COP27 - Loss and Damage Funding for Climate Vulnerable Countries
On November 20th, 2022 at the 27th Conference of the Parties (COP27), it was announced that a loss and damage fund will be utilized for countries at the forefront of the climate crisis. But what does this mean, and is this fund a truly “ground-breaking decision?”
The Sharm el-Sheik Implementation Plan acknowledges that it will cost at least $4-6 trillion per year for the global economy to become low-carbon. Furthermore, it recognized “the significant financial costs associated with loss and damage for developing countries,” and how this actively damages the prospects of realizing the United Nations’ Sustainable Development Goals by 2030. The loss and damages experienced by developing countries include impacts to cultural heritage as well as physical and social infrastructure.
Accepting that economic inequity is unavoidably connected with the climate crisis is essential for inclusive transformation when combatting climate change, and concedes that developed countries have actively benefitted at the expense of the planet and developing countries. But how will this fund work in practice?
In reality, many unknowns remain. While it is evident that multiple sources of funding are required for climate adaptation and mitigation of developing countries, it is unclear who exactly is responsible for contributing to the fund. Moreover, it is yet to be determined which countries will benefit from the fund, and what deadline will be established to ensure that loss and damage funding is met. So far, governments have agreed to create a transitional committee for recommendations on the fund, with the first meeting to be held by March 2023. It was also agreed that the Santiago Network for Loss and Damage would be utilised to improve technical assistance for climate vulnerable developing countries.
However, this is not the first time that developed countries have aspired to provide climate finance for developing countries. At COP16, developed countries agreed to provide $100 billion per year to developing countries by 2020. Fast forward to 2022, and the Sharm el-Sheikh Implementation Plan recognizes that this is still yet to happen, with discussion at COP27 on setting climate finance that prioritizes developing countries delayed to 2024. As the World Wildlife Fund (WWF) aptly summarizes: “without additional commitments to put the world on track for 1.5 degrees Celsius, the loss and damage fund becomes a fund for the end of the world.” Therefore, while the loss and damage fund is a step in the right direction, there are fundamental unknowns that must be clearly defined if developed countries are to challenge inequity, deliver climate action, and act on their promises.
