Sharm el-Sheikh, Egypt: During a late night intervention Thursday, the European Union — led by the executive vice president of the European Green Deal, European Commission, Frans Timmermans — agreed to set up a loss and damage climate finance facility that serves “most vulnerable countries” only, and draws on a wide donor base. But while the EU announcement is being perceived as a breakthrough, several developing countries that laboured to bring the issue on the COP27 climate summit agenda think the proposal is far from desirable.
The G77 and China group, comprising over 130 countries of varying sizes, have demanded a loss and damage finance facility that will provide funds to all developing countries facing devastation in the face of climate change. After negotiations led to no concrete outcomes, the COP27 Presidency handed over discussions on loss and damage funds to heads of delegations for ministerial consultations.
On Thursday, at an informal stocktake, The EU proposed to set up a fund under the Conference of Parties to the Paris Agreement on climate change, which would serve “the most vulnerable countries” — an undefined category under the United Nations Framework Convention on Climate Change — and be “one part of a mosaic of solutions, including looking into debt and reforming the Multilateral Development Banks”, Timmermans said.
The proposal also seeks to link loss and damage financing to efforts towards mitigating climate change, with Timmermans saying “if we don’t scale up ambition or mitigation immediately, we will pass tipping points and no amount of loss and damage (funds) will be enough”.
Western countries, including the U.S., have been pushing developing countries to do more to reduce or remove greenhouse gas emissions to limit global warming to 1.5 degrees above pre-industrial levels. The 2015 Paris Agreement states that countries should limit global warming to “well below” 2 degrees, and preferably 1.5 degrees, above pre-industrial levels, to avoid exacerbating the worsening effects of climate change.
Though the proposal finds common ground with the G77 on the urgent need to set up a fund for loss and damage, “everything that follows is detrimental to developing countries”, a negotiator from that group of countries said, declining to be named.
Harjeet Singh, head of global political strategy at the Climate Action Network, said the E.U.’s proposal was welcome, but its focus on the vague category of vulnerable countries, as well as its insistence on a wider donor base — which developing countries argue could undermine the rules of the convention — are “unacceptable”.
“Narrowing down the list of countries at a time when many large developing countries are also facing the brunt of the climate crisis is unacceptable. Most developing countries also want global warming to be limited to 1.5 degrees, and want to transition to low carbon pathways of development. But that has to be supported with finance,” Singh told ThePrint.
He added: “Europe’s proposal doesn’t talk about meeting finance targets that they have failed to so far meet, or how it will fund those low carbon development pathways.”
Whether a loss and damage facility is established will be considered the litmus test for COP27’s success, experts have said.
Also read: COP27: Don’t demand climate ambition if you can’t provide for it, India to developed nations
‘Loss & damage finance has to be guided by historical emissions’
So far, the G77 and China are united in opposing the EU’s proposition, according to observers.
“The EU’s offer lacks any form of moral integrity to try to use the plight of developing countries suffering from loss and damage as leverage,” said a negotiator from an African country.
The negotiator added: “The proposal is devoid of any predictable, new and additional finance, and there’s no commitment on their part to provide any resource but rather to make developing countries contribute together, with other sources that still need to be identified.”
Timmermans had earlier said he expected China to contribute to loss and damage finance because it is “one of the biggest economies on the planet”. Developed countries are trying to expand the donor base for climate finance to include “major economies” from developing countries, even though the United Nations Framework Convention on Climate Change (UNFCCC), which forms the basis of climate negotiations, doesn’t recognise that categorisation.
“If they want China to contribute, ultimately a country like India will be included too, even though the chasm between India and China is wide,” said Avantika Goswami, programme manager at the Centre for Science and Environment.
She added: “All of the mechanisms they have proposed wouldn’t be governed by the principles of the convention, which means they won’t be held to account by any binding framework. There is a very clear demand for a finance facility within the convention, and the ‘mosaic of solutions’ moves away from that singular demand.”
An Indian government official said India would not agree to a proposal to widen the donor base, because it wasn’t fair to ask.
“We don’t want to be locked into a situation that’s not fair. Finance for loss and damage has to be guided by historical emissions and per capita emissions. The EU’s idea of ‘most vulnerable’ countries is open to interpretation, and left open ended” said the official.
The U.S. is the largest historical emitter, accounting for nearly a quarter of all emissions since pre-industrial times. The E.U. is the second-largest historical emitter, with 22 per cent of emissions.
Another point of resistance to Timmermans’ proposal stems from the fact that developed countries want to enhance climate ambition to limit global warming to no more than 1.5 degrees, while also resisting the principle of equity in approaching the mitigation target. In other words, they do not wish to consider their own historical emissions and advantages when proposing higher climate ambitions for countries with fewer resources, negotiators from developing countries have said.
According to sources, the EU views loss and damage and climate mitigation as “two sides of the same coin”, and believe any assistance on loss and damage must be accompanied by “dramatically cutting emissions to avoid more dangerous climate change”.
Most of the world’s carbon budget has been usurped by developed countries to advance their economies, scientific data shows. Limiting global warming to 1.5 degrees shrinks the carbon budget further, compared to “well below” 2 degrees of warming, as proposed under the Paris Agreement, putting pressure on developing countries to adopt a low carbon transition, even as developed countries fail to deliver on their promises of delivering adequate finance.
According to Goswami, linking loss and damage with mitigation, as the EU and other developed countries are pushing to do, also makes for a tenuous link.
“As the G77 has pointed out, you can be carbon neutral and still be impacted by the effects of climate change,” she said, adding, “If you’re a vulnerable country facing rising sea levels, how can you mitigate your way out of that reality? It’s just not possible.”
Countries are still trying to come up with an agreement on loss and damage finance as talks spilled over beyond Friday, the COP27’s scheduled concluding day.
(Edited by Poulomi Banerjee)
Also read: Why definition of climate finance remains a major bone of contention at COP27 talks