Fund to compensate developing nations for climate change is unfinished business at COP28

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Developing nations had long sought to address the problem, and finally broke through with an agreement at last year’s annual United Nations climate talks, known as COP27, to create what’s known as a loss and damage fund. But many details were left unresolved, and dozens of contentious meetings were held in the year since to negotiate things like who would contribute to it, how large it would be, who would administer it, and more.

A draft agreement was finally reached earlier this month, just a few weeks before this year’s COP28 talks open Nov. 30 in Dubai. The agreement will be up for final approval at the climate talks, and dissatisfaction from both wealthy and developing nations could block approval or require additional negotiations.

“For us, it’s a matter of justice,” said New Delhi-based Harjeet Singh, head of global political strategy at Climate Action Network International, a group that spent the past decade lobbying to compensate those nations. “Poor communities in developing countries are losing their farms, homes, and incomes due to a crisis caused by developed countries and corporations.”

A recent report by the United Nations estimates that up to $387 billion will be needed annually if developing countries are to adapt to climate-driven changes. Even if details of a loss and damage fund are worked out, some are skeptical that it will raise anything close to that amount. A Green Climate Fund that was first proposed at the 2009 climate talks in Copenhagen, and began raising money in 2014, hasn’t come close to its goal of $100 billion annually.

Chandra Bhushan, head of New Delhi-based climate think tank International Forum for Environment, Sustainability and Technology, said he doesn’t expect countries to contribute more than a few billion dollars to the loss and damage fund.

“Developing countries should be ready to manage these events independently, as seen with COVID-19. They can’t always rely on others,” Bhushan said.

The draft agreement calls for the World Bank to temporarily host the fund for the next four years. It lays out basic goals for the fund, including its planned launch in 2024, and specifies how it will be administered and who will oversee it, with a requirement that developing countries get a seat on the board.

The agreement asks developed countries to contribute to the fund but says other countries and private parties can, too. It says allocations will prioritize those most vulnerable to climate change, but any climate-affected community or country is eligible.

Developing nations were disappointed that the agreement didn’t specify a scale for the fund, and wasn’t more specific about who must contribute.

They also wanted a new and independent entity to host the fund, accepting the World Bank only reluctantly. They see the organization, whose president is typically appointed by the United States, as part of a global finance system that has often saddled them with crushing loans that make it more difficult to cope with the costs of climate change. They have long argued that there is a need for a larger, better coordinated pool of money that’s available without deepening debt crises.

“This arrangement won’t provide the new fund with true independence, will obstruct direct access to vulnerable communities, and will lack full accountability to governments and those most affected by climate change,” said RR Rashmi, a former climate negotiator with the Indian government who is now a distinguished fellow at New Delhi-based think-tank The Energy Resources Institute.