Loss and damage financing will dominate the talks

“Seeing loss and damage as a side issue is not acceptable because this is the reality that millions 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 landmark UN climate conference is likely to depend on convincing rich countries to pay reparations – a highly divisive and emotive issue seen as a fundamental issue of climate justice.

The COP27 climate summit begins in Egypt from November 6. The annual meeting of the UN Climate Change Conference will bring together more than 30,000 delegates in the Red Sea resort of Sharm el-Sheikh to discuss collective action on the climate emergency.

It comes amid growing calls for rich 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 likely to dominate proceedings at COP27, with diplomats from more than 130 countries expected to push for the creation of a dedicated loss and damage fund.

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

Rich countries, despite being responsible for the bulk of historical greenhouse gas emissions, have long opposed the creation of a fund to deal with losses and damages. 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 agenda battle, then we might as well go home and forget about the rest of the COPs because they will be useless in the face of what is happening in the world on climate change.

Saleemul Huq

Director of ICCCAD

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

Financing to deal with loss and damage is on the provisional agenda of the UN climate conference. However, policymakers will have to determine whether to adopt it on the official agenda at the start of the summit.

Huq, a damage and loss research and advocacy pioneer, said there was a fear that rich countries would once again refuse to financially support low- and middle-income countries that are acutely vulnerable to the climate crisis.

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

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

Huq said during a webinar organized by Carbon Brief that the battle to put damage and loss financing on the official agenda “will be the big fight coming to Sharm el-Sheikh”.

“If we lose the agenda fight, then we might as well go home and forget about the rest of the COP because they 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] it is by far the most important issue that needs to be discussed and if the UNFCCC doesn’t then it effectively becomes redundant.”

“The litmus test for the success of COP27”

The push for damage and loss payments differs from climate finance aimed at 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, meanwhile, means preparing for the adverse effects of the climate crisis by taking action to minimize 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.

Fishermen fish in the Sava River amid heavy smog in Belgrade, Serbia, Tuesday, Nov. 1, 2022. Smog spewed from ancient coal-fired power plants, antiquated cars and heating systems that run on burnt tires and wood are choking the Balkans and both literally and financially.

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

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

“You’re telling 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 the technology that’s going to save the planet.”

A man inspects a damaged field in Ramdaspur village hit by Cyclone Sitrang in Bhola under Barishal, Division, Bangladesh on October 15, 2022.

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Proponents of loss and damage financing argue that it needs to account for climate impacts — including hurricanes, floods and wildfires, or slow-onset impacts like sea level rise — that countries cannot defend against 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.

“Seeing loss and damage as a side issue is not acceptable because this is the reality that millions face every day,” Singh said during the same webinar, citing devastating floods in Pakistan and severe droughts in the Horn of Africa.

Singh said the political mobilization to fund loss and damage makes COP27 the most important COP to date. “We must now make sure it delivers the climate justice we’ve been demanding 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 accepted definition of loss and damage, but it is widely understood to refer to economic impacts on livelihoods and property and to non-economic loss and damage, such as loss of human life and loss of biodiversity.

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

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

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James said countries from the Global South would seek assurances from Egypt that a $100 billion climate finance pledge from rich countries in 2009 to help low-income nations mitigate and adapt to the climate emergency would be met. .

“This is so important because it’s about trust,” James said. “If we can’t even get the adaptation and mitigation funding that’s already been promised, then that calls into question the ability to raise additional funds.”

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

Nicola Sturgeon, first minister of Scotland, which is not a member of the UN, announced at the COP26 summit in Glasgow last year a symbolic investment of £1 million ($1.15 million) in damages and losses in a bid to encourage other rich countries to follow their example. .

Why does it matter?

“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 caused by Hurricane Ian in late September as a recent example.

“Ian is the biggest storm that Florida has experienced so far. But that’s not going to be true next year, they’re going to have a bigger one next year and they’re going to have an even bigger one than this next year. So we’ve now entered the season of the effects of anthropogenic climate change causing loss and damage”.

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

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

“Given the geopolitical situation right now and the very different positions from the North and the South on loss and damage, I think it’s going to be difficult for countries to make a dramatic breakthrough,” McCully told CNBC by phone.

“The sign of a successful COP will be that there is at least an agreement on a damage and loss financing mechanism,” he said. “And I think a moderately successful COP would be that it doesn’t all collapse into the north-south difficulty, and at least have an agreement for further talks to create a mechanism.”

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