The COP27summit of nearly 200 countries agreed on Sunday to set up a“loss and damage” fund to support poorer countries being ravagedby climate impacts, overcoming decades of resistance fromwealthy nations whose historic emissions have fuelled climatechange.
Pakistan’s climate minister Sherry Rehman, who was part ofthe campaign by developing nations to win the commitment at thetwo-week U.N. summit in Egypt, hailed the landmark decision as“downpayment on climate justice”.
But the text of the agreement leaves open a number ofcrucial details to be worked out next year and beyond, includingwho would contribute to the fund and who would benefit.
Here’s what you need to know about the agreement:
In U.N. climate talks, “loss and damage” refers to costsbeing incurred from climate-fuelled weather extremes or impacts,like rising sea levels.
Climate funding so far has focused mostly on cutting carbondioxide emissions in an effort to curb global warming, whileabout a third of it has gone toward projects to help communitiesadapt to future impacts.
Loss and damage funding is different, specifically coveringthe cost of damage that countries cannot avoid or adapt to.
But there is no agreement yet over what should count as“loss and damage” caused by climate change - which could includedamaged infrastructure and property, as well as harder-to-valuenatural ecosystems or cultural assets.
A report by 55 vulnerable countries estimated their combinedclimate-linked losses over the last two decades totalled $525billion, or 20% of their collective GDP. Some research suggeststhat by 2030 such losses could reach $580 billion per year.
Vulnerable countries and campaigners in the past argued thatrich countries that caused the bulk of climate change with theirhistorical greenhouse gas emissions should pay.
The United States and European Union had resisted theargument, fearing spiralling liabilities, but changed theirposition during the COP27 summit. The EU has argued that China -the world’s second-biggest economy, but classified by the U.N. as a developing country - should also pay into it.
A few governments have made relatively small but symbolicfunding commitments for loss and damage: Denmark, Belgium,Germany and Scotland, plus the EU. China has not committed anypayment.
Some existing U.N. and development bank funding does helpstates facing loss and damage, though it is not officiallyearmarked for that goal.
Also remaining to be worked out are the details on whichcountries or disasters qualify for compensation.
The fund agreed at the U.N. summit in Egypt will be aimed athelping developing countries that are “particularly vulnerable”to climate change, language wanted by wealthy nations to ensurethe money goes to the most urgent cases while also limiting thepool of potential recipients.
The deal lays out a roadmap for future decision-making, withrecommendations to be made at next year’s U.N. climate summitfor decisions including who would oversee the fund, how themoney would be dispersed and to whom.
The agreement calls for the funds to come from a variety ofexisting sources, including financial institutions, rather thanrelying on rich nations to pay in.
Some countries have suggested other existing funds couldalso be a source of cash, although some experts say issues likelong delays make those funds unsuitable for addressing loss anddamage.
Other ideas include U.N. Secretary-General AntonioGuterres’s call for a windfall profit tax on fossil fuelcompanies to raise funding.
