COP27: Loss and damage fund lone bright spot as agreement leaves much to be desired

“In Glasgow, we saw a phase-down of coal (being incorporated into the agreement). At COP27, we needed to see an (agreement on) equitable and just phaseout of all fossil fuels. A text that does not stop fossil fuel expansion, that does not provide progress from the already weak Glasgow Pact makes a mockery of the millions of people living with the impacts of climate change,” Zeina Khalil Hajj, head of global campaigning at 350.0rg, said.

The developing countries, mainly the small island states were taking drawing comfort from the fact that one of their main demands at this conference, a new fund to help nations hit by climate disasters, had been met.

“A mission thirty years in the making has been accomplished,” said the statement from the chairperson of the Association of Small Island States (AOSIS), a group of 39 small island and low-lying coastal developing states.

“We have literally exhausted all of our efforts here at COP27 to bring home the climate action commitments our vulnerable people desperately need. Our ministers and negotiators have endured sleepless nights and endless days in an intense series of negotiations… But after the pain comes the progress. Today, the international community has restored global faith in this critical process that is dedicated to ensuring no one is left behind,” the statement said.

But the creation of the fund is the bare minimum that has been accomplished. Developing countries hit by climate disasters are still quite a distance away from being able to access some financial resources to rebuild themselves. A number of issues crucial to the operationalisation of this fund, some of them highly contentious, have been left for another day. These include questions like who will pay into the fund, who will be able to access it, and how will it be managed. A transitional committee has been set up to look into all these issues, including the possibility of “identifying and expanding” the sources of funding.

Harjeet Singh, head of global political strategy at Climate Action Network International, said the creation of the fund was important but only the first step, and a lot of work remained to be done.

“It is a big breakthrough nonetheless. The creation of this fund has sent a warning shot to polluters that they can no longer go scot-free with their climate destruction. From now on, they will have to pay up for the damages they cause and are accountable to the people who are facing supercharged storms, devastating floods, and rising seas. Countries must now work together to ensure that the new fund can become fully operational and respond to the most vulnerable people and communities,” he said.

One of the big letdowns has been the lack of any progress on increasing the financial flows for addressing climate change. The agreement takes note of the fact that about USD 4 trillion are required every year as investments in the renewable energy sector till 2030 to reach net-zero targets. Additionally, a global transformation to a low-carbon development path requires at least USD 4-6 trillion every year. The developing countries need about USD 5.6 trillion in the pre-2030 period just to fulfill their climate action plans. And yet, the developed countries have not yet delivered on their promise to deliver even the relatively small amount of USD 100 billion every year. There is nothing in the agreement that puts pressure on the developed countries to deliver these, and more, at the earliest.

The agreement does talk about transforming international financial markets to mobilise greater investments in renewable energy and green projects, and to ensure that climate finance was easily accessible to all, particularly the small and vulnerable countries. However, much more work requires to be done on this.