COP27 enters loss and damage alley; finance facility issue to make or break it

Egypt’s Sharm El-Sheikh, a city known for facilitating several international agreements, hardly seems to be on course for a successful climate agreement. The creation of a loss and damage finance facility could make-or-break the 27th Conference of Parties (COP27) to the United Nations Framework Convention on Climate Change (UNFCCC), which formally concludes November 18, 2022.

The pattern seems similar to COP26 in Glasgow last year. Developed countries, on the last day, had put pressure on the Presidency to backtrack from the creation of a loss and damage financial facility; and had turned it into a mere dialogue.

A presidential draft cover-text that came out early on November 17 morning has hardly committed on the issue and left key agendas to the outcome of negotiations.

The developing country blocks almost unanimously want the facility to be set up at COP27 itself. But many of the developed countries want more discussion over the issue before setting up such a facility around 2023-24.

Sections of developed countries have further muddled the process by demanding that major economies like India and China should also bear responsibility for loss and damage payment.

Meanwhile, countries accepted the operationalisation of the Santiago Network November 17 afternoon.

“While the debate on loss and damage facility is still on, the parties accepted the operationalisation of the Santiago Network on loss and damage, which talks about providing technical assistance on the issue,” Saleemul Huq, climate scientist and a senior advisor to least developed countries, who participated in the negotiations, told this reporter.

Pushing and shove

“We want the facility to be created right at Sharm El-Sheikh. Modalities can be worked out in the coming one or two years. If that is not done, this COP will not be successful,” Nabeel Munir, Pakistan’s ambassador and key negotiator told this reporter November 17. Pakistan is the present chair of the G77 and China group.

The group had released a draft text regarding loss and demand finance November 15. It had asked “to establish a fund for assisting developing countries in meeting their costs of addressing non-economic and economic loss and damage associated with the adverse effects of climate change”.

A senior Indian official, however, pointed out November 17 it was difficult to say how critical the agenda could turn out to be in the final round of negotiations.

The official, when reminded about the draft text statement released by G77 and China on the issue, said the statement and stand were not necessarily the same. 

The G77 statement was issued apparently as counter to a text circulated by the COP Presidency a day before where it was mentioned that “funding arrangement … to be operationalized no later than by COP29 (November 2024) … (or) on the basis of negotiations …between  2023 and 2024”.

The draft cover text released Thursday — called Presidency non-paper — is also hardly an improvement.

It recognised “the growing urgency to address loss and damage” and expressed “deep concern towards the significant financial costs associated with loss and damage for developing countries”.

But it remained silent on setting the facility at Sharm El-Sheikh.

“We are in support of such a facility but more discussion is required and various other possible funding instruments apart from public finance needs to be considered before we create a loss and damage facility,” said Frans Timmerman, executive vice president of the European Commission, sitting beside Bas Eickhout Mep, head of European Parliamentary Board.

The official added that the “world has changed since 1992 and present major economies and emitters should also pay for loss and damage”, shifting the onus mainly on China and India.

Mep tried to deflect the discussion. He argued that along with loss and damage; mitigation, overall finance and other key agendas needed to be discussed.

Developed countries, in a bid to break the unity of developing ones, are trying to differentiate countries like India, China from others. They are doing this by promising to support them through financial channels outside the UNFCCC process, be it the Global Shield mechanism or otherwise.

The effort was reflected in the November 17 text.

It “acknowledges the relevant work undertaken outside the UNFCCC process … such as the G7’s Global Climate Risk Shield, Insuresilience, and the WMO and UNSG’s Initiative on Early Warning Systems for All” and talked about “diverse financial ecosystem which includes, but not limited to, innovative and hybrid sources of finance”.

The United States is completely blocking the facility at COP27 while there are fissures within Europe, according to information available with this reporter.

Countries like France, Switzerland and Sweden are opposing the facility. Others like Germany, Ireland and the Netherlands are more open to engage on the issue. 

While Germany is keener on the Global Shield, Ireland is only talking about giving support to least developed and vulnerable countries.

Climate reality

“The stand of developed countries is absolutely unacceptable and if developed countries do not agree to the creation of a facility here, it may push the COP into a make-or-break mode,” Harjeet Singh, head of global political strategy of Climate Action Network International, said.

“It is a fact that we have come a long way on the issue since 2012, when loss and damage was first mooted. One has to remember that only in this COP has the issue has been included in the main negotiating agenda.

“Already everybody is talking about it. But we need to have real actions on the ground,” Singh added.

“This issue has been gathering momentum because it connects the COP with climate reality in the outer world. Not only the developing and vulnerable countries but also developed ones are suffering now from weather extremes.

“The only difference is while developed countries have resources and resilience to combat them, the developing countries do not. That is where financial support is necessary,” another observer from a south Asian country said.

“We have seen how Pakistan has suffered; how Assam, the north-eastern state of India has suffered or for that matter the Sundarbans in West Bengal of India being impacted repeatedly and millions getting affected.

“If developed countries do not accept the reality, the whole multilateral climate negotiation will reach a dead end,” another expert said.

“We are more hopeful here, with the issue being accepted as a mainstream negotiating point” said a developing country negotiator.

Follow COP27 with Down To Earth

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