TWN Info Service on Climate Change (Oct23/03)
20 October 2023
Third World Network

Deadlock at the Transitional Committee meeting over the Loss and Damage Fund

Aswan, 20 Oct (Radhika Chatterjee) – Members of the UNFCCC’s Transitional Committee (TC) for addressing the Loss and Damage Fund (LDF) and funding arrangements (FA) are in Aswan, Egypt for its fourth, and possibly its last meeting. This meeting began on October 17^th, 2023 and ends today 20 Oct, is meant for finalising the TC’s recommendations for COP28, in Dubai, UAE. However, the TC is yet to make any progress on the way forward due to a deadlock amongst the TC members, along North-South lines.

Interactions were held behind closed doors for the most part of the second day of their meeting. However, when the meetings were opened to observers, it became clear that developed country representatives of the TC have been displaying a lack of flexibility on various issues, sticking their strong positions, especially over the host of the LDF.

Deep divisions were obvious, which included developed country demands include their placing the Fund in the World Bank, restricting access of the Fund to just two constituencies of developing countries viz. Small Island Developing States (SIDS) and Least Developed Countries (LDCs), and refusing to accept their obligations under the Convention of being the primary contributors to the Fund.

According to observers, reducing the eligibility of the LDF to just two constituencies would automatically result in the reduction of the scale of the Fund, which eventually will fail to serve the purpose of addressing the growing loss and damage needs, given the rise in number of climate change induced disasters around in many countries around the world, such as the most recent events in Pakistan and Libya.

The TC was mandated by Decisions 2.CP/27 and 2.CMA/4 to finalise recommendations for the LDF and FA for the consideration of COP/CMA at COP28. Their recommendations will form the basis for the establishment of a fund that is expected to address the needs of loss and damage faced by developing countries facing such devastating impacts.

Considering the lack of movement and progress on the discussions, Ambassador Pedro Luis Pedroso Cuesta, Chair of Group of 77 and China (G-77 and China), spoke at a press conference on Oct 20, to put forward the views of the developing countries on the current stalemate in the TC discussions.

In his interactions with the press, he reiterated that developing countries were united in their position on having a Loss and Damage Fund that addresses the needs of all developing countries. He pointed out that the United States of America (US) has come to this meeting with a predetermined idea of having the LDF being placed in the World Bank and is now refusing to show any kind of flexibility on this position.

He explained that a key concern that developing countries have about the World Bank hosting the LDF is the operational culture of the Bank. He pointed out the World Bank has included climate in its vision only in 2023, following recent meetings in Marrakesh, Morocco.  The World Bank he said not considered fit for purpose for addressing loss and damage needs.

He further shared that according to the extensive consultations that TC members had with World Bank officials, the Fund will not be able to have a legal personality if it is housed inside the Bank. Neither will the Fund be able to have an independent secretariat. This means it would be bound by the policies of the World Bank. More importantly, the hosting of the Fund inside the Bank would imply that the Fund would not be accountable to the COP/CMA.

The Co-Chairs of the TC, Richard Sherman (South Africa) and Outi Honkatukia (Finland) are now working to produce a text for the consideration of the TC members, with a text is expected to be out by 20^th Oct, – the last day of the TC meeting.

Ambassador Pedro Luis Pedroso Cuesta issued the following statement to the press, which was made available to TWN.

“The hour is late. The stock of greenhouse gasses in the atmosphere, the failure to mitigate fast enough and the failure to finance adaptation are leading to a worsening climate crisis and mounting climate-related loss and damage, all confirming the outcomes of the IPCC AR6 (the 6^th assessment report of the Intergovernmental Panel on Climate Change). A critical component of the 2015 ‘Paris Agreement’ was a mechanism to address loss and damage; yet this has laid empty of meaningful finance. Developing countries particularly vulnerable to the adverse consequences of climate change are sinking under debts related to loss and damage, severely crimping their capacity to invest in current sustainable development and future resilience. The breakthrough decision at COP27 in Sharm El Sheikh was establishing a fund for loss and damage and a transitional committee to operationalise it at COP28.

At this late hour, a small group of nations responsible for the most significant proportion of the stock of greenhouse gasses have tried to bargain potential support for a Fund on one side with eligibility and administrative arrangements that would impede its ability to respond directly, for instance, to recent climate-related tragedies in Pakistan and Libya and an explicit withdrawal from their differentiated responsibilities and commitments under the COP and CMA. These responsibilities and commitments were previously accepted as the basis of international agreement and led to the establishment, capitalisation and recent replenishment of the Green Climate Fund. Accepting this Faustian bargain now would break the COP when we need the greatest internationalism and solidarity to solve climate and other global challenges. With unanimity, developing countries, small and large, alongside others who care about a liveable planet, have rejected that bargain.

There is a clear pathway to operationalising the Fund. Its scope, eligibility, independence, and operation are straightforward. It needs to be able to provide direct support in the form of largely grant-based finance to developing countries particularly vulnerable to the adverse consequences of climate change to help them reconstruct and rehabilitate, including addressing relocation, lost livelihoods and non-economic losses after extreme weather and significant slow-onset events.

A Board, balanced between developed and developing countries and taking its guidance, and accountability to and from the COP/CMA, should allocate the Fund’s resources based on the severity of the climate-related event, with the flexibility to address the variation in these impacts across countries and time, from cyclones and flooding, to slow onset droughts and sea-level rise.

If this Fund is to have the necessary scale, it must build on an initial capitalisation from developed economies with voluntary contributions from others and innovative sources of finance. It must also engage with all other relevant actors to support aligning their efforts to leverage the impact of the Fund in addressing loss and damage.

We must ensure that the administrative arrangements of the Fund do not impede direct access to all developing countries particularly vulnerable to climate change, preclude the Fund from accepting broad sources of finance, including philanthropy, or leveraging its resources on the capital markets. The urgency of the hour suggests it should also consider interim administrative arrangements.”

Whether the calls of the G77/China will  be heard or fall on deaf years will be watched with bated breath on whether developed countries will relent on their demands.