Countries agree to loss and damage fund seen as a breakthrough at COP27
World leaders have finally struck a historic deal at COP27 in Egypt to provide funding to developing countries facing the effects of climate change.
The establishment of a “loss and damage” fund is seen as a breakthrough, but previous promises of payment by developed countries have yet to be fulfilled.
What is “loss and damage”? What is China’s current position in this regard?
What do countries want money for?
Funding for climate action broadly falls into three categories:
The money is used to help developing countries recover from the effects of climate change they are already suffering.
For example, in the past 12 months alone, developing countries have experienced severe disasters related to climate change, from floods in Pakistan to droughts in East Africa.
Funding for disaster relief has usually been obtained through humanitarian aid.
Developing countries, however, want guaranteed compensation from developed countries, which they say are historically responsible for climate change.
Developed countries recognize the need to finance this. Viewing payments as compensation is controversial, however, and they are wary of accepting liability on terms.
The money is money that helps developing countries wean themselves off fossil fuels and other polluting activities. This is by far the most funded area related to climate change.
Many countries still have coal-fired power plants that have not reached the end of their useful life. They need financial or technical support to switch to clean energy sources, such as solar farms.
The money is money to help developing countries prepare for the worst effects of climate change.
It differs from loss and damage in that it focuses on the future.
Its requirements vary by country, but may include:
- Build Stronger Flood Defenses
- Resettlement of at-risk populations
- Develop storm-resistant buildings
- Promote planting of food crops that are more resistant to drought
What agreement was reached on loss and damage?
More than 200 countries have agreed to establish a loss and damage fund.
Developed countries will contribute to the fund, which will then be distributed to “particularly vulnerable” countries.
Loss and damage is not even on the agenda at COP26 in 2021. So this is a major development for COP27.
Many details still need to be worked out, including how much rich countries will pay and how the money will be distributed.
All parties hope a series of workshops early next year will resolve the issue.
But strong concerns have been raised that the fund could be damaged by a lack of progress on a deal to cut emissions.
Katie White of the World Wildlife Fund said that unless emissions were urgently cut in line with the 1.5C target, the loss and damage agreement “has the potential to be a down payment for a catastrophic outcome”.
How much have you given so far?
In 2009, wealthier countries agreed to provide developing countries with $100bn (£88bn) a year in climate action funding by the end of 2020.
But by the end of 2009, funding had totaled $83.3bn (£73bn). This goal is expected to be achieved by 2023.
According to the OECD, the majority of this money (82%) comes from public funds, with the rest coming from the private sector.
Scientists say climate change is worsening more than half of all infectious diseases and humanity must “be prepared” for a major threat to global health security.
But analysis commissioned by the United Nations shows that the private sector can provide 70% of the future investment needed to meet climate commitments.
A coalition of more than 550 private companies has pledged to use $130 trillion in assets to help achieve net-zero emissions.
Are developing countries getting enough money?
Not only are existing climate finance commitments currently not fully met, but developing countries see funding targets as too low.
At the UK’s Glasgow climate summit in 2021, the Group of 77 plus China’s coalition of developing countries called on rich countries to mobilize at least $1.3tn (£1.14tn) by 2030. They argue that the funds should be split equally between reducing emissions and preparing for climate change.
According to the latest OECD figures, only 34% of climate finance is currently used to help developing countries adapt to climate change.
Furthermore, the majority of public funding (71%) is still provided in the form of loans rather than direct grants. This could increase the debt burden of poorer countries.
Navkot Darby, head of international climate policy at Oxfam, thinks this is deeply unfair.
“Instead of supporting countries facing worsening droughts, cyclones and floods, rich countries are weakening their ability to deal with the next shock and deepening poverty in the countries involved,” he said.
China’s Changing Status
Around 2009, as the world’s largest emitter of greenhouse gases, China’s stance on climate change mitigation has undergone a gradual shift: from ignoring environmental degradation and focusing on economic growth, to committing to significantly reducing carbon dioxide emissions and Green energy development; also changed from passive to active in international negotiations, hoping to play a leading role.
Because China and the United States, the two largest emitters in the world, reached an agreement and coordinated with other countries around the world, the COP21 climate change conference held by the United Nations in December 2015 was promoted to reach the “Paris Agreement” that will affect the future of the world.
However, although China has been accelerating the development of green and clean energy and technology for more than a decade, it is still the world‘s largest carbon emitter and coal producer, and will accelerate the approval of new coal-fired power generation in 2022 to prevent economic recession factory.
China is also providing assistance for climate change loss and damage funds: in 2015, Beijing contributed 20 billion yuan to establish the China Climate Change South-South Cooperation Fund to support other developing countries in addressing climate change, including strengthening their ability to use funds from the Green Climate Fund . China has also pledged not to support new coal-fired power plants overseas.
There are more and more voices in the world questioning whether China should be included in the ranks of developed countries and whether it should bear more responsibility for the loss and damage caused by climate change.
At the COP27 meeting of the United Nations Climate Change Conference in 2022, as the least developed countries most vulnerable to climate change, the Small Island States Group proposed for the first time that China and India, as current major greenhouse gas emitters, have the responsibility to pay climate losses to developing countries and damages fund. But the request was rejected by China’s climate change representatives. Because the current concept of loss and damage fund still focuses more on the historical responsibility of the developed countries after the industrial revolution. China also said that China has made special fund support for developing countries.
New data from international organizations that monitor carbon emissions show that China, currently the world‘s largest emitter, surpassed the combined emissions of all developed countries in 2019. China’s per capita emissions will still increase substantially in 2020 and 2021. As the world‘s second largest emitter, the United States‘ total emissions and per capita emissions are decreasing year by year.
Therefore, on the issue of curbing the loss and damage of climate change, it is worth observing whether China can fulfill its commitment to peak carbon emissions before 2030, and whether it will face greater international pressure as a result.