In the early hours of Friday morning at the Cop27 UN climate summit in Egypt, European Commission Vice President Frans Timmermans presented a proposal on behalf of the EU to agree to the creation of a damage and loss fund. Rich countries had resisted this basic request, arguing that it would take time to determine whether such a fund was necessary and how it would work. Timmermans said on Friday morning that the EU has listened to the G77 group of developing countries, for whom the creation of a fund at this summit is a key demand. Losses and damages refer to the devastation of extreme weather to the physical and social infrastructure of poor countries and the funding required for rescue and reconstruction after climate-related disasters. Cop27: the climate carnage we faced this year – video Timmermans said: “We were hesitant about a fund, it wasn’t our idea to have a fund. My reluctance was because I know from experience that it takes time to be able to build a fund and longer to pay it, while we have the existing means. I really believe we could move faster with the existing means [for climate finance]. But since they [the G77] we are so connected to a fund, we have agreed.” Timmermans added that “clear terms” would apply to any fund. It will be geared towards supporting the most vulnerable, with the contribution of a broad base of financial donors. The fund would not work in isolation, but as part of a mosaic of solutions that includes reforming the multilateral development banks, for example. At the same time, the EU wants more ambition to cut emissions, with stronger provisions for updated national plans to cut emissions in line with the 1.5 degree target in the Paris Agreement and the peak of global emissions by 2025. “This should it’s a package deal,” Timmermans said. Developing countries are considering the proposal. Carla Barnett, the secretary general of the Caribbean Community, gave an ambiguous answer: “There is only one option for small island developing states, a financing fund that offers a fair path for the future of our countries. Divide and delay tactics will not work. This is an issue that we defend based on fairness.” A G77 negotiator, who asked not to be named, was unimpressed by the EU’s proposal. “It is a predictable attempt by the EU to break up the G77 in the talks. Of course, it is not a breakthrough. They are simply repeating their original negotiating position making it sound like a compromise, when they know very well that it is not. It is completely disingenuous.” Australia said it welcomed the EU’s contribution and would “engage constructively with it”. In terms of losses and damages, “it is very attractive from a new fund that benefits from a broad base of contributors and focuses on the most vulnerable”. “We want to fully consider how other institutions, such as multinational development banks, can interact and further develop their interaction with this fund,” said Chris Bowen, Australia’s climate change minister. There was concern that more clarity would be needed. Yamide Dagnet, director of climate justice at the Open Society Foundations, said: “I expect that Friday’s debate will turn the issue of the definition of vulnerability on its head. The proposals of both the EU and the pair of ministers at the table refer to the “most vulnerable countries”, those who should benefit from this fund – asking, who is included and who is excluded in this framework, which has never been clearly defined by UN terms and could limit the benefits of the fund.” The EU’s move puts the spotlight on the US, which also has objections to a fund and has yet to respond to the proposal. “The EU proposal firmly establishes the principle that payments to developing countries for climate adaptation must be matched by overall global reductions in greenhouse gas emissions, which is ultimately the central goal of the Paris Agreement,” said Paul Bledsoe, former Clinton White House. climate consultant, now with the Progressive Policy Institute in Washington. “But labels matter. Such payments to other nations must always be described as general foreign aid, never as climate compensation or reparations, in order to win US support. On that condition, they have a decent chance of winning support from the Biden administration.” The EU decision puts much more pressure on China, which has so far shied away from any obligation to provide climate finance to poorer countries despite being the world’s largest emitter and second largest cumulative emitter and second largest economy in the world. Under the 1992 UN Framework Convention on Climate Change, under which the Conference of the Parties is held, countries are strictly demarcated into developed and developing, and China is still classified as developing under the treaty. Timmermans said:[The fund] The donor base should be in line with the Paris Agreement and take into account the economic situation of countries in 2022 and not 1992, as in the G77 proposal.” Canada’s Environment Minister Steven Guilbeault said his country supports the EU’s proposal, but countries such as China, Saudi Arabia and Qatar should contribute to the fund given their historical emissions and wealth. He told the Guardian: “We need to have a serious discussion about expanding the donor base. We recognize our responsibility but we are less and less large emitters compared to others. It is in the interests of vulnerable countries to have more donors… China should definitely be there. I think there are a number of oil producing countries in the Gulf region that should be part of it. I haven’t looked at the UAE figures, but Qatar and Saudi Arabia, yes.” Preety Bhandari, from the World Resources Institute, said countries had three options for loss and damage. Two have agreed to set up a fund either immediately or next year in Dubai. The third – the US preference – would not refer to a fund, but would agree to work on financing arrangements inside and outside the United Nations, a reference to the need to reform the World Bank and other international organizations to better address the climate crisis. “It all boils down to political will,” Bhandari said. “It is time for concessions and compromises. Let’s hope the common ground is good.”
