COP27 loss and damage fund welcomed but some fear it is an ‘empty bucket’

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Nations around the world reached a historic breakthrough agreement at the 27th Conference of the Parties (COP27) in Sharm El Sheikh, Egypt. The agreement was to fund the loss and damage incurred during climate-related disasters which are largely linked to past emissions by a few of the world’s most developed countries. 

Loss and damage talks remained the most contentious item on the agenda at the meeting and delegates were given three proposals by different countries or negotiating blocs over the weekend. The decision was that a financial support structure on loss and damage for the most vulnerable must be set up by the next COP in 2023. Costs from extreme weather events are estimated to be $200 billion annually. 

Loss and damage funding was mostly provided by the G7’s Global Shield programme, an insurance initiative for 20 of the world’s most vulnerable nations. Finance also went to UN early-warning systems, with some commitments to the Santiago Network and country-specific projects. About $340 million in new pledges for loss and damage were made. This is a network that connects vulnerable developing countries with providers of technical assistance, knowledge and resources in relation to averting, minimising and addressing loss and damage due to rising temperatures.  

COP president and Egyptian Foreign Minister Sameh Shoukry said political decisiveness had been shown at COP27, despite the differences between parties. 

“It was only appropriate that this COP, the implementation COP in Africa, is where the fund is finally established. Millions around the globe can now sense a glimmer of hope that their suffering will finally be addressed swiftly and appropriately.”

A lack of trust

Trust has been a major issue for the developing world as a result of failed financial promises in global climate diplomacy. Despite this, Shoukry pleaded with parties to realise their collective goals. 

“Throughout this journey I came to better understand the climate challenge and to acknowledge the complexities and intricacies around it and to feel the agony and suffering. I came to realise that, despite the seemingly wide gaps in positions between parties at times, we are all here working for the same purpose in different ways. We need more trust, more empathy and more understanding — we all deserve this,” he said. 

The fund is among the most celebrated outcomes and a big step towards climate justice at COP27, which concluded two days over schedule on Sunday morning after intense negotiations on the final declaration. 

“COP27 has delivered a historic decision on a loss and damage fund. This decision on African soil is a first step to rectify the systemic injustice towards billions of people on the frontlines of the climate crisis. The hard work to operationalise the fund and mobilise funding starts now. We will not have patience for delay or obstruction for progress,” said Climate Action Network international’s director Tasneem Essop,a veteran activist from South Africa. 

Speaking during the closing plenary session just after 5am, Essop cautioned countries that failing to declare a phase-out of all fossil fuels would increase the burden of loss and damage.

“While COP27 begins to address the consequences of the climate crisis, it fails to commit to phasing out all fossil fuels which are at the root of the climate crisis. More fossil fuel equals more losses and damages,” she said. 

“At the beginning of these talks, loss and damage was not even on the agenda and now we are making history. It just shows that this UN process can achieve results and that the world can recognise the plight of the vulnerable. 

“It’s worth noting that we have the fund — but we need money to make it worthwhile. What we have is an empty bucket. Now we need to fill it so that support can flow to the most impacted people who are suffering right now at the hands of the climate crisis,“ said Mohamed Adow, executive director at Power Shift Africa.

Major gaps for preventing the worst or the money to adapt to it

Climate adaptation is equipping people and the environment to deal with climate shocks. Finance for adaptation has thus far been wanting and countries are already due to agree on a new global goal on adaptation. This has been pushed to COP28 in Dubai 2023. Signatories to the 2015 Paris Agreement, that commits the world to limiting warming below 2°C above pre-industrial levels and to try to keep it below 1.5°C, have largely failed on financial promises in most areas of climate action, including a $100 billion a year promise to help developing nations prepare for changing climate. 

Some regions of the world are already reaching 1.5°C averages, while assessments have found that Africa is already 1.2°C warmer and the impacts are showing. 

The UN 2022 Adaptations Gap Report said a multi-year drought in the Horn of Africa, unprecedented flooding in South Asia, and severe summer heat and record-breaking droughts across many regions of the Northern Hemisphere, among others, point to mounting and ever-increasing climate risks. It said this had been compounded by the global energy and food security crisis after the Covid-19 pandemic and the war in Ukraine. 

It found that international adaptation finance to developing countries had continued to rise, reaching $28.6 billion in 2020. This represents a 34% share of total climate finance to developing countries in 2020 and is a 4% increase from 2019. It said that combined adaptation and mitigation finance flows in 2020 fell at least $17 billion short of the $100 billion pledged to developing countries, even by climate finance providers’ own accounting.

Mitigation

At the same time, mitigation, the act of limiting warming by stopping emissions, has shown little improvement in moving with science. Global emissions need to peak globally by 2025 to meet the 1.5°C goal. This failed to manifest in the final cover text at COP27. 

COP26 president Alok Sharma described the negotiations as a relentless fight to hold the line on the target to keep temperature rise to 1.5°C. According to climate scientists, every degree of average warming since the Industrial Revolution began pumping vast amounts of greenhouse gas into the air, matters. 

The failure at COP27 to move on emissions occurred in a year when the world has experienced massive climate impacts, such as flooding in Pakistan, Nigeria and Australia, and drought in the US, which will mean support structures, such as the loss and damage fund, have to work even harder. The 1.5°C goal was referred to in the deal but only to recognise it. Specific plans to actually achieve it were absent. 

Sharma said a number of proposals about how to reach the goal were made at the beginning of COP27 but many failed to materialise. 

“We joined with many parties to propose a number of measures that would have contributed to this.

“Emissions peaking before 2025, as science tells us is necessary. Not in this text. Clear follow-through on the phase-down of coal. Not in this text. A clear commitment to phase out all fossil fuels. Not in this text. And the energy text, weakened, in the final minutes.

“Friends, I said in Glasgow [COP26] that the pulse of 1.5°C was weak. Unfortunately, it remains on life support and all of us need to look at ourselves in the mirror and consider if we have fully risen to that challenge over the past two weeks,” he said. 

Uneven climate change

A key point scientists have made in major scientific assessments on the effects of warming is that the impacts of climate change haven’t been spread evenly around our planet and they won’t be in the future. 

An Intergovernmental Panel on Climate Change Special Report on Global Warming shows that limiting warming to 1.5°C is expected to significantly reduce the probability of heat stress, drought and risks related to water availability in some regions, particularly in the Mediterranean (including Southern Europe, Northern Africa and the Near East), and in Southern Africa, South America and Australia. 

About 61 million more people in the world’s urban areas would be exposed to severe drought in a 2°C warmer world than at 1.5°C warming. This is among the reasons the final outcome of the past two weeks of talks among countries is underwhelming for human and environmental rights advocates who witnessed world leaders fail again to commit to a complete phase-out of fossil fuels in order to reach net-zero emissions by mid-century.