This next weekend, representatives from various governments will gather together in a last-ditch effort to bridge the enormous divide that exists between wealthy and developing nations on the best way to distribute financial aid to vulnerable people impacted by climate change.
The discussions regarding finances for “loss and damage,” which refers to the rescue and rehabilitation of countries and communities that are experiencing the effects of extreme weather and climate change, began in March but broke down in rancor two weeks ago. The term “loss & damage” refers to rescue and rehabilitation of countries and communities that are experiencing the impacts of harsh weather.
Countries have reassembled in Abu Dhabi for a last conference of two days, which will come to a close on Saturday night, in an effort to find solutions to the unresolved issues in advance of the United Nations Climate Change Conference (COP28), which will begin in the United Arab Emirates at the end of this month.
As activists believe that if there is not widespread consensus before to the summit, the plans may become mired down in the complex Cop negotiations, it is considered as important to forge a compromise this weekend in order to make progress on loss and damage at COP28.
“The meeting is a make-or-break moment that will determine success or failure of new loss and damage fund,” said Harjeet Singh, the head of global political strategy at Climate Action Network International (CAN International). We have to close the trust gap, put the fund into operation, and give the essential support to those people who have the greatest need for it. Because the lives and livelihoods of millions of people are on the line, we simply cannot afford to fail.
But there is still a divide between developed countries, which want cash contributions to be voluntary and to come from large emerging economies such as China and Gulf petrostates, as well as traditional donors such as the United States and Europe, and developing countries, which are concerned about how the fund will be governed and how they will be able to access the rescue funds they so desperately require for climate change.
A historic first step that poor countries had been looking for for more than a decade, the establishment of a loss & damage fund was unanimously approved by all of the world’s governments during the 27th Conference of the Parties, which took place in Egypt last year. Poor countries have contributed the least to the climate change, with tiny carbon footprints compared to the affluent world; nonetheless, they face the brunt of extreme weather around the world due to geography, the fundamental status of their infrastructure, and a lack of resources. This is because poor countries have less resources available to them.
The floods that struck Pakistan a little more than a year ago and the drought that has brought devastating hunger to the horn of Africa are two examples of extreme weather that has been caused and aggravated by the climate change. In each of these instances, loss and damage payments might have benefited vulnerable people who were in desperate need. As average temperature of the planet continues to rise, scientists predict that natural disasters like this will become much more common, and it will take hundreds of billions of dollars each year to repair the damage they cause.
The primary points of disagreement are the administration of the fund, including who should contribute to it, who should be able to withdraw money from it, and who should be permitted access to it.
Some wealthy nations, particularly the United States, have advocated for the fund to be hosted by the World Bank on the grounds that it offers a pre-existing structure that makes it possible for funds to be amassed and distributed in the quickest manner possible. They argue that the process of starting a new fund from scratch would be more time consuming, complicated, and expensive.
But a significant number of activists refute this, under the assumption that wealthy nations support the World Bank because it grants them a greater degree of power than they would otherwise have as huge donors. They point to the overheads of the World Bank, saying that at least one similar fund was paid 24% of its funds as a “hosting fee” to pay for the bank’s bureaucracy, which includes its staff pension plans.
It is time-consuming and challenging to obtain financing from the World Bank, and the majority of the money that is made available is in the form of loans rather than grants. Many people have a long-standing grievance against the Bank for its failure to focus on climate change finance, which led to the removal of the president that Trump had selected, David Malpass, earlier this year. Many of these people believe that the Bank should have prioritized this issue.
“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,” stated Brandon Wu, head of policy and campaigns at the charity ActionAid. Instead of striving in good faith to build a fund that would be the most effective possible alternative for aiding individuals in vulnerable situations, developed countries are negotiating with their own narrow interests in mind.
The United Nations and a number of other parties feel that the issue of where to house the fund will be resolved, and The Guardian has learned that the United States does not consider it to be a “red line” in negotiations to have the World Bank serve as the fund’s host institution. “This is not the main issue,” observed one representative from a poor country that was actively participating in the discussions.
The issue of who should have access to the fund could also be close to being resolved, since countries have come to the consensus that the most vulnerable people in poor countries should be given priority. When UN Framework Convention on the Climate Change was adopted in 1992, it was the parent treaty to the climate accord that was signed in Paris in 2015. Some governments argue that the fund should be open to all countries who were classified as developing in 1992.
Despite their high per capita incomes and large carbon footprints, nations like Saudi Arabia and the United Arab Emirates (UAE), which will host COP this year, may become eligible as a result of this. On the other hand, it is also possible that a definition of “most vulnerable” would concentrate mostly on the countries that are the least developed.
The question of where the money will come from to compensate for the losses is probably going to cause the most contention. Campaigners want wealthy nations to shoulder the cost of their “historic responsibility” for emissions of greenhouse gases. Because of this, the United States would be responsible for the largest portion of the spending, which presents a challenge for the White House given the likelihood that the Republican-controlled Congress of the United States will resist efforts to expand climate finance.
The United States of America and other wealthy nations would like to see an expansion of the potential sources of funding, which may include the money made from the sale of carbon offsets as well as contributions from the private sector. A frequent flyer surcharge, which would target well-off consumers in both wealthy and impoverished countries, as well as a charge on shipping, which is a significant source of emissions, are examples of the types of funding mechanisms that have been suggested by groupings of developing countries. Former PM of UK Gordon Brown has proposed a windfall tax on the profits made from fossil fuels.
Because the amounts that are required are expected to reach the over hundreds of billions of dollars range, it is likely that as many of these sources as possible will be required, in some way. The most important source of contention, however, is the status of nations like China, India, South Korea, and other large growing economies in relation to petrostates like Saudi Arabia, Qatar, Russia, and the United Arab Emirates (UAE), which is the host nation. All of these nations were considered to be developing in 1992, and as a result, they were exempt from the duty to donate money to less developed nations.
However, all of these nations are now either big polluters themselves – the emissions from China, India, and Russia are now so large that they are getting close to the cumulative emissions of the countries in Europe – or they have benefited enormously from the sale of fossil fuels. All of them have economies that are far larger than those of the vulnerable countries that will receive aid from the loss and damage fund.
The Deputy Secretary General of the United Nations, Amina Mohammed, stated that “it is a whole new era, not just for climate, but for any funding today it is about broadening the base.” In this scenario, there will be conflicts among those who believe that there is a historic bias on it, and as a result, certain parties will be required to pay the cost of it. And some people believe that we don’t need to broaden the base or the resources because we’ve moved on from that point already and are moving forward into the future.
The campaigners made it plain that they would fight any attempts to create distinctions between the situation of giant economies like China and that of the smaller and more vulnerable nations. This will make it difficult to find a solution to this basic issue, which will make it difficult to resolve. A senior activist at the Centre for International Environmental Law named Lien Vandamme stated that China and the G77 group of developing countries will stand united, and that wealthy countries like the United States, the United Kingdom, and the European Union would be required to front the funds. “[They] continue to deny that it is their responsibility to compensate for the losses and damages that have been caused as a result of their inaction about climate change.
“This is unforgivable, and the only way for the fifth summit to accomplish what the fourth one was unable to do is for wealthy nations to make a significant shift in their attitude to these negotiations. The communities whose rights are at risk and who are entitled to remedy will not disappear even if there is a failure to deliver.