December 8, 2023
Source: The Big Riddle of the U.N. Climate Conference | The New Republic
If rich nations set up a “fund” to help poorer nations and don’t fund it … is it a fund?
On the very first day of the United Nations’ climate change conference last week, negotiators notched an uncharacteristically early win: Nations agreed to establish a dedicated fund for loss and damage—i.e., to help countries recover from the effects of climate change.
A loss and damage fund looked like an epic long shot until almost the last minute of last year’s climate talks in Egypt, when the United States abruptly relented, after years of pressure to stop blocking the fund. Shortly after that conference, known as COP27, a Transitional Committee composed of representatives from each region of the world got together to figure out what the fund should look like, with the goal of bringing a recommendation to this year’s talks. But the committee still hadn’t reached an agreement after their four scheduled meetings. They reconvened for an additional session a few weeks ago in Abu Dhabi, hoping to agree on something they could bring to Dubai. Not only did they manage to come up with a text to present for negotiation at COP28, but the text was approved quickly and with only minor revisions.
…The $700 million participating nations have already committed to the fund will only pay for an estimated 0.2 percent of the irreversible economic and noneconomic losses developing countries are facing from global heating every year. And the $700 million figure may not be completely accurate, as some pledges—which do not come with any legal commitments—could refer to money going directly to the loss and damage fund but could also refer to broader “funding arrangements,” which can mean just about anything.
…Throughout those talks, the U.S. had been especially adamant that the fund at least initially be hosted by the World Bank, in which the U.S. is the largest shareholder. The draft text countries agreed to on Friday says the fund will be governed by its own board and executive director, though it will still be subject to World Bank H.R. policies and other administrative procedures. The World Bank also charges a baseline 17 percent administrative fee to host these sorts of independent funds. Within eight months, the World Bank will also have to at least make progress toward satisfying several conditions before it can host the fund. Among the most important is allowing countries direct access to funds, which according to current World Bank rules need to be dispersed via intermediaries.
…Oxfam has found that upward of 90 percent of the climate financing offered by multilateral development banks between 2019 and 2020 came in the form of loans. “If you’re doing everything like an MDB, then you might as well have set it up under an MDB,” Schalatek added, reiterating that the fund will be officially under the auspices of the U.N. Framework Convention on Climate Change and the Paris Agreement.
Conversations this year will also set the stage for next year’s announcement of a successor to the $100 billion climate financing commitment made in 2010 and achieved in 2022. Developing countries are eager to see loss and damage included in whatever pledge comes next; many developed countries would rather leave it out.
Because it took years of intense pressure for the UNFCCC to establish a loss and damage fund, even those criticizing how rich nations want the fund to work see its creation as a major victory. Like just about all climate policy, though, it’s hard to know how these promises will play out. Making sure a victory still feels like a victory in 10 years’ time entails a lot of work.
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Conversations this year will also set the stage for next year’s announcement of a successor to the $100 billion climate financing commitment made in 2010 and achieved in 2022. Developing countries are eager to see loss and damage included in whatever pledge comes next; many developed countries would rather leave it out.
Because it took years of intense pressure for the UNFCCC to establish a loss and damage fund, even those criticizing how rich nations want the fund to work see its creation as a major victory. Like just about all climate policy, though, it’s hard to know how these promises will play out. Making sure a victory still feels like a victory in 10 years’ time entails a lot of work.
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