COP28: cash pledges needed to spur loss and damage fund

[CAIRO] Substantial financial pledges will be needed to jump-start the loss and damage fund for climate-vulnerable countries at the UN’s upcoming global climate talks, analysts tell SciDev.Net.

The fund is expected to be set into operation during the talks, known officially as the Conference of the Parties of the United Nations Framework Convention on Climate Change (UNFCCC) – COP28 for short – which will begin in Dubai this week (Thursday).

At last year’s COP27 climate summit in Egypt, wealthy nations agreed to establish a fund to help less-developed countries recover from climate-related disasters such as droughts and floods – a first in 30 years of climate negotiations.

A group made up of officials from 24 nations – named the Transitional Committee – was tasked with spending the past year determining the specific structure of the fund, deciding which nations should make contributions, and where the money should be spent.

“COP28 must garner significant pledges to support the ongoing second replenishment of the Green Climate Fund as well as jump-start the initial capitalisation of the new Loss and Damage Fund.”

Liane Schalatek, associate director, Heinrich Böll Foundation, US

Earlier this month, a consensus agreement was reached on how to get the fund off the ground, but governments could still try to renegotiate at the forthcoming talks, analysts say.

“I expect that the Loss and Damage Fund will be operationalised,” says Olivia Serdeczny, research analyst at Climate Analytics, a think tank.

“The Transitional Committee that was set up to draft recommendations on how the Fund should operate has arrived at a compromise.”

If the agreed text is not “opened up” by any government – meaning that nobody tries to renegotiate what is in it – then the fund would be activated without further negotiations at COP28, she tells SciDev.Net.

The finer details of how much money countries should pay into the fund and which countries should benefit have also yet to be established.

“We will also need actual pledges of money to contribute to the fund,” Serdeczny explains.

Egyptian climate change expert Hesham Eissa, formerly with the UNFCCC, does not expect the parties to reach decisions on issues such as funding mechanisms and damage evaluation during COP28 “especially in light of the current global political and economic conditions”.

One sticking point will be “verifying whether the losses occurred due to climate change or not” he says, adding that this requires a precise system and mechanisms to be established – and this takes time.

Having previously failed to reach a consensus on where the fund should be hosted, negotiating parties agreed this month that the World Bank would serve as interim trustee to administer the fund for the first four years.

However, global South countries fear this could lead to a blurring of lines between the support allocated to the fund for climate loss and damage, and that provided for development, according to Eissa.

Under the current agreement, contributions from wealthy nations are voluntary, not mandatory, and there is no target for how much will be raised.

Adaptation finance

Countries in the global South will also be looking to wealthier countries to make good on their commitments on adaptation finance at COP28.

Developed countries pledged at COP26 two years ago to double adaptation finance provision by 2025.

Liane Schalatek, associate director of the Heinrich Böll Foundation in the US, says much more adaptation finance needs to be committed, particularly as grants, in order to fulfil this pledge.

Schalatek, who leads the foundation’s work in international climate finance, told SciDev.Net that the funds established under the UNFCCC have an important role to play. Another fund under this umbrella is the Green Climate Fund, set up to mobilise funding for low-emission and climate-resilient development.

“COP28 must garner significant pledges to support the ongoing second replenishment of the Green Climate Fund, as well as jump-start the initial capitalisation of the new Loss and Damage Fund,” she said.

She also stressed the need for “a better quality of adaptation financing”.

“Too much is still provided in loans, which many developing countries … can no longer afford if they don’t want to gut other needed investments,” she explained.

For Schalatek, any progress during the meetings towards global goals on adaptation and related finance commitments would be considered a successful outcome for climate-vulnerable countries in the global South.

Vulnerable states

According to the draft agreement reached in Egypt’s Sharm El Sheikh last year “particularly vulnerable countries” hit by climate-related events such as droughts should benefit from the fund.

Experts believe that countries of the global South such as South Sudan, Somalia and the island states are among the most vulnerable countries to climate disasters that require financial aid.

Developing countries called for at least US$100 billion a year to be put into the fund.

However, Serdeczny suggests this is still a modest assessment of what is needed.

“If you consider the flooding in Pakistan, estimates of costs amounted to US$30 billion, with reconstruction costs an additional US$16.3 billion. And this is just one country – one event,” she says.

A discussion paper co-authored by Schalatek finds that at least US$400 billion should be paid into the fund, with this figure to be revised upwards over time.

Aside from the value of contributions, many of the details of the fund have still to be worked out. The board of the Loss and Damage Fund was asked to look at questions such as what the basis will be for receiving support.

Serdeczny pointed out that “there is a fair bit of consensus already – otherwise, we would not have a proposal that can be adopted at this COP”.

However, she stressed that there were too many questions on the table to be answered at COP28 alone, with many of them requiring considerable technical expertise and political thought.

This piece was produced by SciDev.Net’s Global desk.