Historic L and D Funds Operationalized at COP28

The COP28 Summit holding at Expo City, Dubai, started on a strong footing with the agreement and operationalization of the historic Loss and Damage Fund. This Fund which was first agreed upon last year at COP27, held in Sharm El Sheikh, Egypt, was one of the key outcomes of the summit and is aimed at assisting developing countries that are particularly vulnerable to the adverse effects of climate change.

The host country, the UAE, taking the lead, announced that it will commit $100mn to the Fund. Making the announcement, the COP28 President, Dr. Al Jaber, called on nations to follow the UAE’s example to immediately commit resources to the Fund.

Germany and Italy followed suit with notable commitments of $100mn each, and the UK with $50mn. The EU made a $145mn commitment on behalf of its 27 member bloc. Other countries include the US and Japan with commitments of $17mn and $10mn respectively. Over $500mn has been pledged so far, with negotiators hoping that more pledges will be made before the end of the summit.

The history of the climate change Loss and Damage Fund negotiations dates back more than thirty years. Over the years, developed countries have opposed the setting up of the fund, while developing countries have accused developed countries of being selfish and insincere in the fight against climate change. This has led to bad blood between both blocks. A relative breakthrough was made in 2015 at COP21, held in France, with the Paris Agreement recognizing Loss and damage as the third pillar of climate action, alongside mitigation and adaptation.

The Fund was eventually set up at COP27 in Egypt last year, but since then, it has been swimming in troubled waters, with “Loss and Damage” considered by many as the most controversial words in climate finance. Long and tough negotiations on issues such as who contributes, how much, who is eligible to receive funding, and who manages the fund had slowed progress, with developing countries threatening to walk out on talks earlier this year, as the US and others pushed for the World Bank to host the fund, instead of countries setting up an independent facility. All countries eventually agreed that the World Bank will host the fund, but its role will be regularly reviewed over the next five years.

Principally, emissions from developed countries led to the climate crisis, with developing countries especially in Africa disproportionately bearing the burden of climate impacts. Studies estimate the loss and damage in developing countries to be greater than $400bn annually, and this figure is expected to rise.

The operationalization of the Loss and Damage Fund is a major milestone that will redress the long-term imbalance of the climate negotiations, and ensure that the international climate architecture works for vulnerable countries while giving them access to funds to meet their needs, scale up, and address climate-induced loss and damage. With this task achieved, parties at COP28 will now concentrate on achieving its principal mandate of delivering the first Global Stocktake-a comprehensive evaluation of progress against climate goals.