DUBAI: The 28th Conference of Parties (COP28) had an auspicious start on Thursday achieving a major milestone — an agreement to operationalise the Loss and Damage (L&D) Fund, which will be used to support developing countries, especially the vulnerable, to tide over the adverse effects of climate change. On Day 1, a cumulative $420 million was pledged by different countries.
The UAE, which is also one of the biggest oil and gas-producing regions in the world, pledged $100 million to set the ball rolling. COP28 president Sultan Al Jaber, who is the UAE’s Special Envoy for Climate Change, was in the eye of the storm days ahead of COP facing criticism of conflict of interest after leaked documents suggested the global climate event was being used by the UAE to strike business deals.
Al Jaber vehemently refuted it. Now, this agreement will salvage some credibility. At a press briefing, Al Jabar said the threshold to establish and operationalise the Loss and Damage Fund was $200 million, but an upward of $420 million was contributed by various countries.
World Bank to be Fund’s interim host
The fund was first decided during COP27, held in Sharm El Sheikh, Egypt, became operational on Thursday following the agreement reached by parties during five transitional committee meetings. The 5th transitional meeting hosted earlier this month in Abu Dhabi was added by the COP28 Presidency following the impasse reached at the 4th meeting.
Other countries making notable commitments included Germany, which committed $100 million. The UK committed £40 million for the fund and £20 million for other arrangements, Japan $10 million and the US $17.5 million.
An elated Al Jaber said the speed at which the world came together for this Fund’s operationalisation within a year since parties agreed to it in Sharm El Sheikh is unprecedented. “This fund will support billions of people, lives and livelihoods that are particularly vulnerable to the effects of climate change,” he said.
Concerns remain
As of now, the World Bank will be the interim host of the fund for a period of four years. Although members of the transitional committee called for the fund to be operated by an UN entity in accordance with the principles of the UNFCCC and the Paris Agreement, there was no breakthrough in that regard.
It has been agreed that the fund should have at least $100 billion a year in loss and damaging funding by 2030, which is considered the the minimum it will require. The developing countries demand close to $400 billion per annum.
As per a study titled “Loss and Damage Today: The Uneven Effects of Climate Change on Global GDP & Capital” released on Thursday by University of Delaware, L&D from climate change accounted for about $1.5 trillion in 2022. Countries in the Global South have lost an average of 8.3% of GDP due to the impacts of climate change.
More needs to be done
Ambassador Pa’olelei Luteru, AOSIS Chair said: “We cannot rest until this fund is adequately financed and starts to actually alleviate the burden of vulnerable communities. Success starts when the international community can properly support the victims of this climate crisis, with efficient, direct access to the finance they need.”
The developed countries need to pledge new and additional funds to the fund. This support should be in the form of grants rather than loans that risk further indebting these economies, said Ulka Kelkar, executive director (Climate), WRI India.
Mohamed Adow, Founder and Director of Powershift Africa, said although it has been agreed to operationalise the fund, there are no hard deadlines, no targets and countries are not obligated to pay into it.
Harjeet Singh, head of global political strategy at Climate Action Network International, said rich countries have pushed for the World Bank to host this fund under the guise of ensuring a speedy response. The absence of a defined replenishment cycle raises serious questions about its long-term sustainability. “Therefore, a robust system, particularly integrated with the Global Stocktake process and the new climate finance goal, is needed to ensure that COP28 results are meaningful.”
Pledges so far
UAE: $100 million Germany: $100 million
UK: £40 million to the Fund, £20 million for other funding arrangements for loss and damage
US: $17.5 million Japan: $10 million
EU: €225 million(including Germany)