COP27 approves the creation of a historic Loss and Damage fund
For the first time in history, the countries gathered at the world climate summit have agreed on a fund dedicated to paying for loss and damage caused by extreme weather in the planet’s vulnerable regions.
The COP27 plenary approved in the early hours of Sunday morning the decision to finance the “loss and damage” of climate change.
Following two months of a working group led by Chile’s Environment Minister Maisa Rojas and her German counterpart, Jennifer Morgan, the Egyptian Presidency announced that the parties have agreed to create a special Loss and Damage fund. This was a challenging issue that met with resistance from many countries.
“After some intense weeks of work, this is an emotional outcome. The decision has been made to create a special fund to address loss and damage. This was a historic request from developing countries, and it is also historic that it has been agreed upon. This is the first time that something of this magnitude has been approved,” Minister Rojas stated from Egypt.
Loss and Damage has been for years the most complex and uncomfortable issue to address, as it faces up to the impact generated by developed states: extreme events such as hurricanes and heat waves, as well as gradual onset events like sea level rise and desertification.
On Saturday afternoon, the Coalition for Climate Change Ambition, made up of Chile and Germany, warned that keeping the increase in global average temperature below 1.5°C “will be essential to limiting future loss and damage”, and called for more ambitious goals.
The following stand out among the key aspects of the decision taken:
- It recognizes the urgent and immediate need for adequate financial resources to assist developing countries that are particularly vulnerable to the adverse effects of climate change, in response to economic and non-economic loss and damage associated with those effects. This includes rehabilitation, recovery and reconstruction.
- It establishes new financing agreements to assist developing countries that are particularly vulnerable to the effects of climate change in loss and damage. This includes providing and mobilizing new and additional resources, including outside of the Convention and the Paris Agreement.
- In the context of establishing the new financing agreements referred to above, it creates a specific fund to respond to loss and damage.
- It establishes a Transition Committee for the implementation and operation of the new financing to respond to loss and damage.
Despite the initial reluctance of some countries, and following intense negotiations, the proposal that was drawn up in the working group was adopted in plenary, with some amendments. Details of how the fund will operate – for example, its governance system and identification of funding sources – must be agreed on following the recommendations of the Transition Committee within a year, at the next COP28 climate summit to be held in the United Arab Emirates in November 2023.
Source: Environment Ministry