Talks about funding for the poorest countries in the face of the climate crisis have resumed on the topic of “loss and damage.”

Leaders of countries will convene this weekend in a final effort to overcome significant disagreements between wealthy and impoverished nations regarding the distribution of funds to those affected by climate-related catastrophes.

Discussions about financial assistance for “loss and damage,” which pertains to aiding and restoring countries and communities affected by severe weather, began in March but fell apart in conflict two weeks ago.

Representatives from various countries have gathered in Abu Dhabi for a two-day conference, concluding on Saturday evening, with the goal of addressing unresolved issues before the upcoming UN Cop28 climate summit in the United Arab Emirates later this month.

It is crucial to reach a compromise this weekend at Cop28 in order to advance discussions on loss and damage. Activists are concerned that without a general consensus beforehand, the negotiations at the summit will become mired in complexity.

According to Harjeet Singh, the leader of worldwide political strategy at Climate Action Network International, this gathering is a critical moment that will ultimately determine the outcome of the new fund for loss and damage. It is imperative that we bridge the gap of trust, put the fund into action, and offer crucial assistance to those who require it most. Failure is not an option as the well-being and livelihoods of millions of people are on the line.

However, a divide still exists among developed nations. Some are pushing for voluntary cash contributions from major emerging economies like China and Gulf petrostates, as well as traditional donors like the US and Europe. On the other hand, poorer nations are apprehensive about the governance of the fund and their ability to access much-needed rescue funds.

Last year, at Cop27 in Egypt, representatives from all governments around the world came to an agreement that a fund for loss and damage should be established. This was a significant milestone, as it was a demand that developing countries had been making for over ten years. Despite having the smallest carbon footprint, poor countries are the most affected by extreme weather events due to their geographical location, inadequate infrastructure, and limited resources compared to wealthier nations.

The floods that ravaged Pakistan approximately one year ago, and the drought that caused severe hunger in the horn of Africa, are both instances of extreme weather fueled and worsened by the climate crisis. In these situations, funds for loss and damage could have provided aid to those in desperate need. As the Earth’s temperatures continue to increase, these types of disasters are predicted to occur more frequently, requiring hundreds of billions of dollars annually for restoration efforts.

The primary points of disagreement involve the governance, contributors, and eligibility for accessing the fund’s funds.

Certain wealthy nations, such as the United States, have advocated for the placement of the fund under the control of the World Bank, stating that it offers an established framework for efficiently collecting and distributing funds. They argue that creating a new fund from the beginning would be a lengthier, more complicated, and more expensive process.

However, numerous activists refuse to accept this, believing that wealthy nations prioritize the World Bank because it gives them greater influence as major donors. They highlight the bank’s expenses – at least one comparable fund has been charged a “hosting fee” of 24% of its funds, which covers the bank’s administrative costs, including its employee pension funds.

Accessing World Bank funds is slow and difficult, and much of the finance provided comes in the form of loans rather than grants. Many also have longstanding grudges against the Bank for its failure to focus on climate finance, which led to the ousting of the Trump-appointed president David Malpass earlier this year.

Brandon Wu, director of policy and campaigns at the charity ActionAid, said: “These positions [by rich countries] are absolutely unacceptable for a fund that is meant to support developing countries and be responsive to the needs of vulnerable communities. Developed countries are negotiating with their own narrow interests in mind, rather than trying in good faith to design a fund that would be the most effective possible option for supporting vulnerable people.”

According to The Guardian, the US does not consider the World Bank hosting the fund as a non-negotiable demand. The UN and other parties believe that the issue of where to locate the fund can be resolved. A developing country representative involved in the discussions stated that this is not the primary concern.

The issue of determining who should have access to the fund may soon be resolved, as nations have reached a consensus that priority should be given to the most vulnerable populations in developing countries. Certain governments argue that the fund should be available to all countries that were categorized as developing in 1992, when the UN Framework Convention on Climate Change (the parent treaty of the 2015 Paris climate agreement) was ratified.

This could result in countries like Saudi Arabia or UAE, who are hosting this year’s Cop, being included even though they have a high per capita income and carbon footprint. However, it is probable that the definition of “most vulnerable” will primarily target the least developed countries.

The primary conflict will probably revolve around the financing of loss and damage. Advocates are pushing for wealthy nations to shoulder the burden of their “historic responsibility” for carbon emissions. This would place the majority of funding responsibility on the US, which poses a challenge for the White House as the Republican-dominated US Congress is expected to resist any efforts to raise climate-related financial aid.

The United States and other affluent nations desire to expand the means of financing, possibly by incorporating revenue from selling carbon offset credits and investments from private companies. Coalitions of developing countries have proposed funding strategies such as a fee for frequent flyers that would focus on wealthier individuals in both developed and developing nations, or a fee on shipping, which is a major contributor to emissions. Gordon Brown, the previous prime minister of the United Kingdom, has suggested implementing a tax on profits made from fossil fuels.

A large number of these resources will most likely be necessary in some capacity, as the total amount needed could potentially reach hundreds of billions of dollars. However, the main dispute revolves around the classification of countries like China, India, South Korea, and other major emerging economies, as well as petrostates such as Saudi Arabia, Qatar, Russia, and the hosting country of UAE. These countries were all considered developing nations in 1992 and therefore were not obligated to contribute funds to poorer countries.

However, all of them are now significant contributors to greenhouse gas emissions. The emissions from China, India, and Russia have reached a scale that is comparable to the combined emissions of European nations. Additionally, these countries have greatly profited from the sale of fossil fuels. They also have much larger economies compared to the vulnerable countries that will receive support from the loss and damage fund.

Amina Mohammed, the United Nations’ second-in-command, stated that we are entering a new era in terms of climate and funding. This means that there may be disagreements among those who believe there is a responsibility to pay for past actions, while others believe we should focus on moving forward and expanding our resources.

Finding a solution to this central conflict will prove challenging, as activists have stated their determination to oppose any efforts to differentiate between the stances of major economies like China and those of smaller, more vulnerable nations. Senior campaigner Lien Vandamme from the Centre for International Environmental Law expressed that China and the G77 group of developing countries will remain united, while wealthy nations such as the US, UK, and EU must take responsibility and provide financial support. These countries continue to refuse their obligation to compensate for the harm and losses caused by their lack of action on climate change.

“It is unacceptable and requires a significant shift in the approach of wealthy nations in order for the fifth meeting to accomplish what the fourth could not. Neglecting to follow through will not make the affected communities or their rightful need for resolution disappear.”


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