Feud over 'loss and damages' fund risks derailing climate talks

By Amanda Morrow - RFI
NOV 28, 2023 LISTEN

Despite the so-called “breakthroughs” made ahead of this week's Cop28 talks, ongoing disputes over a Loss and Damages Fund for poor countries battling climate disasters will prevent the financing tool from ever being workable, critics warn.

Getting the fund up and running is a major objective of the UN summit in Dubai – during which almost 200 countries must sign off on the recommendations that resulted from meetings between rich and poor nations in the lead up to Cop28.

“Loss and damages” refers to the consequences of climate change that are separate from adaptation and mitigation measures.

With devastating climate impacts already a reality for many countries – namely the humanitarian crises wrought by flooding and droughts in Africa – the need for speedy, accessible, debt-free finance is painfully urgent.

'Lack of visibility'

A deal to simply create the fund itself was hailed as a watershed moment at last year's climate talks in Egypt, after negotiators from developing countries overcame decades of resistance from their wealthy rivals.

But a lack of visibility over who'll pay into the fund, who'll benefit from it and how much money will be made available is preventing countries that are suffering loss and damages from making any plans, says Ritu Bharadwaj, a lead researcher at the International Institute for Environment and Development in London.

“A fund has been created but there is no resourcing of that fund,” Bharadwaj told RFI.

“While we go into Cop28, you will see developed countries coming forward and saying, 'oh, we are committing to this fund' – but would that commitment flow in every year or would it be a one-time commitment?”

Ensuring that promises are kept has become a key focus of successive climate talks since wealthy nations failed to respect a pledge to mobilise $100 billion a year by 2020 to help vulnerable countries reduce their emissions and adapt to climate impacts.

Efforts should also be made to ensure money earmarked for adaptation is not confused with funds intended for loss and damage, Bharadwaj adds. “We really have to see whether this is new and additional,” she says, so as to avoid a “double accounting” of the same money.

Loans not grants?

In a hurried agreement, the World Bank was last week chosen to administer the Loss and Damages Fund for an interim period of four years – a provision that developing countries reluctantly signed off on in the rush to cobble together a set of blueprint recommendations ahead of Cop28.

“A bank as host does not serve the purpose for which the fund was created because banks have a loan-based business model, and this fund should be grant-based,” says Nusrat Naushin, a researcher at the International Centre for Climate Change and Development in Dhaka, Bangladesh.

“The expectations that civil society have posed from the beginning of the establishment of this fund [at Cop27] are still there, but the progress is not what we are expecting at all.”

Critics argue that similar international models of governing and devolving finance have been woefully slow and ineffective – such as the UN's flagship Green Climate Fund, set up in 2010 to channel billions of dollars into helping developing nations adapt to climate change.

"It typically takes about five and a half to seven years for a country to get accredited, develop a proposal and get any kind of fund flowing into their country through the Green Climate Fund," says Bharadwaj.

"What's the guarantee that the World Bank would not follow a similar route?"

There are also concerns that wealthy nations will have a disproportionate influence over the fund's management, given that they account for most of the World Bank's donors.

'Compensation' taboo

Divisions over how to legally define loss and damages – along with moves by wealthy nations to delink the fund with any notion of compensation – have stalled its progress for many years.

"A taboo on the words 'liability', 'compensation' and 'reparations' was put forth when the Paris Agreement itself was decided," says Naushin – who adds that the 2015 deal was among the first to give the issue of loss and damages its own official category (Article 8).

This month US climate envoy John Kerry reiterated his country's stance that loss and damages contributions should be "voluntary" and have "nothing to do with compensation and liability".

While negotiators from vulnerable countries were made to make hard compromises on loss and damages, voices from civil society will ensure that big polluters do not stand in the way of climate justice, Naushin says.

"This is one of the key issues that should be spoken about ... the fund is not only about solidarity, but also about climate reparations."