Breakthrough as COP27 strikes deal on ‘Loss and Damage Fund’

More than 190 countries have struck a deal to set up a new global fund that would pay vulnerable nations for climate related damages caused by rising sea level, unusual rainfall pattern, powerful storms and other such calamities, marking a victory for the developing world at COP27 at Sharm El Sheikh.

The establishment of the Loss and Damage Fund, as demanded by the poor and vulnerable countries for years, may turn out to be the high-point of the UN climate summit that has gone into extra time on Saturday as consensus on several key issues eluded even after two weeks of negotiations.

The final outcome document is not ready at the time of going to the press as negotiators, sources said, would go into one more round of huddle past midnight (Indian time) to iron out several thorny issues.

Also Read: Draft COP27 climate deal shows inaction on loss & damage funding

But a number of key persons attending the 27th Conference of Parties to the United Nations Framework Convention on Climate Change confirmed that an agreement has been reached on the corpus. “There is an agreement on loss and damage, which is what negotiators call the concept,” Maldives Environment Minister Aminath Shauna told The Associated Press. “We proposed a text and this actually just has just been accepted, so we now have a fund,” Norway Climate and Environment minister Espen Barth Eide said.

In the plenary session, the countries have to approve formation of the Loss and Damage Fund through a vote after other sticking issues are resolved. Once operational, the fund may help the small island nations and least developed countries the most.

A draft text released by the Presidency (Egypt) on Saturday has a separate section on Loss and Damage that welcomes “for the first time, of matters relating to funding arrangements responding to loss and damage associated with the adverse effects of climate change, including a focus on addressing loss and damage.”

As per the draft, the mechanism to institutionalise the new corpus will be worked out at COP28 in Dubai in 2023. Also the new financial arrangement would complement the existing arrangements for financial support from other sources.

Also Read: COP27 negotiators to push for deal in overtime climate talks

A breakthrough happened after the European Union decided to lend its support though the European block initially posed a few near impossible conditions for large developing nations like India and China. It is not clear whether China will have to make a contribution to the new corpus but India said it was against mandatory contribution to the Loss and Damage fund.

Only 43 rich and industrialised nations (Annex-I countries) are required to cut down on their greenhouse gas emission and make financial contributions for clean up as per the UNFCCC.

The list was prepared in 1992 when the economies of China and India were only a small fraction of what they are today. There is now international pressure on the two Asian giants, which are also among the world’s top five polluters, for higher contributions.

The new corpus may take years to become operational and the fund flow may not be smooth. The developed countries are yet to fulfill their commitment of $ 100 billion annual funding, which they made in 2009.