Delegates at the U.N.’s climate conference in Sharm el-Sheikh, Egypt thrashed out an agreement on Sunday to establish a ‘Loss and Damages’ fund to compensate the most vulnerable countries for damages from climate-linked disasters, after nearly 40 hours of negotiation beyond the prescribed Friday deadline.
Crucial questions — such as who will manage this fund, whether contributions are expected from large developing countries and what the fair share of contributors will be — have been left to a “transitional committee” that will make recommendations to enable the actual adoption of the fund at the next Conference of the Parties (COP) of the U.N.’s Framework Convention for Climate Change, to be held in the United Arab Emirates next year.
The announcement of the L&D fund was the highlight of the two-week long process that saw little agreement among countries on other issues, such as a call to eliminate all forms of fossil fuel or delivering on climate finance to developing countries. The conference saw nearly 45,000 participants, including indigenous peoples, local communities, cities and civil society, youth and children.
COP27 President H.E. Sameh Shoukry said: “We heard the calls, and we responded. Today, here in Sharm El-Sheikh, we established the first-ever dedicated fund for loss and damage, a fund that has been so long in the making. It was only appropriate that this COP, the implementation COP in Africa, is where the fund is finally established.”
The agreement and pledges made on loss and damage aim to unlock greater ambitions for mitigation and adaptation. During COP27, financial pledges for loss and damage funding came from multiple countries, including Austria, Belgium, Canada, France, Germany, and New Zealand, joining Denmark and Scotland, which had made pledges previously. The expected monetary compensation from the L&D fund is estimated to be nearly $500 billion and rising by $200 billion annually, a statement from the office of the Presidency added.
“This outcome moves us forward,” Simon Stiell, U.N. Climate Change Executive Secretary, said in a statement, “We have determined a way forward on a decades-long conversation on funding for loss and damage – deliberating over how we address the impacts on communities whose lives and livelihoods have been ruined by the very worst impacts of climate change.”
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A summary document of the all the major decisions taken over two weeks, called the Sharm el-Sheikh Implementation Plan, highlighted that a global transformation to a low-carbon economy is expected to require investments of at least $4-6 trillion a year. “Delivering such funding will require a swift and comprehensive transformation of the financial system and its structures and processes, engaging governments, central banks, commercial banks, institutional investors and other financial actors,” a statement from the office of the Presidency noted.
Prior to COP27, India had set out for itself the task of having countries make headway on climate finance. This, however, saw limited success. “Serious concern was expressed that the goal of developed country Parties to mobilize jointly $100 billion per year by 2020 has not yet been met, with developed countries urged to meet the goal, and multilateral development banks and international financial institutions called on to mobilize climate finance,” the U.N. secretariat noted.
COP27 saw the launch of a “mitigation work programme” which would start this year and continue until 2030, with at least two global dialogues held each year. “Governments were also requested to revisit and strengthen the 2030 targets in their national climate plans by the end of 2023, as well as accelerate efforts to phasedown unabated coal power and phase-out inefficient fossil fuel subsidies,” the statement noted.
Several independent experts were less than enthused.
“Unfortunately, the final text merely keeps the processes alive till the next COP. While a notional funding arrangement for L&D has been agreed upon, its shape and scale are far from clear. It is unlikely that calls on other crucial issues will be taken before the conclusion of the global stocktake,” said R. R. Rashmi, Distinguished Fellow at The Energy Resources Institute, who has been part of previous Indian delegations to the COP. The global stocktake refers to a five-year appraisal by countries of the impact of their actions to curb climate change.
Pallavi Das, Programme Associate at the Council for Energy, Environment and Water stated: “At COP27, India negotiated from a position of strength and ensured that the debate moved from coal phase out to fossil phase down. This push exposed the hypocrisy of oil and gas producers, mainly the USA and Saudi Arabia, and the text settled on coal phase down, as in the case of Glasgow. India should continue to corner gas and oil-producing countries to ensure that the world is on track to achieve the 1.5°C target.”