COP27: Summit agrees ‘loss and damage’ climate fund in landmark deal

COP27: Summit agrees ‘loss and damage’ climate fund in landmark deal

Sharm El Sheikh, Egypt

Delegates from nearly 200 counties at the COP27 climate summit agreed to set up a “loss and damage” fund to help vulnerable countries cope with climate disasters, in a landmark deal early Sunday morning in Sharm el-Sheikh, Egypt.

The full COP27 agreement, of which the fund is a part, also reaffirmed the goal of keeping global warming to 1.5 degrees Celsius above pre-industrial levels – a key demand of many countries.

But while the agreement represents progress in what has been a contentious negotiating process, it has not strengthened language around reducing emissions of planet-warming greenhouse gases.

The final text also makes no mention of phasing out fossil fuels, including oil and gas.

The final agreement marks the first time that countries and groups, including long-suffering states like the United States and the European Union, have agreed to set up a fund for nations vulnerable to climate disasters exacerbated by pollution disproportionately produced by wealthy, industrialized nations.

Negotiators and non-governmental organizations observing the talks hailed the establishment of the fund as a significant achievement, after developing and small island nations joined together to step up pressure.

“The agreements reached at COP27 are a victory for our entire world,” Molwyn Joseph, president of the Alliance of Small Island States, said in a statement. “We showed those who felt neglected that we hear you, see you and give you the respect and care you deserve.”

The fund will focus on what can be done to support loss and damage funds, but does not include provisions for liability or compensation, a senior Biden administration official told CNN.

The US and other developed countries have long sought to avoid such provisions that could open them to legal liability and lawsuits from other countries. And in previous public comments, US climate envoy John Kerry has said that loss and damage are not the same as climate reparations.

“‘Reparations’ is not a word or a term that is used in this context,” Kerry said in a recent interview with reporters earlier this month. He added: “We have always said that it is imperative for the developed world to help the developing world cope with climate impacts.”

Details of how the fund will operate remain murky. The text leaves many questions as to when it will be finalized and operational and how exactly it will be financed. The text also mentions a transitional commission that will help to break down these details, but does not set specific future deadlines.

And while climate experts celebrated the victory, they also noted uncertainty about the future.

“This loss and damage fund will be a lifeline for poor families whose homes have been destroyed, farmers whose fields have been destroyed, and islanders forced from their ancestral homes,” said World Resources Institute Executive Director Ani Dasgupta. “At the same time, developing countries are leaving Egypt without clear assurances about how the loss and damage fund will be monitored.”

The outcome on the fund came this year in large part because the G77 bloc of developing countries remained united, using more leverage over losses and damages than in previous years, climate experts said.

“They should have been together to force the conversation we’re having now,” Nisha Krishnan, director of resilience at the Africa World Resources Institute, told reporters. “The coalition held on because of this belief that we had to stay together to make this happen – and push the conversation forward.”

For many, the fund represents a long-fought victory, pushed over the line by global attention on climate disasters such as the devastating floods in Pakistan this summer.

“It was like a big build-up,” former US climate envoy Todd Stern told CNN. “This has been around for a long time and it’s getting harder for vulnerable countries because not a lot of money is being invested in it yet. As we see, the real impacts of climate change on disaster are becoming more intense.”

Global scientists have warned for decades that warming must be limited to 1.5 degrees above pre-industrial levels – a threshold that is fast approaching as the planet’s average temperature has already risen to around 1.1 degrees.

Above 1.5 degrees, the risk of extreme drought, forest fires, floods and food shortages will increase dramatically, scientists said in the latest report by the UN’s Intergovernmental Panel on Climate Change (IPCC).

But while summit delegates confirmed the goal of keeping global warming to 1.5 degrees Celsius, climate experts expressed dismay at the lack of mention of fossil fuels or the need to phase them out to prevent global temperatures from rising. As at last year’s Glasgow summit, the text calls for the phasing out of unabated coal power and the “phasing out of inefficient fossil fuel subsidies”, but stops short of calling for the phasing out of all fossil fuels, including oil and gas.

“The impact of the fossil fuel industry has been revealed on all fronts,” Laurence Tubiana, executive director of the European Climate Foundation, said in a statement. “The Egyptian presidency drafted a text that clearly protects the oil and gas oil states and the fossil fuel industry. This trend cannot continue in the UAE next year.”

It took some dramatic action to even keep the 1.5 degree figure hit in Glasgow last year.

EU officials threatened to walk out of the meeting on Saturday if the final agreement did not adopt the goal of limiting warming to 1.5 degrees Celsius above pre-industrial levels. At a carefully choreographed press conference, EU Green Deal czar Frans Timmermans, flanked by a full line-up of ministers and other top officials from EU member states, said that “no deal is better than a bad deal”.

“We don’t want 1.5 Celsius to die here today. This is completely unacceptable for us,” he said.

In addition to the final agreement, the summit produced several other significant developments, including the resumption of formal climate negotiations between the US and China – the world’s two largest emitters of greenhouse gases.

After China froze climate talks between the two countries this summer, US President Joe Biden and Chinese President Xi Jinping agreed to re-establish US-China communications when they met last week at the G20 summit in Bali, paving the way US climate envoy John Kerry and his Chinese counterpart Xie Zhenhua to officially meet again.

“Without China, even if the U.S. is moving toward a 1.5 degree program, which we are if we don’t have China, no one else can achieve that goal,” Kerry told CNN last week.

The two sides met during the second week of the COP, trying to pick up where they left off before China broke off the talks, according to a source familiar with the discussions. They were focused on specific action points, such as advancing China’s plan to reduce emissions of methane — a potent greenhouse gas — and their overall emissions target, the source said.

Unlike last year, there were no big, joint climate announcements from the two countries. But the resumption of formal communication was seen as an encouraging sign.

Li Shuo, Beijing-based Greenpeace East Asia global policy adviser, said this ZP “saw extensive exchanges between the two sides, led by Kerry and Xie.”

“The challenge is that they need to do more than talk, [and] should also lead,” Shuo said, adding that renewed formal dialogue “helps prevent the worst outcome.”

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