COP27 all set to deliver on loss and damage fund, but little else till now as talks continue

A proposal to urge all countries to phase-down the use of fossil fuels, originally raised by India, is also expected to make a last-minute comeback. Several developing countries, including China and oil-producing nations like Saudi Arabia, have been opposing this. The developed countries, and the small island states, also want a more explicit acknowledgement of the need to restrict the temperature rise to within 1.5 degree Celsius, and a commitment to let the global emissions of greenhouse gases peak no later than 2025.

As a result, the final rounds of negotiations, later on Saturday night and possibly on Sunday morning, are unlikely to be very smooth.

But more than anything else, Sharm el-Sheikh conference would be remembered for the progress made on the loss and damage finance. A long pending demand of the developing countries, loss and damage had remained on the periphery of climate negotiations for several years. This year, it was not just put on the main agenda for the first time, but the conference is also all set to deliver on the creation of a special fund to help developing countries hit by climate disasters.

“The draft decision on loss and damage finance offers hope to the vulnerable people that they will get help to recover from climate disasters and rebuild their lives,” said Harjeet Singh, head of Global political strategy for Climate Action Network International who has been one of the most active campaigners for loss and damage.

The fund, though important, is only small start. Developing countries hit by climate disasters are still quite a distance away from being able to access some financial resources to rebuild themselves. In fact, there are lots of elements to this that still remain undecided and would be fought hard over in the next meetings. Right now, no money has been pledged for the fund. It is also not clear which countries would be eligible to access the fund. The current draft text says it is meant for developing countries that are “particularly vulnerable”, which is considered a slight progression over “most vulnerable” used in a previous draft that would have excluded many developing countries. The exact definitions of these terms are potential points of disagreements which have been left to be resolved at a later stage.

There are more fights that have been left for the other day. One of them is the tussle over the donor base. EU and the United States had been insistent that large economies, mainly China and possibly India, as well, must also contribute to this fund. Both these countries reject this demand, citing the obligation of the developed countries only in providing climate finance. This question has been put off for the time being. As of now, a transition committee is being set up to look into the operationalization of this fund. One of the mandates of this committee is to identify and expand the donor base.

The draft texts are extremely weak on the finance elements with no new push to the developed countries to meet their financial obligations. It notes that about USD 4 trillion every year as investments in the renewable energy sector till 2030 to reach net-zero targets. Additionally, a global transformation to low-carbon development path would require at least USD 4-6 trillion every year. The developing countries would need about USD 5.6 trillion in the pre-2030 period just to fulfill their NDCs. And yet, there is nothing more than an expression of “serious concern” that the developed nations have so far not delivered on their promise to mobilise a relatively small amount of USD 100 billion every year. The draft text just “urges” the developed nations to meet this goal, but doesn’t even mention the timeline.