L&D finance must be grant-based so that countries are not further indebted by a crisis they contributed little to, say experts
Despite the push for setting up a loss and damage financing facility, the Glasgow Dialogue which commenced in Bonn has been unproductive and lacks a promising direction.
The Group of 77 and China (G77+China) negotiating bloc, which represents more than 80 per cent of the world’s population, had united in their demand for a loss and damage finance facility (LDFF) At the 26th Conference of Parties (CoP 26) to the United Nations Framework Convention on Climate Change (UNFCCC) at Glasgow last year.
The facility would disburse funding to rebuild the lives of communities facing the worst impacts of the climate crisis today. The demand was pushed back by developed countries such as the United States and Switzerland. The facility was watered down to a compromise: To have a “dialogue” on future possible institutional arrangements to address loss and damage (L&D).
The Glasgow Dialogue commenced at the United Nations’ mid-year climate change conference (SB 56) in Bonn, Germany this month and will end in June 2024.
L&D refers to impacts that communities are facing due to the climate crisis today through displacement or destruction of their livelihoods — impacts that even climate adaptation cannot address. And financing for this can be seen as climate reparations, paid by historical emitters of carbon dioxide (CO2) emissions, in accordance with the ‘polluter pays’ principle.
Yet, language around compensation and reparations has been taboo in international climate negotiations. It was dropped from L&D discussions during the Doha Climate Change Conference in 2012 in the spirit of international cooperation, explained Harjeet Singh, a senior advisor with Climate Action Network International, at a side event on June 13 in Bonn.
Instead, the language adopted referred to means of implementation, finance and technology. “Discussions within the international climate law framework have also been restricted to technical assistance only,” said Arpitha Kodiveri, an environmental lawyer and postdoctoral researcher at the New York University School of Law, speaking to Down to Earth.
This refers to technical elements like knowledge, know-how and early warning systems. Kodiveri added:
The questions of liability and compensation have been erased from the legal process and are not even part of the legal vocabulary. So, when Article 8 recognised loss and damage within the Paris Agreement, it was a compromise made that liability and compensation was not included.
But this is getting harder to avoid, both in terms of visible losses and evolving clarity in scientific disciplines like attribution science. On the former, a 2019 report by the International Institute for Environment and Development found that households in rural Bangladesh spend almost $2 billion a year on repairing the damage caused by climate change and on prevention measures.
Estimated costs of L&D by 2030 range from $290-580 billion, according to a new briefing paper by Oxfam published this month.
On attribution science, Kodiveri explained that it gives historical responsibility a scientific backing and, consequently, legal ‘teeth’. Now there is certainty that certain events have been attributed to human-induced climate change, she said. “This scientific clarity can back legal claims of historical accountability. As a result, existing legal mechanisms may be pushed to a corner to accept the question of liability and compensation.”
Despite not being on the formal agenda of the Bonn conference, discussions and consultations on L&D were peppered across the two-week event, against the backdrop of civil society pressure to place it front and centre in negotiations.
To begin with, there were disagreements among developing countries on how to proceed. Groups like the G77 and Like-Minded Developing Countries (LMDC) were in favour of adding it to the SB 56 agenda, while the Alliance of Small Island States (AOSIS) believed that it should be an agenda item at CoP 27 in Egypt, culminating in the creation of a LDFF.
Civil society observers noted that such differences and ambiguity within developing country blocs were unhelpful and provided ammunition to developed countries to extend unproductive “dialogues” further.
Countries like India signalled their support for the issue. “Loss and damage impacts are felt disproportionately by small island nations and coastal areas. We understand what it means for them, and we are with them,” said Richa Sharma, head of the delegation for India, at a side event on June 7 in Bonn.
The Glasgow Dialogue provided for breakout groups on June 8 at the Bonn conference in which Parties and non-Party stakeholders discussed the landscape of gaps and demands on L&D. Article 8 of the Paris Agreement acknowledges L&D, stating: Parties recognise the importance of averting, minimising and addressing L&D associated with the adverse effects of climate change.
But it was clarified during breakout group discussions that “averting” refers to climate mitigation, and “minimising” refers to adaptation. “Addressing” L&D is the key issue, and currently no financing exists for this under the Financial Mechanism of UNFCCC.
Developed countries like Switzerland insisted, in Breakout Group 3, that they make large contributions to the International Red Cross as well as other forms of development and humanitarian aid, which is not counted explicitly as “loss and damage finance”.
US and Canada also brought up humanitarian assistance as an example of finance already being provided, with Canada noting that a funding arrangement for L&D need not be under UNFCCC only — it could feature in other spaces.
The risk here is that the accountability created by the Convention is lost, observers noted in spaces separate from the breakout group. “Humanitarian and development spending is to address human suffering and to promote development — it is not designed for the purposes of addressing loss and damage and ensuring those who cause harm pay,” said the new Oxfam paper.
A mechanism where contributions are mandatory, not voluntary and not charitable, is what is required for finance that represents reparations for victims of climate change, it added.
Developed countries also raised the question of how to define who is the “most vulnerable”, but civil society observers noted in private spaces that such language can be strategically used to narrow the scope of responsibility and eliminate many victim countries from being eligible for finance.
Other elements that get neglected in the discourse are the impacts of slow onset events such as sea-level rise and the melting of glaciers, and aid for non-economic losses such as the loss of “cultural identity, Indigenous and local knowledge, human health, biodiversity and territory”.
By the end of the first week of SB 56 in Bonn, the Glasgow Dialogue had produced broad discussions and little else, and L&D was not on the formal conference agenda either. The Chair of the Subsidiary Body for Implementation (SBI), Marianne Karlsen, held informal consultations with Parties to address concerns that the discussions in Bonn would not be captured formally and would dissipate without a thread to anchor it at CoP27.
At a meeting with Observer Groups on June 10, Karlsen stated that while Parties agreed that L&D finance is important and urgent, not all agree that “setting up a financial mechanism is the right response”, and thus a formal agenda item has not precipitated.
At a side event on June 13, Nabeel Munir, Pakistan ambassador and present G77 Chair, lamented that the “ask” from the G77 at Glasgow was the establishment of a finance facility. “That’s a tangible outcome. ‘Discussions’ and a ‘dialogue’ are not a tangible outcome. Those are a talk shop and nothing more,” he added.
After accepting the compromise of a dialogue as a ‘foot in the door’, they were disappointed to find the conversations in the Glasgow Dialogue at Bonn focused on insurance, which is far from what is being demanded.
L&D finance must be grant-based so that countries are not further indebted by a crisis they contributed little to, said Liane Schalatek of Heinrich Böll Stiftung, at the same side event. It must also be “new and additional” so as not to cannibalise funds for adaptation, which are already minimal.
Having L&D as a formal agenda item at CoP27 is a promising route to derive something substantial from this talk shop, said Sindra Sharma to DTE. Sharma is a climate researcher and senior programme officer at Climate Action Network International. She is also the co-author of a new paper titled Loss and Damage Finance Facility – Why and How.
However, despite being spread across three sessions, the Glasgow Dialogue has not inspired hope for this outcome. The problem is glaring: Rich countries just really do not seem to care; instead, they seem happy shifting sand in the sandbox while the world is on fire around them, added Sharma.
While developed countries like Australia, New Zealand and Canada appeared to soften their stance in the latter half of the Bonn conference, US and the European Union remained resolute in blocking the agenda item.
On June 13, the G77 sent a private letter to the executive secretary of UNFCCC with a new proposal: Let the Dialogue continue as a parallel process within the SBI, but place L&D as a sub-item under agenda 10 of the CoP/CMA (Conference of the Parties serving as the meeting of the Parties to the Paris Agreement) in Egypt.
One blocker in this process was Saudi Arabia, which asked for more time to deliberate on the matter on June 14 (day 9 of the 10-day conference), according to a source who didn’t wish to be named. EU also emerged as a blocker, opposing the securing of an agenda item on funding arrangements for L&D at COP27.
While negotiations at Bonn will now stretch to the last day of the conference for final answers, observers are interested to see how long the developed countries can avoid the creation of an LDFF.
In the face of fast-evolving climate attribution, alarmist reports by the Intergovernmental Panel on Climate Change, growing climate devastation, and strong civil society pressure, the time for polluters to pay may finally be approaching.
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