On the first day of COP 28, member countries agreed to make operational a Loss and Damage (L&D) fund that is meant to compensate countries already dealing with climate change.
To be based at the World Bank but managed by an independent secretariat, commitments worth atleast $450 million have already been made by countries though billions of dollars are still needed to meet its purpose.
The L&D fund was first announced at the conclusion of COP-27 in Sharm El-Sheikh, Egypt, last year, but it has taken five separate meetings since then, via ‘transitional committees,’ to get to a position where countries could unanimously agree on a text that was then passed by COP-28 President, Sultan Ahmed Al Jaber. The genesis of the need to have such a fund is nearly three decades old.
Positive start
As of Thursday, financial commitments have been made by the United Arab Emirates $100 million – the host country, Germany $100 million; the United States $17 million, the United Kingdom $50.6 million (approx.), and Japan $10 million as part of the L&D. The European Union also committed to $145 million, over and above the German contribution.
Several delegates said that an agreement to kickstart the fund on the first day of the COP itself was a “positive” start and set “good momentum” on the tenor of discussions in the days ahead.
“Countries must build on this and generate enough momentum in the days ahead. We must keep our eyes on the prize (of taking concrete steps to keep temperatures below 1.5C),” said Simon Steill, Executive Secretary, UNFCCC ( United Nations Framework Convention on Climate Change).
Representatives, including heads of state, from nearly 160 countries have confirmed attendance at the World Climate Action Summit on the 1st of December and will make statements.
The World Bank will be the “interim host” of the fund for a period of four years. It is expected to operate in accordance with the principles of the UNFCCC and the Paris Agreement.
All developing countries are eligible to apply for and every country has been “invited” to contribute to the fund. Payments are voluntary and a certain percentage has been set apart for a category of countries called Least Developed Countries and Small island developing states.
$1.5 trillion bill
Loss and damage from climate change cost about $1.5 trillion ($1,500 billion) in 2022, according to a study published this week by by the University of Delaware. Several developing countries and some of the poorest lost an average of about 8.3% of GDP due to climate change. The fund, as it stands now, doesn’t specify how often it will be replenished.
Harjeet Singh, of the Climate Action Network International, has been at the forefront of demanding an L&D fund for years. He said in a statement : “Amid this historic decision to operationalise the Loss and Damage Fund within a year of its establishment, addressing underlying concerns becomes critical. On one hand, rich countries have pushed for the World Bank to host this Fund under the guise of ensuring a speedy response. Conversely, they have attempted to dilute their financial obligations and resisted defining a clear finance mobilisation scale. The absence of a defined replenishment cycle raises serious questions about the Fund’s long-term sustainability.”
Environment Minister, Bhupendra Yadav, thanked the UN Presidency for facilitating the kick-starting of the fund. “India has given key inputs during the transitional committee meetings and we thank the presidency for facilitating this,” he said as part of statements given by multiple countries on the nature of the fund.
