Climate meet delivers landmark win on loss-and-damage fund

The grave challenge of climate change confronting humankind is being addressed in intergovernmental negotiations at the United Nations. The most recent UN climate conference set up an urgently needed fund for responding to loss and damage arising from climate change impacts, but produced little else of concrete significance.

Meena Raman

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THE latest annual United Nations climate conference delivered on what was the ‘litmus test’ for its success – consensus on the establishment of a fund to deal with loss and damage associated with the adverse effects of climate change. What seemed impossible was made possible, largely due to the unity of the developing-country Group of 77 and China and the role of the Egyptian presidency of the conference. Also important were efforts by civil society groups that put pressure on the United States, which had been the main blocker to having the fund.

Until the final hours of the climate talks – which took place in Sharm el-Sheikh, Egypt, on 6-20 November – it was uncertain whether the deal would be sealed, amid behind-the-scenes diplomacy by the conference presidency team. The G77/China was led by Pakistan, which wielded a strong moral voice at the conference, following the country’s catastrophic and devastating floods which were attributed to climate change.

It was a big win for loss-and-damage issues at Sharm el-Sheikh, spotlighting what was once seen as an ‘orphan child’ of the UN intergovernmental climate negotiations, with usual priority given to climate change mitigation (i.e., reduction of greenhouse gas emissions) while adaptation to climate change impacts is treated as the ‘stepchild'.

However, the conference yielded nothing significantly meaningful on finance, given the overall stance of developed countries in the process, with the loss-and-damage fund remaining empty for now. The hope is that financing will be forthcoming when the fund is set up and is resourced in the coming years. The Santiago Network on Loss and Damage (SNLD), which is to be a technical assistance facility for developing countries, was also devoid of any financial commitments. The finance decisions adopted only exhorted developed countries to deliver on the $100-billion-per-year-by-2020 pledges and to double adaptation funding. New pledges, totalling more than $230 million, were made to the Adaptation Fund, a small sum given the scale of the needs in developing countries.

The Sharm el-Sheikh conference encompassed the 27th session of the Conference of the Parties to the UN Framework Convention on Climate Change (COP 27), the 17th session of the Conference of the Parties serving as the meeting of the Parties to the Kyoto Protocol (CMP 17), the fourth session of the Conference of the Parties serving as the meeting of the Parties to the Paris Agreement (CMA 4), as well as sessions of the Convention’s Subsidiary Body for Scientific and Technological Advice (SBSTA) and Subsidiary Body for Implementation (SBI).

An overarching source of alarm and agony of many developing countries during the talks was the persistent efforts by developed countries to not own up to their historical responsibilities for past emissions, and to delete or dilute the foundational principles of equity and ‘common but differentiated responsibilities and respective capabilities’ (CBDRRC) between developed and developing countries under the Convention and the Paris Agreement.

These attempts were repeatedly called out by developing countries, especially from the Like-Minded Developing Countries (LMDC) grouping, the African Group, the Arab Group and ABU (Argentina, Brazil and Uruguay). The effort to remove differentiation between developed and developing countries was at the heart of the fight on many fronts, especially on the issues of mitigation and finance. Developed countries continued using terms such as ‘major emitters’, ‘major economies’ and the ‘G20’ in relation to who should show more ambition on mitigation, while in the discussion on finance, it was about ‘broadening the donor base’. The retort from developing countries was that these issues had already been settled under the Paris Agreement and that the principles and provisions of the Agreement should be respected and implemented.

The climate talks were originally scheduled to end on 18 November but decisions were only gavelled in the early morning of 20 November, when the official plenary began at 4 a.m. Delegates were visibly exhausted and bleary-eyed following long days and nights of negotiations which were particularly intense in the final few days.

Apart from the loss-and-damage fund, other issues that had been deadlocked were the cover decisions (as to what they should contain), the mitigation work programme, the global goal on adaptation and matters related to finance.

Among the sticky issues in relation to mitigation were how the goal of limiting global warming to 1.5°C should be reflected, how to advance efforts following the controversial decision adopted at COP 26 on the phasedown of unabated coal power and phaseout of inefficient fossil fuel subsidies, and the peaking of emissions by 2025.

In order to avoid spats in the full glare of the public and world media given the wide divergence between Parties, the conference presidency team resorted to informal consultations and diplomatic efforts behind the scenes to find compromises on the difficult issues with draft texts which were reviewed by Parties. This was the reason for the delay in convening the final plenary, as Parties sought to assess the overall balance of the package of decisions among the key issues of mitigation, adaptation, loss and damage, and finance.

Following the eventual adoption of the various decisions, COP 27 President Sameh Shoukry, who is the Egyptian foreign minister, said that ‘despite the difficulties and challenges of our times, the divergence of views, level of ambition or apprehension, we remain committed to the fight against climate change ... and that as much as sceptics and pessimists thought that climate action will be taking a back seat on the global agenda, we rose to the occasion, upheld our responsibilities and undertook the important decisive political decisions that millions around the world expect from us.’

Shoukry added: ‘We listened to the calls of anguish and despair resonating from one end of Pakistan to the other, a country with literally more than a third of its area flooded, a resounding alarm of the future that awaits us beyond 1.5 degrees. A bleak future..., a future that I do not wish for my grandchildren nor for any child on this planet.’

‘Today, here in Sharm el-Sheikh, we establish the first ever dedicated fund for loss and damage, a fund that has been so long in the making. 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,’ he said, adding that ‘we leave Sharm el-Sheikh with renewed hope in the future of our planet, with an even stronger collective will and more determination to achieve the temperature goal of the Paris Agreement.’

He said further that Parties ‘just adopted the landmark Sharm el-Sheikh Mitigation Ambition and Implementation work programme that will hugely contribute to keeping 1.5°C within reach, and I trust that we all know what needs to be done to safeguard 1.5°C and ensure that we never go beyond.’

‘We also leave Sharm el-Sheikh with an important agreement on tangible steps to enact the Paris Agreement’s Global Goal on Adaptation (GGA), a long-running request by developing countries who bear the brunt of climate impacts despite being the least contributor to climate change, and who deserve to be accorded the needed finance, technical assistance and capacity to better enable them to adapt, to build resilience and to enhance their climate action overall. I trust that this work in progress on the GGA will be concluded at COP 28 next year to the best interest of this process and all its Parties.

‘The Sharm el-Sheikh Implementation Programme that we just adopted is an embodiment of what COP 27 was all about: implementation. It lays out a clear pathway that should guide our efforts in the coming years to implement commitments and honour pledges. Together we will implement, to save our planet from the threat of climate change, and to turn this climate challenge into an opportunity for growth and development, in a just, equitable, inclusive and balanced manner. Together we can, and together we will.’

Some of the significant decisions adopted are highlighted below.

The cover decisions – Sharm el-Sheikh Implementation Plan

The cover decisions adopted under the COP and CMA are referred to as the Sharm el-Sheikh Implementation Plan. The COP and CMA decisions are similar in many respects. Highlights of some of the main aspects of the decision adopted under the CMA are as follows:

The decision ‘[s]tresses that the increasingly complex and challenging global geopolitical situation and its impact on the energy, food and economic situations, as well as the additional challenges associated with the socioeconomic recovery from the coronavirus pandemic, should not be used as a pretext for backtracking, backsliding or de-prioritising climate action.’

It ‘[r]eaffirms the Paris Agreement temperature goal of holding the increase in the global average temperature to well below 2°C above pre-industrial levels and pursuing efforts to limit the temperature increase to 1.5°C above pre-industrial levels, recognising that this would significantly reduce the risks and impacts of climate change’; and ‘[r]eiterates that the impacts of climate change will be much lower at the temperature increase of 1.5°C compared with 2°C and resolves to pursue further efforts to limit the temperature increase to 1.5°C’.

On enhancing ambition and implementation,   the   decision   ‘[r]esolves to implement ambitious, just, equitable and inclusive transitions to low-emission and climate-resilient development in line with the principles and objectives of the Convention, the Kyoto Protocol and the Paris Agreement, taking into account this decision, the Glasgow Climate Pact (GCP) and other relevant decisions of the COP and the CMA.’ (The developed countries have of late been mainly focusing on the GCP adopted at COP 26 in Glasgow in 2021 and much less on the Paris Agreement and even less on the Convention. Some major developing countries have raised concerns that the GCP is being put at the same level as the Convention and the Paris Agreement.)

On mitigation, the decision ‘[r]ecognises that limiting global warming to 1.5°C requires rapid, deep and sustained reductions in global greenhouse gas emissions of 43 per cent by 2030 relative to the 2019 level’; and ‘[a]lso recognises that this requires accelerated action in this critical decade, on the basis of equity and the best available scientific knowledge, reflecting CBDRRC, in the light of different national circumstances and in the context of sustainable development and efforts to eradicate poverty.’

It also ‘[n]otes with serious concern the finding in the latest synthesis report on nationally determined contributions (NDCs) that the total global greenhouse gas emission (GHG) level in 2030, taking into account implementation of all latest NDCs, is estimated to be 0.3 per cent below the 2019 level, which is not in line with least-cost scenarios for keeping global temperature rise to 2 or 1.5°C’; and ‘[e]mphasises the urgent need for Parties to increase their efforts to collectively reduce emissions through accelerated action and implementation of domestic mitigation measures in accordance with Article 4.2 of the Paris Agreement.’ (Article 4.2 of the Paris Agreement states: ‘Each Party shall prepare, communicate and maintain successive NDCs that it intends to achieve. Parties shall pursue domestic mitigation measures, with the aim of achieving the objectives of such contributions.’)

The decision also ‘[c]alls upon Parties to accelerate the development, deployment and dissemination of technologies, and the adoption of policies, to transition towards low-emission energy systems, including by rapidly scaling up the deployment of clean power generation and energy efficiency measures, including accelerating efforts towards the phasedown of unabated coal power and phase-out of inefficient fossil fuel subsidies, while providing targeted support to the poorest and most vulnerable in line with national circumstances and recognising the need for support towards a just transition.’ (This is a repeat of the decision from the GCP.)

A new and significant outcome is the establishment of ‘a work programme on just transition for discussion of pathways to achieving the goals of the Paris Agreement’. The decision ‘requests the Subsidiary Body for Implementation and the Subsidiary Body for Scientific and Technological Advice to recommend a draft decision on this matter for consideration and adoption by the CMA at its fifth session [in 2023], with the work programme to be implemented in a manner that builds on and complements the relevant workstreams under the Convention and the Paris Agreement, including the work programme for urgently scaling up mitigation ambition and implementation’. The CMA also ‘[d]ecides to convene, as part of the work programme on just transition, an annual high-level ministerial round table on just transition, beginning at its fifth session’.

On finance,  the  decision  ‘[n]otes with concern the growing gap between the needs of developing country Parties, in particular those due to the increasing impacts of climate change and their increased indebtedness, and the support provided and mobilised for their efforts to implement their NDCs, highlighting that such needs are currently estimated at USD5.8-5.9 trillion for the pre-2030 period.’ It also ‘[e]xpresses serious concern that the goal of developed country Parties to mobilise jointly USD100 billion per year by 2020 ... has not yet been met and urges developed country Parties to meet the goal.’ It also ‘[u]rges developed country Parties to provide enhanced support, including through financial resources, technology transfer and capacity-building, to assist developing country Parties with respect to both mitigation and adaptation, in continuation of their existing obligations under the Convention, and encourages other Parties to provide or continue to provide such support voluntarily.’ The decision also ‘[c]alls on the shareholders of multilateral development banks (MDBs) and international financial institutions (IFIs) to reform MDB practices and priorities, align and scale up funding, ensure simplified access and mobilise climate finance from various sources and encourages MDBs to define a new vision and commensurate operational model, channels and instruments that are fit for the purpose of adequately addressing the global climate emergency, including deploying a full suite of instruments, from grants to guarantees and non-debt instruments, taking into account debt burdens, and to address risk appetite, with a view to substantially increasing climate finance.’

It also ‘[c]alls on MDBs to contribute to significantly increasing climate ambition using the breadth of their policy and financial instruments for greater results, including on private capital mobilisation, and to ensure higher financial efficiency and maximise use of existing concessional and risk capital vehicles to drive innovation and accelerate impact.’

Further, the CMA decided to ‘launch the Sharm el-Sheikh dialogue between Parties, relevant organisations and stakeholders to exchange views on and enhance understanding of the scope of Article 2.1(c) of the Paris Agreement and its complementarity with Article 9 of the Paris Agreement and requests the secretariat, under the guidance of the Presidency of COP 27, to organise two workshops in 2023 in this regard and to prepare a report to the CMA on the deliberations at these workshops.’

Developed countries, led by Switzerland for the Environmental Integrity Group (EIG), have been calling for Article 2.1(c) as a separate agenda item. The article refers to ‘Making finance flows consistent with a pathway towards low greenhouse gas emissions and climate-resilient development,’ and there have been divergences between developed and developing countries over what this actually means.

Loss-and-damage fund

In a separate decision, Parties agreed to ‘establish new funding arrangements for assisting developing countries that are particularly vulnerable to the adverse effects of climate change, in responding to loss and damage, including with a focus on addressing loss and damage by providing and assisting in mobilising new and additional resources, and that these new arrangements complement and include sources, funds, processes and initiatives under and outside the Convention and the Paris Agreement.’

It was also decided, ‘in the context of establishing the new funding arrangements..., to establish a fund for responding to loss and damage whose mandate includes a focus on addressing loss and damage.’ Parties also agreed to ‘[e]stablish a transitional committee on the operationalisation of the new funding arrangements for responding to loss and damage..., to make recommendations based on, inter alia, elements for operationalisation..., for consideration and adoption by ... COP 28 and CMA 5 (November-December 2023) with a view to operationalising the funding arrangements...’.

Parties also agreed that ‘the recommendations to operationalise the funding arrangements and the fund ... shall consider, inter alia: (a) Establishing institutional arrangements, modalities, structure, governance and terms of reference for the fund...; (b) Defining the elements of the new funding arrangements...; (c) Identifying and expanding sources of funding; (d) Ensuring coordination and complementarity with existing funding arrangements’. The transitional committee ‘will be informed by the following, inter alia: (a) The current landscape of institutions, including global, regional and national, that are funding activities related to addressing loss and damage, and ways in which coherence, coordination and synergies among them can be enhanced; (b) The gaps within that current landscape, including the types of gap, such as relating to speed, eligibility, adequacy and access to finance, noting that these may vary depending on the challenge, such as climate-related emergencies, sea level rise, displacement, relocation, migration, insufficient climate information and data, or the need for climate-resilient reconstruction and recovery; (c) The priority gaps for which solutions should be explored; (d) The most effective ways in which to address the gaps, especially for the most vulnerable populations and the ecosystems on which they depend; (e) Potential sources of funding, recognising the need for support from a wide variety of sources, including innovative sources.’

Santiago Network on Loss and Damage

Parties also agreed to ‘establish the Advisory Board of the Santiago network as part of the Warsaw International Mechanism for Loss and Damage’ and that ‘the Santiago network secretariat will be accountable to and operate under the guidance of the governing body or bodies through the Advisory Board and hosted by an organisation or a consortium of organisations able to provide the necessary administrative and infrastructural support for its effective functioning’.

The decision also recalls what was agreed in Glasgow in 2021, ‘in which it was decided that the Santiago network will be provided with funds to support technical assistance for the implementation of relevant approaches to averting, minimising and addressing loss and damage associated with the adverse effects of climate change in developing countries in support of the functions’; and also recalls the decision from 2021 ‘which urges developed country Parties to provide funds for the operation of the Santiago network and for the provision of technical assistance’. It also ‘encourages others to provide support for the operation of the Santiago network and technical assistance’ and ‘welcomes the pledges that have already been made to the Santiago network’.

Mitigation work programme

The decision on the mitigation work programme ‘[c]onfirms that the objective of the work programme for urgently scaling up mitigation ambition and implementation ... shall be to urgently scale up mitigation ambition and implementation in this critical decade in a manner that complements the global stocktake.’ Parties decided that ‘the work programme shall be operationalised through focused exchanges of views, information and ideas, noting that the outcomes of the work programme will be non-prescriptive, non-punitive, facilitative, respectful of national sovereignty and national circumstances, take into account the nationally determined nature of NDCs and will not impose new targets or goals’. (This had been a subject of grave concern to many developing countries.)

It was also decided that ‘the work programme shall function in a manner that is consistent with the procedures and timelines for communication of successive NDCs established in the Paris Agreement’, and that ‘the scope of the work programme should be based on broad thematic areas relevant to urgently scaling up mitigation ambition and implementation in this critical decade and include all sectors covered in the 2006 IPCC Guidelines for National Greenhouse Gas Inventories of the Intergovernmental Panel on Climate Change (IPCC), thematic areas in the contribution of Working Group III to the Sixth Assessment Report of the IPCC and relevant enabling conditions, technologies, just transitions and cross-cutting issues’.

It was also decided that implementation of the work programme would start immediately after CMA 4 and continue until CMA 8 (2026) ‘with a view to adopting a decision on the continuation of the work programme at that session’, and that ‘the work programme will be carried out under the CMA’. The Chairs of the SBSTA and SBI were requested ‘to appoint, well in advance of the fifty-eighth sessions of the subsidiary bodies (June 2023) and every two years thereafter, in consultation with respective constituencies, two co-chairs for the work programme, one from a developed country Party and one from a developing country Party’.

Global goal on adaptation (GGA)

The decision on the GGA  ‘[r]ecognises that adaptation is a global challenge faced by all with local, subnational, national, regional and international dimensions, and that it is a key component of and makes a contribution to the long-term global response to climate change to protect people, livelihoods and ecosystems’.

Parties agreed to ‘initiate the development of a framework for the global goal on adaptation to be undertaken through a structured approach under the Glasgow-Sharm el-Sheikh work programme in 2023 ... with a view to the framework being adopted at CMA 5’; and that ‘the framework ... will guide the achievement of the global goal on adaptation and the review of overall progress in achieving it with a view to reducing the increasing adverse impacts, risks and vulnerabilities associated with climate change, as well as enhance adaptation action and support’.

New collective quantified goal on finance (NCQG)

The decision on the NCQG ‘acknowledges the need to significantly strengthen the ad hoc work programme on the NCQG in the light of the urgency of scaling up climate action with a view to achieving meaningful outcomes from the deliberations on all elements and setting the new collective quantified goal in 2024 taking into account the needs and priorities of developing countries.’

It also ‘acknowledges the need for substantive progress in the deliberations on the NCQG on climate finance, which will ... take into account the needs and priorities of developing countries and include inter alia, quantity, quality, scope and access features, as well as sources of funding, of the goal and transparency arrangements to track progress towards achievement of the goal, without prejudice to other elements that will also be considered as the deliberations evolve, including matters relating to time frame.’

It ‘further acknowledges that deliberations on the NCQG should build on lessons learned from the goal of developed countries of mobilising jointly USD100 billion per year by 2020 ... and taking into account the needs and priorities of developing countries.’                

Meena Raman is Head of Programmes at the Third World Network and coordinates TWN’s climate change work.

*Third World Resurgence No. 354, 2023, pp 7-11