Libya floods 2023: Why the Loss and Damage fund should be operationalised equitably

The devastating floods in Libya over the last few days that killed more than 5,000 people is probably an event which could have been aided by the quick disbursal of funds from the Loss and Damage Fund (LDF). The fund was established at the 27th Conference of Parties (COP27) to the United Nations Framework Convention on Climate Change (UNFCCC) in Sharm El-Sheikh, Egypt in November 2022. 

LDF is in the process of being operationalised through the Transitional Committee, which will give recommendations on governance, sources, location and administration of the fund to the COP 28 in Dubai, United Arab Emirates, later this year. 

But if proposals for operationalisation of the LDF from France and other developed countries like United States and Germany to the third meeting of the Transitional Committee (TC3) to operationalise the LDF come to fruition, the release of funds to Libya, despite the scale of the losses, would perhaps not happen easily or the country would get them in the form of debt-increasing loans or insurance. 

This is because developed countries have proposed LDF to be aimed at what they call ‘particularly vulnerable countries’ and hinted at these being Least Developed Countries (LDC) and Small Island Developing States (SIDS). Libya is not qualified as an LDC by the United Nations and it is not a small island developing state either. 

In fact, France wants the funds to go specifically to the LDCs and SIDS. 

The TC3 was held in Santo Domingo, Dominican Republic, from August 29 to September 1, 2023 and ended in a deadlock on many lingering issues, including the eligibility of countries to access finances from LDF. 

Developing countries, in a unanimous proposal, said that all of them should be able to access the funds and not specifically some country groupings. 

It was also repeatedly highlighted by TC members from developing countries during TC3, most prominently by Mohamed Nasr of Egypt who is also representing the COP27 presidency on the TC, Matheus Bastos from Brazil and Angela Rivera Galvis from Colombia.  

The massive loss of lives from Daniel, a rare medicane — a tropical cyclonic storm in the Mediterranean region — could have also been avoided if war-torn Libya was made less vulnerable to such extreme weather events through adaptation measures such as early warning systems. 

Medicanes and other extreme rainfall events could become more common in the Mediterranean due to global warming and resultant climate change. Daniel also caused heavy flooding and inundation in Greece, Spain, Turkey and Bulgaria, with a total death count of 21, according to the IBM-owned weather information website, Weather Underground. 

In the absence of such measures, the only recourse for Libya would be LDF, both for immediate relief and long-term rehabilitation and reconstruction. 

If the developed countries have their way, then Pakistan would also be left out of the LDF funding mechanisms, which was highlighted by Nasr of Egypt during TC3. It is not an LDC or SIDS. Perhaps to address this, the country made a proposal on September 10, 2023 ahead of the fourth meeting of the TC to be held in Aswan, Egypt from October 17-20. 

In the submission, Pakistan, which played a major role in the establishment of the fund as the chair of the G77 and China group of countries, highlighted the vulnerability of the country to loss and damage from extreme weather events like the floods in 2022, which killed around 1,700 people and displaced eight million.  

Pakistan highlighted the centrality of the LDF in the larger structure of loss and damage financing, and reiterated the principles of the UNFCCC and Paris Agreement, especially the principles of Equity and Common But Differentiated Responsibilities and Respective Capabilities (CBDR-RC).

During the TC3 meeting the developed countries like the United States and France tried to shift the focus away from the LDF and their contributions to it as part of their historical responsibility for emitting greenhouse gases into the atmosphere, which is causing loss and damage all around the world, including the floods in Libya.   

In fact, Christina Chan, the TC member representing the US, told other TC colleagues on the third day of TC3 that the operationalisation of the LDF should be about cooperation and nobody should be held liable. The US has made the same point in its bridging proposal submission to TC 3. It has also discounted the principles of CBDR-RC. 

The developed countries focused more on funding arrangements, which would mainly come from mechanisms such as the mostly insurance based Global Shield initiative being led by Germany and the V20 group of vulnerable countries, climate-debt swaps, voluntary carbon markets, rewriting of debt and other private sources with minimal public funding. The public funding which the US wants to come from all countries “in a position to do so" would be used for addressing loss and damage arising from slow onset events and non economic losses which hasn’t been done as yet. This would mean countries like China would have to pay into the LDF. 

In response, in its proposal to the TC3 on September 1, China said, “The phrase ‘in position to do so’ proposed by the US lacks established consensus within the UNFCCC and the Paris Agreement. Our agreements rely on precise language to ensure consistent implementation and accountability. The introduction of ambiguous language may lead to misunderstandings and hinder effective collaboration.”

Developing countries want the LDF to be the centrepiece of the loss and damage financing architecture, with most finances coming in the form of public funds from developed countries. They want this central fund to be supported by other funding arrangements in such a way that they would not increase their national debts. This could include taxes and levies on fossil fuel companies, shipping, aviation etc in line with the principles of CBDR-RC. 

The other major differences in the proposals from the developed and the developing countries that still remain are around the location of the secretariat of the LDF, the focus on new and existing funding arrangements inside and outside the UNFCCC instead of the LDF and the composition of the governing board of the fund.  

Most of these differences cropped up from the proposal made by the US. For instance, the US proposal wanted to locate the fund’s secretariat in the World Bank while the developing countries want an independent secretariat built from scratch. Many developing country TC members highlighted that involving the World Bank would be counterintuitive in the case of LDF as the functioning of the World Bank and other Multilateral Development Banks is very different from what they proposing for the LDF. 

“The staff of the secretariat should be able to understand the context specific needs of the countries approaching the LDF”, Michai Robertson, the TC member from Antigua and Barbuda representing the SIDS said on the third day of TC3. He also highlighted the problems with historical data while accessing finances from existing funds like the Green Climate Fund and that this should not be the case with the LDF. He also highlighted that oral testimonies from impacted communities should also be considered in dispensing the funds. 

Civil society observers who were only allowed into TC 3 on the third and fourth day also confronted the US representative about the composition of the board of LDF, which the US wanted to be composed mostly of developed countries. It wanted the board to be composed of 10 developed countries, 10 developing countries from various regions and country groupings and four members from the biggest donors which need to be developed countries again. The board would also comprise of a member each from the private sector, philanthropic sector and representing indigenous people.

"In the recent round of climate talks, negotiators grappled with whether the critical Loss and Damage Fund should be set up under the financial mechanism of the UN climate change convention or made part of an existing institution. Clarity on the new fund’s scope, location and financial sources remains elusive,” Harjeet Singh of Climate Action Network International told Down To Earth. 

“As the clock ticks toward the next Transitional Committee meeting in October, rich nations must not only hear but also respond positively to the proposals of developing countries. We are racing against both time and a climate crisis that is already undermining hard-fought progress and impacting millions,” Singh added. 

The TC3 meeting was to resolve the various contentious issues between the developed and developing country groups so that the fourth meeting of the TC (TC4) can focus on the recommendations to COP 28. Now all eyes are on TC4 and inter-sessional work before that. 

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