COP28 Sees Compromises on Loss and Damage Demands in the Absence of Accountability for Big Polluters

UN Climate Change/Kiara Worth

Rami Abi Ammar

Established at last year’s COP27, the loss and damage fund became a central item on the agenda for negotiations at this year's United Nations Climate Conference, COP28, held in Dubai. The fund has been a tabled demand since 1991, as developing countries bearing the climatic brunt of historical emissions and continuing extraction activities by developed industrialized states seek finance for averting, minimizing, and addressing climate disasters. Since its recognition in Article 8 of the Paris Agreement, loss and damage became a third pillar of international climate policy, along with mitigation and adaptation. However, since its recognition and later establishment, the fund has not received any designated financing or any operational structure.

On only its first day, COP28 host country, UAE, announced a USD 100 million pledge to the loss and damage startup fund, matched by Germany and followed by USD 145 million pledge from the rest of the EU, USD 75 million from the UK, USD 24.5 million from the United States, and USD 10 million from Japan. The kick-off of negotiations around the loss and damage fund and the initial, first-day commitments standing at USD 429 million have been lauded as a “landmark deal.” In the days ahead of this announcement additional contributions from France, Italy, Ireland, Norway, Canada, and Slovenia have raised the total commitments to USD 700 million (as of December 6, 2023). Yet many questions still arise regarding the operationalization of the fund, financial commitments to it, and the eligibility of developing countries to access it.

As it stands, the recommendations and commitments to the fund meet few of the demands set out by developing countries over the course of 30 years. The draft decision outlining recommendations on the operationalization of the fund appears to be strewn with compromises answering to the interests and trepidations of developed countries. Initial pledges are only a fraction of the USD 100 billion/year by 2030 proposed by developing-country members of the Transitional Committee in a submission to the Conference in September. In their submission, the members emphasized that this figure is “not meant as a ceiling, but rather as a minimum commitment,” with the potential to scale up given the rising trajectory of losses and damages under current climate realities. This is in light of a growing evidence base suggesting costs of climate-related losses and damages could be as high as USD 680 billion annually, taking into account ‘residual’ damages. Attempts at describing a funding scale or minimum commitment into the final recommendations for the operationalization of the fund have been met with rejection and thus left out of the draft decision. US Transitional Committee member Christina Chan rejected the mention of any figure describing the scale of the fund in the committee’s final recommendation documents last October, deeming it out of the mandate of the committee.

More critically, the language in the draft decision excludes liability and compensation for loss and damage, highlighting instead that the funding arrangements, and the fund itself, are based on “cooperation and facilitation.” Thereby, paying into the fund remains voluntary and parties are not required to fulfill any financial commitments, even if they are pledged. This has long been a point of contention between developing countries and large industrialized polluters including the US, Europe, China, and the Gulf petrostates. For the US particularly, any pathway towards an outcome on the fund has become contingent on the exclusion of liability and compensation language from decisions, as pushed by US Transitional Committee member Chan in the fifth meeting of the committee in early November. This can be seen as a clear safeguard for the US against any legal accountability for its historically high emissions.

Concessions on the modality of the fund are seen not only in voluntary contributions, but also in the recommendation of what has been dubbed “innovative” finance mechanisms that remain within the realm of small grants and highly concessional loans. Other recommendations include “direct budget support and policy-based finance, equity, insurance mechanisms, risk sharing mechanisms, pre-arranged finance, and performance-based programs” all of which fall short of providing sustainable and independent revenue streams for the fund, particularly those from proposed bunker fuel and airline fuel taxes. Developing countries have repeatedly called for reparatory and solidarity-based financing to address losses and damages, but they continue to be met with concessional loans and private sector financing in attempts to cower away from the polluter-pays principles.

Another concession to the US came with the appointment of the World Bank as the interim operator of the fund in the final recommendations to COP28, further highlighting the reliance of the fund on the modality of multilateral development banks. The loss and damage fund was envisioned to be an independent, standalone entity operating under the architecture and financial mechanisms of the UNFCCC. Its extension to the World Bank, whose president is appointed directly by the US and whose board is predominantly inclined to represent the interests of developed countries, has raised concerns of observers regarding the influence of big polluters over the fund in light of the Bank’s questionable environmental credentials and lack of transparency. The World Bank has less than a shining history in the developing world, particularly with the struggle of its concessional lending arm - the International Development Association (IDA)- to replenish financing for lenders already impacted by its shortfalls. The World Bank’s expansion into the climate space has also come into question when it has invested over USD 14.8 billion into fossil fuel projects and policies since the Paris Agreement and USD 3.7 billion in oil and gas trade finance in 2022 alone.

The appointment of the World Bank remains temporary, with the draft decision granting it six months after the conclusion of COP28 to confirm its commitment and finalize its program. However, the permanent appointment of the World Bank is not far-fetched and would render access to loss and damage funding yet another lengthy, complicated process out of reach of developing countries reeling from disaster. Notably, developing nations requiring loss and damage financing are also faced with unfolding public debt crises, and their eligibility could be undermined by limited lending capacities.

At the heart of demands for trigger-based solidarity funding is the difficulty faced by countries with limited means, especially in the wake of climate-induced events, to quantify, justify, and properly attribute losses and damages. Stringent criteria and complex applications for small grants and loans, typical of World Bank and other climate funds, already disadvantage parties that are unable to provide timely, cohesive, accurate, and multi-scalar datasets to prove eligibility. The increasing lure and role of attribution science used to link extreme weather events with anthropogenic climate change can create geographic bias against states and regions with data limitations. More importantly, attribution frameworks can occlude or misrepresent critical historical, social, and political-economic factors that lead to socio-ecological conditions and relations that produce and reproduce vulnerability to climate change losses and damages. They also present a problem for recovery of non-economic losses including displacement and impacts on human lives, mobility, and cultural heritage.

Attribution science, therefore, should not be a formal requirement to access loss and damage financing. It may not even be in favor of the interests of industrialized nations when attribution frameworks pick up on their culpability in constructing both the environmental and socio-political conditions for disaster. Even then, what science are big polluters willing to accept?
When COP28 President and ADNOC CEO Sultan Al Jaber claims there is no science behind demands at phasing out of fossil fuels, it brings into question whether negotiations at COP are set up to fail. Who is at the table at COP28? Can the demands of developing countries for accountability be heard over the record number of fossil fuel lobbyists in attendance at this year's conference? The USD 700 million in pledges to loss and damage combined with UAE’s USD 30 billion private climate finance fund and other pledges towards climate-related projects remain dwarfed by an overall USD 7 trillion in subsidies to the fossil fuel industry by many of the donors at COP28. Attitudes on phasing out fossil fuels remain cautious, as oil producers and investors seek to dilute and obscure language within agreements.

COP28 cannot be removed from the current graver and wider socio-political context, and depoliticizing climate negotiations is harmful for communities suffering from its repercussions. The summit continues amid gross human rights violations and indiscriminate environmental crimes in the region which it fails to address. Israel’s brutal aggression on Gaza, amounting to genocide, ethnic cleansing, and deliberate destruction of water, food, and energy infrastructure is supported by direct US military aid of USD 14.5 billion. That is over 600 times the amount the US has pledged for the loss and damage fund - a fraction of the USD 3.8 billion per year in US military assistance to Israel since 2016. Furthermore, environmental damages and emissions from growing military aggression cannot be dismissed or overlooked. This is especially critical when military aggression continues to be used to support the extraction of natural resources, such as in the case of ongoing displacement and violence in the Democratic Republic of Congo.

Just climate action should come hand in hand with supporting human rights. Without addressing prevailing power structures, COP will continue to fail as an avenue for accountability and restitution for the human, economic, and physical losses of global anthropogenic climate change.

​About the Author
Rami Abi Ammar is a Climate Change and Environment Researcher at IFI.