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In a historic first, rich countries will pay for losses and damages caused by climate change

Loss and damages fund has long been a demand of the developing world, which is facing the brunt of climate change. At COP27, talks over the fund nearly broke down late Saturday.

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Sharm el-Sheikh, Egypt: After a night of high drama and protracted negotiations, the COP27 made history by establishing a fund for losses and damages arising from climate change — a demand developing countries facing the devastating impacts of global warming have made for decades, and that has been consistently blocked by rich countries until now. 

During the closing plenary, which began around 4 am Sunday morning, applause broke out as COP27 President Sameh Shoukry announced that the loss and damage fund would serve the United Nations Framework Convention on Climate Change. Talks had been extended by nearly two days after negotiations on contentious topics —including the fund — remained deadlocked.

For hours before the announcement, the fund’s establishment stood on shaky ground as negotiations nearly broke down during consultations with Shoukry late Saturday night. 

Agreement to establish the fund is seen as a progressive step towards climate justice, recognising that the most vulnerable, facing the irreversible effects of climate change, did little to contribute to it. Work on the fund’s operationalisation, and funding arrangements are to be worked out in the years to come. 

“The new loss and damage fund is a testament to the perseverance and tenacity of climate-vulnerable countries and civil society groups. A sharp new message from COP27 is to reform multilateral development banks to provide more climate finance without forcing developing countries deeper into debt,” Ulka Kelkar, director of the climate programme at World Resources Institute India, said in a statement. 

Harjeet Singh, head of Climate Action Network’s global political strategy and a champion of the agenda on loss and damage, said in a statement: “With the creation of a new Loss and Damage Fund, COP27 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”.

Developed country groups, including the EU, US, UK, and Australia, dragged their feet on establishing the fund and sought to quash the principle of common but differentiated responsibilities by proposing the donor base be extended to include developing countries themselves. This proposal was overturned by developing country groups in intense negotiations that extended through Saturday night, Kunal Satyarthi, joint secretary at the National Disaster Management Authority who was leading loss and damage negotiations for India, told ThePrint.  

The EU had even threatened to walk away from talks, saying they’d rather have “no decision than a bad decision.”

At the COP’s conclusion, the EU’s Frans Timmermans said: “We will be holding ourselves and everyone here accountable under the Paris Agreement. Too many parties are not ready to make more progress today in the fight against the climate crisis”. 

Though the establishment of a loss and damage funding facility was a victory, Like Minded Developing Countries — a group that includes India  — expressed concern that there were efforts through the negotiations to dilute principles of equity that form the bedrock of the UN climate change convention. 

“In every negotiating room, equity has been questioned and efforts were made to delete the principle of common but differentiated responsibilities,” said LMDC spokesperson Diego Pacheco. 

Some countries have said they weren’t consulted before clauses were added to the text. 


Also Read: India’s fossil fuel imports, bills to double over next two decades, reveals new IEA report


No plan to phase down fossil fuels

The Egyptian Presidency released the Sharm el-Sheikh Implementation Plan — a legal, political document summarising key negotiations — to mark the conclusion of talks. 

It’s important to note that the plan, which is aimed at implementing climate action, excludes any mention of fossil fuels and repeats last year’s resolution to phase down coal. 

At the COP26 in Glasgow, countries agreed to phase down unabated coal power and phase out inefficient fossil fuel subsidies. 

Last week, India had proposed inserting a clause to phase down all fossil fuels — a position that seemed to have gained popularity from developed countries but ultimately didn’t make it into the final text, reportedly because petrostates intervened

“It is disappointing that COP27 did not build on the COP26 statement to deliver a stronger message on phasing out fossil fuels,” said Shruti Sharma, senior policy advisor, International Institute for Sustainable Development, adding, “The hope at COP27, through India’s proposal, was to include a phaseout of all fossil fuels, including coal oil and gas. Irrespective of the intention of the Indian proposal, we know that drastic emissions cuts are needed now to get on track with Paris Agreement goals and keep the 1.5°C temperature limit within reach.”

Developed countries expressed their disappointment that the plan didn’t include stronger calls to action to mitigate climate change and reduce emissions. 

“We joined with many parties and proposed a number of measures that would have contributed to emissions peaking before 2025 that science tells us is necessary.  Not in this text. Clear path to phase down coal, not in this text.  A clear commitment to phase out all fossil fuels, not in this text,” said the UK’s Alok Sharma during the closing plenary. 

Through the negotiations, developed countries called for stronger action to limit global warming to no more than 1.5 degrees, but this proved to be unacceptable to poorer countries because of the lack of equity in the proposal. 

The text does, however, recognise that the “impacts of climate change will be much lower at the temperature increase of 1.5 °C compared with 2 °C.”

It also includes India’s other suggestion to transition to sustainable lifestyles and recognises that scaling up renewable energy will cost at least $4 trillion a year, while developing countries need at least $5.8 trillion to achieve their climate goals.

What’s significant is that the document calls on multilateral development banks to scale up climate finance, and to reform “bank practices and priorities, align and scale up funding, ensure simplified access and mobilize climate finance from various sources.”

A tumultuous negotiation

The pressure to conclude talks ran high Saturday night as delegations from various countries had either left Sharm el-Sheikh, or were scheduled to leave shortly after. 

Tensions rose at around 10 pm Saturday night, when the US, EU, Switzerland, and New Zealand appeared to take a pause on their agreement to a loss and damage fund, stalling talks.

According the Earth Negotiations Bulletin, countries continued to spar through the night and “seemed comfortable with re-inserting text or calling for major deletions that would cross other parties’ red lines”.

The closing plenary was first scheduled for 6 pm on Saturday evening, before being pushed to the wee hours of Sunday.

(Edited by Uttara Ramaswamy)


Also Read: After hours of negotiations, developed countries agree to pay for losses and damages at COP27 


 

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