change, the parent treaty to the 2015 Paris climate agreement, was signed. However, this is expected to effectively focus on the least developed countries.
The primary challenge is likely to revolve around the sources of funding for loss and damage. Advocates insist that affluent nations must bear the financial responsibility for their “historical emissions.” This would place a substantial burden on the United States, a situation complicated by the likelihood of opposition from the Republican-controlled US Congress regarding increased climate finance.
Rich nations aim to diversify funding sources, including the proceeds from carbon offsets and contributions from the private sector. Various groups of developing countries have proposed alternative funding mechanisms, such as a frequent flyer levy targeting well-off consumers in both rich and poor nations, or a charge on shipping, a significant source of emissions. Former UK Prime Minister Gordon Brown has even suggested a windfall tax on profits from fossil fuels.
Given the substantial financial requirements, it is probable that a combination of these funding sources will be necessary. However, a central source of tension centers on countries like China, India, South Korea, and large emerging economies, along with petrostates such as Saudi Arabia, Qatar, Russia, and the host nation UAE. While these countries were classified as developing in 1992, they have since evolved into major emitters or benefitted significantly from fossil fuel exports. Consequently, their economies have outgrown those of vulnerable countries in need of the loss and damage fund.
Amina Mohammed, the UN deputy secretary-general, acknowledged the evolving dynamics, emphasizing the need to broaden funding sources. She acknowledged that certain parties believed there was a historical obligation to provide funding, while others advocated for a more expansive approach. Resolving this central tension will be arduous, as campaigners firmly oppose any distinctions between the positions of major economies like China and the more vulnerable nations.
In conclusion, the urgency of the climate crisis has reached unparalleled levels, with extreme weather events intensifying rapidly.