In a significant move on the first day of the UN climate talks in Dubai, governments have collectively pledged over $400 million (£315M or €368M) to establish a loss and damage fund for the victims of climate disasters. The COP28 president, Sultan Al Jaber, celebrated the decision as “historic,” expressing optimism for the momentum it brings to the ongoing climate discussions.
Initial Pledges
During the talks, key contributors to the startup phase of the fund were identified. Germany and the United Arab Emirates, hosting COP28, committed $100 million (£79M or €92M) each, followed by the United Kingdom, the United States, and Japan with significant contributions. However, the relatively modest contribution from the United States drew immediate criticism, with calls for more substantial commitments from the world’s largest economy.
The Fund’s Function
The newly established fund is designed to receive contributions from various sources, including grants, cheap loans from both the public and private sectors, and what has been termed “innovative sources.” The World Bank is set to host the fund for an initial four-year period, despite concerns and resistance from some developing countries.
The fund aims to assist vulnerable communities affected by climate change, with eligibility extended to all developing countries considered “particularly vulnerable.” However, the definition of vulnerability remains a nuanced issue that the text does not delve into.
Compromises and Challenges
The agreement, described as an “early win” for COP28 hosts, reflects the difficult compromises made during negotiations. Developing countries initially opposed the involvement of the World Bank due to concerns over costs, slow procedures, and perceived influence from the United States. Eventually, a compromise was reached, with conditions attached to World Bank involvement and an option for withdrawal after four years.
Rich nations attempted to broaden the donor base, urging developed countries to provide financial resources to the fund, while other nations are encouraged to do so on a voluntary basis. The call for contributions extends beyond traditional donor nations to include countries with high-emitting economies, classified as developing nations by the UN.
Looking Ahead
The success of the fund will hinge on its financial backing, with civil society experts emphasizing the need for more substantial contributions. Innovative sources of finance, including potential carbon taxes on international aviation or shipping, financial transactions, or fossil fuels, are being explored. A coalition led by France and Kenya, set to launch at Cop28, aims to develop these options.
Despite progress in defining how the fund will operate, challenges lie ahead. The urgency now is to ensure funds flow into the initiative promptly, addressing the immediate needs of those affected by climate disasters. With the projected cost of loss and damage for developing countries reaching $400 billion per year by 2030, the focus remains on translating commitments into tangible support for the communities grappling with the impacts of climate change.
Source
Countries pledge $400m to set up loss and damage fund, Climate Home News, 2023-11-30
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