After decades of opposition from wealthy countries that produce the majority of the world’s emissions, the UN climate conference decided on Sunday to create a “loss and damage” fund to aid poorer countries being devastated by climate consequences. No COP before brought forward this initiative. COP27 in that regard has achieved a milestone that will pave the way for raising voices for the developing states which are vulnerable to climate change.
The historic agreement was praised as a “downpayment on climate justice” by Pakistan’s climate minister Sherry Rehman, who participated in the effort by developing countries to secure the promise during the two-week UN COP27 summit in the Egyptian resort city of Sharm el-Sheikh.
Who would donate to the fund and who would profit is a valid concern.
The context of “loss and damage”
“Loss and damage” at the UN climate talks refer to expenses brought on by weather extremes or consequences, such as rising sea levels causing floods and other climate catastrophes in the world.
It has been observed that the majority of climate financing to date has gone toward projects that aim to reduce carbon dioxide emissions in an effort to slow global warming, while roughly a third of it has been allocated to initiatives that assist communities in adapting to its effects. “Loss and damage” funding, in that regard, is distinct since it focuses on paying for damage that nations cannot prevent or prepare for.
But there is still no consensus on what should be included in the definition of “loss and damage” brought on by climate change, which could include destroyed or damaged property and infrastructure as well as less-valuable natural ecosystems or cultural assets.
According to research by 55 vulnerable nations as published in Al Jazeera, the overall cost of climate-related losses over the past two decades was $525 billion, or 20% of their combined GDP (GDP). According to research, these losses might total $580 billion annually by 2030.
Through the means of a loss and damage fund, the question arises, “Who will pay for the fund and damage caused by climate change to the most vulnerable states?” In the past, vulnerable nations and activists argued that wealthy nations should foot the bill since they were the main contributors to climate change through their previous greenhouse gas emissions.
Prior to the COP27 summit, the United States and the European Union opposed the argument out of concern for rising obligations. The EU has claimed that China, the second-largest economy in the world and a developing nation according to the UN, should contribute as well. Since the major economies of the world are also the major contributors to climate change, they should be responsible for paying for developing countries.
A few governments, including the EU, Denmark, Belgium, Germany, and Scotland, have made modest but symbolic financial contributions for loss and damage. China hasn’t agreed to make any payments. Even if it is not formally designated for that purpose, some current financing from the UN and development banks does assist states that have suffered loss and damage.
The specifics of which nations or disasters qualify for compensation still need to be worked out. Above all, COP27 has done what no other COP has done so far to support the vulnerable communities of the world.
