Climate negotiators representing two dozen countries will hold meetings on Tuesday to iron out details of the United Nations’ “loss and damage” fund, created last year in Sharm el-Sheikh, Egypt, and expected to be presented at COP28 in Dubai in November.
The fund is mean to provide compensation for poor nations suffering the impact of climate change. The committee meeting this week has been tasked with determining where the fund will be located, how it will be managed, who will be eligible and how it will be funded.
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The committee is considering whether the fund should be hosted by an already existing institution, such as the International Monetary Fund (IMF) or the Green Climate Fund, or whether a new institution will be created.
Loss and damage funding includes money for such things as relocating or rebuilding after extreme weather, the loss of livelihoods due to ecosystem destruction and non-economic losses, such as loss of culture and tradition, or trauma.
It is different from mitigation, which is financial support that helps address the root cause of climate change, namely greenhouse gas emissions, and adaptation, which helps reduce the impacts of climate change, although the terms are often used interchangeably.
Small island developing states and the least developed countries group have been advocating for loss and damage funding for nearly three decades, and they are finally sitting at the negotiating table determining what the fund will look like.
“I think it’s real to people now because everyone is affected by climate change,” Ayesha Dinshaw, loss and damage programme officer at the Climate Justice Resilience Fund, told Al Jazeera.
“People in developed countries understand now more than ever what it feels like to lose their loved ones, places that matter to them, their homes and belongings,” she said.
$671bn needed annually by 2030
Dinshaw was asked to present the work of the Climate Justice Resilience Fund, which focuses specifically on social justice and community-determined projects in their funding, at the committee’s second workshop in July.
Funds required for loss and damage are expected to reach $671bn annually by 2030, according to calculations by the Loss and Damage Collaboration. Current funding stands at less than $500m annually.
The majority of current funding is directed through financial instruments called the Santiago Network and Global Shield, which were created at the UN climate change conferences, or COP summits, in 2020 and 2022, respectively.
The V20, a coalition of the 55 most climate-vulnerable countries, has estimated its members already spend more than 20 percent of their combined GDP on loss and damage because of climate change.
The conversations happening at the UN-level are coming alongside work by the Bridgetown Initiative, a coalition formed last year by world leaders, including the heads of the World Bank and IMF.
At a summit in Paris in June, the coalition announced a number of achievements including channeling $100bn in the IMF’s reserve currency, called “special drawing rights”, towards vulnerable nations.
Additionally, it announced there was a “good likelihood” that developed countries will contribute their promised $100bn in climate financing this year, based on a commitment made at COP14 in Copenhagen in 2009.
“We’ve seen a significant change in action,” Avinash Persaud, a development economist and climate envoy representing Barbados, told Al Jazeera. “We’ve seen for the first time people looking at questions that have been previously considered closed.”
Resistance to reparations
As the world battles record heat, extreme weather and rising sea levels, climate action is also accelerating with the tables appearing to turn in favour of vulnerable countries. Yet many fear the mobilisation of international finance is not moving fast enough.
Climate financing from developed to developing countries, which currently stands at an estimated $57bn annually, is a far cry from the $2.5 trillion for adaptation, mitigation, and loss and damage that experts calculate developing countries need annually.
The majority of climate finance is still leveraged through debt and prioritizes adaptation and mitigation efforts over funding for loss and damage. A recent UN report calculated more than 25 percent of countries in the world are either in debt distress or at risk from it.
Although China sent Prime Minister Li Qiang to the Paris summit, some of the largest carbon polluters, namely India and Russia, have been largely absent from meaningful climate action.
Additionally, most countries are resistant to a reparations framework that would encourage richer, more developed countries, which have historically contributed the most to climate change, to contribute financially to less developed countries that have historically contributed the least to climate change yet bear the major burden.
Under that framework, a vulnerable country such as Bangladesh, which contributes less than 4 percent of global carbon emissions and is one of the most vulnerable to climate change, would contribute the least to a loss and damage fund and have preferential access.
“Our position is that those who are responsible for climate change – developed countries – should provide resources to this fund,” Hafij Khan, environmental lawyer and adviser to the least developed countries group, told Al Jazeera.
“At the same time, we also agree that other parties who are in a position to do so should be encouraged to provide some resources,” he added.
When Scotland gave a breakthrough grant of $1.26m to the Climate Justice Resilience Fund ahead of last year’s COP summit, then-First Minister Nicola Sturgeon acknowledged developed countries had a “moral responsibility” to support developing ones in the face of climate change.
So far, more than a dozen countries already support some form of loss and damage funding, the largest being Germany’s pledge of 170 million euros ($184m) at COP27 last year.
When the UN Framework Convention on Climate Change was ratified in 1994, countries said developed nations had contributed the largest share of carbon emissions and agreed on the principle that countries had “common but differentiated responsibilities” in combating climate change. But diplomats vary on what that means.
As part of the Paris Agreement, which was signed at COP21 in 2015, countries agreed to remove any mention of liability and compensation from conversations about loss and damage.
The United States, for its part, has stated explicitly it is against climate reparations.
“No, under no circumstances,” US climate envoy John Kerry told the Committee on Foreign Affairs in the House of Representatives last month when asked, “Are you planning to commit America to climate reparations?”
Kerry’s senior adaptation adviser, Christina Chan, told Al Jazeera when asked whether the US would contribute to the loss and damage fund: “No funding commitments have been made at this point in the process.”
Numbers, not words
Although some negotiators place the burden on nations to contribute, others are more focused on leveraging the private sector and other mechanisms, such as taxation on the shipping industry.
The Bridgetown Initiative – named after the capital of Barbados, where the coalition was first convened by Prime Minister Mia Mottley last year – has made significant progress by uniting institutions such as the World Bank with leaders of more than 40 countries.
In addition to increasing the IMF’s special drawing rights and potentially making good on the nationally determined contributions, the Bridgetown Initiative has announced a number of other achievements.
It expects a $200bn increase in lending from development banks over the next 10 years and has also fundraised more than $40bn for the IMF’s new Resilience and Sustainability Trust.
During its Paris summit, it also announced a renegotiation of $6.3bn in debt owed by Zambia to China, a deal the Zambian president described as being “like a mission impossible”.
But can these developments be considered reparations?
“We need new taxes and levies that have a broad reach,” Persaud told Al Jazeera. “In the breadth of their reach, it should certainly be slanted to the wealthier countries.”
Yet, he added, “we are not going to get the $2.4 trillion we need through reparations”.
“We want to debate the issue of numbers and funding, not words.”