Climate negotiators have reached a breakthrough in establishing a framework for a fund that will assist vulnerable nations in dealing with the loss and damage caused by extreme weather events. However, the agreement was marred by disagreements over how the program would be funded.
During a meeting in Abu Dhabi, delegates agreed that the World Bank will temporarily host the new Loss and Damage Fund for a period of four years, breaking a months-long impasse in the negotiations. The agreement also sets basic guidelines for funding, with developed nations being urged to provide support. The next step in the discussion will be at the United Nations climate change summit, COP28, set to take place in Dubai later this month.
The president-designate of COP28, Sultan Al Jaber, emphasized the importance of adopting this recommended approach, stating that billions of people, their lives, and livelihoods depend on it. He described the document as "clear and strong" and believed it paved the way for an agreement.
However, human rights activists and representatives from poorer nations expressed their disappointment at the lack of an immediate and significant infusion of money. Tensions are now brewing, which may spill over into the broader climate talks. Even as the agreement was reached, the lead US representative objected, claiming that it did not reflect consensus.
Weaker nations had pushed for specific language in the agreement that would place the burden of funding on wealthier nations that benefitted from burning fossil fuels and accounted for the majority of greenhouse gas emissions. They had concerns about situating the fund within the World Bank, fearing it may not prioritize climate action sufficiently.
Brandon Wu, director of policy and campaigns at ActionAid USA, expressed his discontent with the outcome, stating that developing countries had shown immense flexibility from the beginning, while developed nations had firmly held their ground.
The final language of the agreement does not require an immediate capitalization of the fund, nor does it indicate the intended scale of contributions. Harjeet Singh, head of global political strategy at Climate Action Network-International, criticized this aspect, stating that the current agreement falls short of supporting communities facing climate emergencies and addressing the needs that already amount to hundreds of billions of dollars.
The US, along with other developed nations, came under blame from human rights activists for opposing language that would have made it clear that historically polluting nations have an obligation to contribute to the fund.
The discussions over where to house the fund were a distraction from the true objective, which was to establish a fund that would effectively address the harm caused by the climate crisis, according to Lien Vandamme, a senior campaigner for the Center for Environmental Law.
China and Saudi Arabia also resisted contributing to the fund, arguing that they are still developing and that countries responsible for the bulk of historical emissions should shoulder the financial burden.
While the agreement posed mutual discomfort and proved to be a difficult and challenging outcome, Avinash Persaud, the climate envoy to Barbados Prime Minister Mia Mottley, acknowledged that it represents a positive step forward. He emphasized that failure to reach an agreement would have cast a long shadow over COP28.
The US successfully argued for language allowing the fund to receive money from various sources, such as revenue from carbon pricing mechanisms and philanthropic donations. However, the US failed to secure language stating that contributions are purely voluntary.
The establishment of the fund has been one of the most divisive issues leading up to the COP28 summit. Countries may either adopt the framework or push for further changes to the text. Developing nations initially opposed the World Bank hosting the facility due to a lack of confidence in the institution's commitment to climate action.