The long-awaited Loss and Damage Fund to compensate for irreversible climate disasters for poor and vulnerable countries has finally been agreed upon_ on the first day of COP28
The world over the first few days of COP28 has witnessed massive funding flow into various climate-related funds including the long-awaited Loss and Damage Fund (L&D) set to compensate those having been affected by climate change. COP28’s host, the UAE, is among the first and foremost having contributed to the new L&D fund, followed by the EU led by Germany, before the fund saw more monetary pledges from other major countries and increased rapidly from the start of US $100 million.
COP28 President Dr. Sultan Al Jaber on Thursday, when COP28 was kick-offed, gaveled this first major milestone of COP28, delivering a historic agreement to operationalize the L&D Fund. It is aimed to assist developing countries that are particularly vulnerable to the adverse effects of climate change, known in the negotiations as “loss and damage”.
“The hard work of many people over many years, has been delivered in Dubai, the speed at which the world came together, to get this fund operationalized within one year since Parties agreed to it in Sharm El Sheikh is unprecedented,” said COP28 President, Dr. Al Jaber.
The Loss and Damage Fund had been an issue for years and was first agreed upon last year during COP27 held in Sharm El Sheikh, Egypt, before becoming operational following the agreement reached by parties during the 5th transitional committee meeting held on the first day of the COP.
According to the host, the meeting was hosted earlier in November in Abu Dhabi and was added by the COP28 Presidency following the impasse reached at the 4th meeting.
That meeting generated recommendations on implementing the Fund, including the provision of essential grant-based support to countries especially impacted by climate and loss. In a comprehensive listening tour, COP28 leadership socialized those recommendations with national governments ahead of COP28, laying the groundwork for what it calls “the historic decision”.
Loss and Damage is essential even if the world meets climate mitigation goals because a “locked-in” level of warming already impacts particularly vulnerable communities being hit by extreme weather events, such as storms and floods, reduced agricultural productivity, and rising sea levels.
The decisive action on Loss and Damage will enable the parties of the COP to focus on the strongest possible response to the Global Stocktake, the world’s report card on progress towards Paris Agreement goals, according to the host, which offered the startup pledge of US $100 million.
Other countries making notable commitments included Germany, which committed US $100million, the UK, which committed £40million for the Fund and £20million for other arrangements, Japan, which contributed US $10million and the U.S., which committed US $17.5million.
The Guardian reported that Germany, while joining the UAE in leading the way, has called on all countries that are willing and able to make contributions of their own to the new fund to respond to loss and damage. Germany’s development minister, Svenja Schulze, was quoted by the newspaper as saying: “In this way, we are building bridges between traditional donor countries and new, non-traditional donors. After all, many countries that were still developing countries 30 years ago can now afford to shoulder their share of responsibility for global climate-related loss and damage.”
Avi Persaud, an adviser to Mia Mottley, the prime minister of Barbados, said this agreement was a hard-fought historic agreement, the newspaper reported. “It shows recognition that loss and damage is not a distant risk but part of the lived reality of almost half the world’s populations and that money is needed to reconstruct and rehabilitate if we are not to let the climate crisis reverse decades of development in moments,” the advisor said as being quoted by the Guardian.
The Guardian also reported remarks made by some representatives of CSOs. Ghiwa Nakat, the executive director of Greenpeace Mena (Middle East and North Africa) said to the Guardian this agreement was the kind of leadership expected from the host country and it urges other countries to follow suit. “Rich developed countries must step up with major contributions to the new fund, and polluting industries must also be made to pay. If the Cop presidency can build on this with a consensus agreement on a just phasing out of fossil fuels, Cop28 will indeed be a historic event,” Ms. Nakat was quoted by the newspaper.
The UAE has also pledged US $200 million to help climate resilience in vulnerable countries through the IMF’s Resilience and Sustainability Trust (RST). The RST is a trust held by the International Monetary Fund (IMF) and provides long-term concessional funding for climate resilience and pandemic preparedness. The RST supports climate resilience in low- and middle-income economies and countries vulnerable to the impacts of climate change.
Last but not least, the UAE has announced a US$30 billion commitment to the newly launched catalytic climate vehicle, ALTÉRRA, that it said will drive forward international efforts to create a fairer climate finance system, with an emphasis on improving access to funding for the Global South.
With this US$30 billion commitment, ALTÉRRA becomes the world’s largest private investment vehicle for climate change action and will aim to mobilize US$250 billion globally by 2030. It aims to steer private markets towards climate investments and focus on transforming emerging markets and developing economies, where traditional investment has been lacking due to the higher perceived risks across those geographies.
Finance for climate action is not currently available, accessible or affordable enough where it is needed, according to the COP28’s host, adding that by 2030 emerging markets and developing economies will require US$2.4 trillion every year to address climate change. That is why COP28 made fixing climate finance a key pillar of its Action Agenda and has worked to deliver ambitious solutions, including mobilising private markets at scale, it said.
According to the UAE, ALTÉRRA will have an innovative two-part structure to spur new ideas, incentivize policy and regulatory frameworks, and identify solutions to rapidly deploy capital across the entire value chain of the new climate economy. It has a dedicated investment focus on supporting four key priorities that underpin COP28’s Action Agenda, namely: Energy Transition, Industrial Decarbonization, Sustainable Living and Climate Technologies.
COP28 President Dr. Sultan Al Jaber described it as a “defining moment” in the creation of a new era of international climate finance.
Aside from the UAE, the US has replenished the existing Green Climate Fund with a pledge worth US $3 billion, making it the largest climate fund ever with US $12.3 billion. Meanwhile, various declarations have also been made during the first few days of COP28 including the COP28 UAE Declaration on a Global Climate Finance Framework to help boost climate finance reforms with holistic financial solutions, the COP28 UAE Declaration on Sustainable Agriculture, Resilient Food Systems, and Climate Action, the COP28 UAE Declaration on Climate and Health, and the latest COP 28 UAE Declaration on Climate, Relief, Recovery & Peace launched on Sunday.
Source: COP28 UAE
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