Countries agree to create a new fund, but details have yet to be worked out on who would contribute to the fund and who would benefit from it.

The UN climate summit on Sunday agreed to create a “loss and damage fund” to support poorer countries ravaged by climate impacts, and to overcome the decades-long resistance of rich countries, which account for the bulk of global emissions. vanquish.

Pakistan’s climate minister Sherry Rehman, who was part of developing countries’ campaign to win the pledge at the two-week UN COP27 summit in the Egyptian resort of Sharm el-Sheikh, hailed the groundbreaking decision as a “down payment on climate justice” . .

But the text of the agreement leaves some crucial details open to be worked out next year and beyond, including who would contribute to the fund and who would benefit from it.

Here’s what you need to know about the agreement:

What is ‘loss and damage’?

At the UN climate talks, “loss and damage” refers to costs incurred by climate-related weather extremes or impacts, such as rising sea levels.

Climate finance has so far focused primarily on reducing carbon dioxide emissions to curb global warming, while about a third of that has been spent on projects to help communities adapt to future impacts.

“Loss and damage” financing is different and specifically covers the cost of damage that countries cannot avoid or adapt to.

But there is not yet agreement on what should be considered “loss and damage” caused by climate change, which may include damaged infrastructure and property, as well as harder-to-value natural ecosystems or cultural assets.

A report of 55 vulnerable countries estimated their combined climate-related losses over the past two decades to total $525 billion, or 20 percent of their collective gross domestic product (GDP). Some studies suggest such losses could reach $580 billion a year by 2030.

Ministers make statements at the closing plenary of Egypt's COP27 climate summit.
Ministers make statements at the closing plenary session of the COP27 climate summit in the Red Sea resort of Sharm el-Sheikh, Egypt, on November 20, 2022 [File: Mohamed Abd El Ghany/Reuters]

Who pays whom?

Vulnerable countries and campaigners have argued in the past that wealthy countries whose historic greenhouse gas emissions caused most of the climate change should pay.

The United States and the European Union had opposed the argument, fearing mounting liabilities, but changed their stance at the COP27 summit. The EU has argued that China – the world’s second largest economy, but classified by the UN as a developing country – should also contribute.

A few governments have made relatively small but symbolic funding pledges for loss and damage: Denmark, Belgium, Germany and Scotland, as well as the EU. China has not committed to any payment.

Some existing UN and development bank funding helps states facing loss and damage, although it is not officially designated for that purpose.

It also has to be worked out which countries or disasters are eligible for compensation.

What does the COP27 agreement say?

The fund agreed at the UN summit in Egypt will aim to help developing countries that are “particularly vulnerable” to the impacts of climate change, a language chosen by the wealthier countries to ensure that the money goes to the most urgent cases and at the same time the pool of potential recipients.

The deal includes a roadmap for future decision-making, with recommendations to be made at next year’s UN climate summit for decisions, including who would oversee the fund, how the money would be distributed – and to whom.

The agreement requires the funds to come from a variety of existing sources, including financial institutions, rather than relying on wealthy countries to pay.

Some countries have suggested that other existing funds could also be a source of cash, although some experts say issues such as long delays make these funds unsuitable for dealing with loss and damage.

Other ideas include UN Secretary-General Antonio Guterres’ call for a windfall profit tax on fossil fuel companies to attract funding.



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