Loss and Damage Financing to Dominate Talks

“Considering loss and damage as an afterthought is not acceptable as it is the reality that millions of people face every day,” said Harjeet Singh, head of global policy strategy at the Climate Action Network.

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The success or failure of the flagship UN climate conference will likely hinge on the willingness of wealthy countries to provide reparations – a highly contentious and emotional issue that is seen as a fundamental issue of climate justice.

The COP27 climate summit kicks off in Egypt from November 6. The annual gathering of the United Nations Climate Change Conference will see more than 30,000 delegates gather in the Red Sea resort of Sharm el-Sheikh to discuss collective action on the climate emergency.

It comes amid growing calls for wealthy countries to compensate climate-vulnerable nations as it becomes harder for many people to live safely on a warming planet.

Reparations, sometimes referred to as “loss and damage” payments, are set to dominate discussions at COP27, with diplomats from more than 130 countries expected to push for the creation of a dedicated loss and damage funding mechanism.

They argue that agreement on this issue is imperative as climate impacts become more severe.

Rich countries, despite accounting for the bulk of historic greenhouse gas emissions, have long opposed the creation of a fund to deal with loss and damage. Many policymakers fear that accepting responsibility could trigger a wave of lawsuits from countries on the front lines of the climate emergency.

If we lose the battle for the agenda, we might as well go home and forget about the rest of the COP because it will be useless in the face of what is happening in the world on climate change.

Salemul Huq

Director of ICCCAD

Saleemul Huq, director of the Bangladesh-based International Center for Climate Change and Development, said he expected an “agenda fight” at the start of COP27 – the outcome of which he said would be essential to the integrity of the top.

Funding to address loss and damage is on the tentative agenda of the UN climate conference. However, policymakers will need to consider whether to adopt it on the official agenda at the start of the summit.

Huq, a pioneer in loss and damage research and advocacy, said he fears once again wealthy countries will refuse to approve financial support to low- and middle-income countries that are extremely vulnerable to the crisis. climatic.

US climate envoy John Kerry said Washington “would not obstruct” talks on loss and damage in Sharm el-Sheikh.

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For example, at COP26 last year, high-income countries blocked a proposal for a loss and damage funding body, opting instead to engage in a new three-year dialogue for funding discussions. . The so-called “Glasgow Dialogue” has been heavily criticized as a program without a clear plan or intended outcome.

Huq told a webinar hosted by Carbon Brief that the battle to put loss and damage financing on the official agenda “is going to be the big fight coming up in Sharm el-Sheikh.”

“If we lose the fight against the agenda, we might as well go home and forget about the rest of the COP because that will be useless in the face of what is happening in the world on climate change,” Huq said.

“It’s beyond mitigation and adaptation now,” he added. “Loss and damage [funding] is by far the most important issue that needs to be discussed and if the UNFCCC does not do this it becomes fundamentally redundant.”

“The litmus test for the success of COP27”

Pressure to pay for loss and damage differs from climate finance directed towards mitigation and adaptation.

Mitigation refers to efforts to reduce greenhouse gas emissions that cause global warming, for example by switching from fossil fuels to renewable energy sources. Adaptation, on the other hand, means preparing for the adverse effects of the climate crisis by taking action to minimize the damage.

These are two established pillars of climate action. Loss and damage financing, meanwhile, is recognized by many as the third pillar of international climate policy.

Anglers fish on the Sava River amid heavy smog conditions in Belgrade, Serbia, Tuesday, Nov. 1, 2022. Smog spewing from old coal-fired power plants, obsolete automobiles and heating systems running on burning tires and wood is suffocating the Balkans both literally and economically.

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Speaking two weeks before COP27, US climate envoy John Kerry said Washington would not “obstruct” talks on loss and damage in Sharm el-Sheikh. His comments mean that, for the first time ever, the US appears willing to discuss reparations at the UN climate conference.

Kerry’s openness to the loss and damage financing talks marked a sharp shift in tone from just a month earlier. Speaking at a New York Times event on September 20, Kerry suggested that the United States would not be prepared to compensate countries for the losses and damages they suffered as a result of the emergency. climatic.

“You tell me the government in the world that has trillions of dollars — because that’s what it costs,” Kerry said. He added that he refused to feel “guilty” about the climate crisis.

“There’s plenty of time to argue, point fingers, do whatever,” Kerry said. “But the money we need right now has to go to adaptation, it has to go to building resilience, it has to go to technology that’s going to save the planet.”

A man inspects a devastated field in the cyclone Sitrang-hit village of Ramdaspur in Bhola sub Barishal, Division, Bangladesh, October 15, 2022.

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Proponents of loss and damage financing argue that it is necessary to consider climate impacts – including hurricanes, floods and wildfires or slow-onset impacts such as sea level rise – against which countries cannot defend themselves because the risks are unavoidable or countries cannot afford it.

“This is the litmus test for the success of COP27,” said Harjeet Singh, head of global policy strategy at the Climate Action Network, which includes more than 1,500 civil society groups.

“Considering loss and damage as an afterthought is not acceptable as it is the reality that millions of people face every day,” Singh said during the same webinar, citing the devastating floods in Pakistan and the severe droughts in the Horn of Africa.

Singh said the political mobilization on financing loss and damage makes COP27 the most important COP to date. “Now we need to make sure it delivers the climate justice we demand by creating a new funding system so we can support the people facing the climate emergency now.”

What is loss and damage?

There is no internationally agreed definition of loss and damage, but it is generally understood to refer to economic impacts on livelihoods and property, and non-economic loss and damage, such as loss of human lives and loss of biodiversity.

“I think it means different things to different people, but overall I would see the idea as funding to address the impacts of climate change that cannot be avoided through mitigation and adaptation,” Rachel James said. , a climatologist at the University of Bristol. , told CNBC by phone.

“That explains why it’s so important for climate justice because we don’t have a mechanism or funding to deal with it right now – and it’s too late to ignore it.”

James said countries in the South will seek reassurance in Egypt that the $100 billion climate finance commitment by rich countries in 2009 to help low-income countries mitigate and adapt to the climate emergency will be respected.

“It’s so crucial because it’s about trust,” James said. “If we can’t even secure the adaptation and mitigation funding that has already been pledged, it calls into question the ability to raise additional funds.”

So far, only one UN member state has pledged to provide compensation for loss and damage to the most climate-vulnerable areas. Denmark announced in mid-September that it would support low-income countries with more than 100 million Danish kroner ($13.3 million).

Nicola Sturgeon, the first minister of Scotland, who is not a UN member, announced at the COP26 summit in Glasgow last year a symbolic investment of £1 million ($1.15 million) in to encourage other wealthy countries to follow suit. .

Why is it important?

“Loss and damage is happening every day somewhere in the world – and it will continue to happen every day from now on,” ICCCAD’s Huq said, citing the damage from Hurricane Ian in late September as recent example.

“Ian is the biggest storm Florida has had so far. But that won’t be true next year, they’re going to have a bigger one next year and they’re going to have an even bigger one next year. year after. So we have now entered the era of human-induced climate change impacts causing loss and damage.”

“We have to deal with this – and we are not at all ready to do so. Even the richest country in the world, the United States, is not prepared for this,” he added.

Paddy McCully, senior analyst at the non-governmental organization Reclaim Finance, said that while loss and damage financing was very likely to feature prominently at COP27, no one expected substantial progress.

“Given the current geopolitical situation and the very different north and south positions on loss and damage, I think it will be difficult for countries to achieve a dramatic breakthrough,” McCully told CNBC by phone.

“The sign of a successful COP will be that there is at least agreement on a loss and damage financing mechanism,” he said. “And I think a moderately successful COP would be that everything doesn’t collapse in north-south acrimony, and you at least have an agreement on further talks on setting up a mechanism.”

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