Who pays, who gains? Debate on climate disaster fund heads to Cop28

Talks in Germany continue on 'loss and damage' fund to meet costs of global warming impact

Developing nations want a generous fund to meet the costs of climate-linked disasters such as floods. AFP

A new disaster fund for global warming-related losses is still being sketched out after 10 days of climate talks in Germany, with all eyes on a potential deal at the Cop28 summit in Dubai.

Diplomats have spoken of constructive discussions in Bonn on the new fund for “loss and damage” – UN jargon for climate impacts that have already happened or can no longer be stopped.

But key questions remain unanswered, such as how money will be raised, which countries will be eligible for it, and where and by whom the fund will be administered.

The idea of a fund to pay for floods, droughts and other climate damages was agreed in principle by almost 200 countries at last year’s Cop27 summit in Egypt.

The fund has been described as the “third line of defence” after cutting back emissions to slow global warming and then trying to adapt to hotter conditions so that disasters do not occur.

A UN-appointed committee has about five months left to draw up recommendations that could win consensus at Cop28, which begins at Dubai’s Expo City on November 30.

The loss and damage talks will be one of the most closely-watched aspects of Cop28 along with a “global stocktake” that assesses progress on limiting global warming to 1.5°C.

A decision to put the fund into operation would be “a key benchmark of success at Cop28”, said Cuban diplomat Pedro Luis Pedroso Cuesta in an intervention on behalf of more than 100 developing countries in Bonn.

“We left Cop27 with a historic outcome on loss and damage. Looking ahead, we must build on this achievement by operationalising the fund and funding arrangements,” Cop28 chief executive Adnan Amin told delegates.

Who gets the money?

One dividing line in Bonn has been about eligibility.

Several diplomats from the developed world argued that the fund should be tightly drawn to help only the most endangered countries, such as island states threatened by rising sea levels.

US delegate Christina Chan said the fund “should address priority gaps” and go to “developing countries that are particularly vulnerable to the impacts of climate change”.

But countries including Brazil, Kuwait and Guinea took the floor to call for a more generous offer in which any developing nation would be eligible for funding.

Harjeet Singh, who represented the Climate Action Network during the talks, said poorer countries could decide between themselves how to prioritise the money.

“I think rich countries must trust the judgment of developing countries to sort that out and not say from a moral high ground that we will decide,” Mr Singh said.

Who will pay?

Protesters in Bonn had a clear message during the talks: “Make Polluters Pay”.

The idea of a carbon levy on flights, cars and major emitters attracted some interest from delegates, although Egypt raised concerns about overloading the already tricky talks.

Richer countries such as Japan and New Zealand spoke of leaving “no stone unturned” and seeking “expansive sources of funding” that could include development banks.

Many poorer nations would rather keep it simple with direct grants from the rich world that do not add to their debt burdens.

“We are suffering these impacts as a consequence of emissions that others have put into the atmosphere,” said Adao Soares Barbosa, an ambassador from Timor-Leste.

“As global emissions continue to increase, the cost of climate change inaction is not a cost that our people should bear.”

Guinea said current funding was “too little, too late” while Egypt said it did not address damage to livelihoods such as fishing vessels destroyed in floods.

Another thing developing countries insist on is that the money should be “new and additional” rather than re-badged from other climate or development funds.

Existing climate finance “to a very, very large extent is not new and additional,” said Mattias Soderberg, a member of the Danish Council for Development Policy and delegate for a church aid group.

“If this is not considered when we make a new fund to address loss and damage, it will clearly happen again.”

What can the money be spent on?

Again the rich world would like a fairly narrow focus on “slow-onset” impacts, such as rising sea levels and degrading farmland, rather than on one-off disasters that already trigger a humanitarian response.

“There is an existing broad landscape of excellent instruments and institutions,” said a delegate from Germany, who conceded that there were also “a lot of gaps”.

Developed nations have also offered to focus on non-economic losses such as cultural heritage threatened by disasters.

But vulnerable nations also want the funds to be used for immediate disaster relief, ideally with money arriving within 24 hours of impact, as well as for longer-term reconstruction.

Sudan called for the money to address the needs of displaced people, with several delegates saying it should show flexibility. Kuwait called for an “easy-access fund”.

“It’s not always easy to document scientifically that this house was flooded by a climate-associated flood, or just a flood. I’m a little bit worried if we create a fund where the money will be limited and delayed because of some scientific rules,” Mr Soderberg said.

Who’s in charge?

There has also been much back and forth on how the fund should be organised.

A group of developing countries have called for it to sit within the UN’s climate office and be accountable to the annual Cop meetings.

An alternative view supported by the US is that a new body is unnecessary and that the fund could be housed within an existing institution.

Egypt expressed concern that such a body might “not really respond” to the wishes of a Cop summit – while Switzerland said UN talks would still have a “critical signalling function”.

A decision on who should host what is known as the Santiago Network on loss and damage also took up negotiating time in Bonn.

Applications have come in from the Caribbean Development Bank and from two UN bodies to host a network that will provide technical assistance on loss and damage.

The host “must be defined so that its operations are launched”, Mr Amin said.