Analysis: Steps forward on Loss and Damage at COP28

Cyclone Winston damage. File photo.

When Fiji was hit by Cyclone Winston in 2015, it caused F$2 billion worth of loss and damage.

The Fiji government’s official post-disaster assessment highlighted many adverse impacts. Nearly 40,000 people required immediate assistance following the cyclone, with 30,369 houses, 495 schools and 88 health clinics and medical facilities damaged or destroyed. The cyclone destroyed crops and food gardens on a large scale, threatening nutrition and food security. Overall, this single disaster compromised the livelihoods of nearly 540,400 people in Fiji – some 62 percent of the population!

So what happens when there are repeated extreme weather events and governments and communities must rebuild, time and time again?

In March this year, Vanuatu faced two cyclones in just one week – Tropical Cyclones Judy and Kevin – followed by a 6.5 magnitude earthquake. The Melanesian nation was hit again in October by Cyclone Lola. How many times must ni-Vanuatu bounce back from these disasters, before wealthy industrialised nations will accept responsibility for reducing the green house gas emissions that amplify the intensity of these cyclones?

The term “loss and damage” refers to a range of destruction and permanent loss associated with climate change impacts.  These can include “extreme weather events”, such as tropical cyclones or flooding events, or “slow onset events” that may be harder to spot immediately but still threaten ecology and livelihoods (slow onset changes can include sea level rise over many years, coastal erosion or ocean acidification that damages reefs and fisheries).

For more than 30 years, Pacific governments have worked with the Alliance of Small Island States (AOSIS) to campaign for action on loss and damage at the annual global climate negotiations – the Conference of the Parties (COP) under the United Nations Framework Convention on Climate Change (UNFCCC).

This year, Vanuatu’s Ralph Regenvanu has been appointed as one of eight Pacific Islands Forum Climate Champions. As Minister for Climate Change, Adaptation, Energy, Environment, Meteorology, Geohazards and Disaster Management, Regenvanu is lead ministerial negotiator on Loss and Damage at the 28th Conference of the Parties (COP28), now underway in Dubai, United Arab Emirates.

“Today, Loss and Damage is not just a Pacific problem,” he said. “What we are experiencing now and have faced for many years, we see the rest of the world beginning to feel.”

“We empathise deeply with the people of Canada as their entire nation burns with wildfire. We empathise with Europe, the United States and Asia as crippling heat-waves kill elderly and the poor. We empathise with the people of Italy and Korea as flooding has destroyed homes and taken lives. This is the reality of loss and damage, in the Global North and South, in the rich and poor countries, and I hope that the world has sufficient collective courage to turn this canoe around.”

Now, as delegations meet at COP28, there are tentative steps forward on Loss and Damage – though still a long way to go.

At the opening ceremony, the host nation UAE agreed to put a new Loss and Damage Fund into operation. The coalition of governments and civil society who had fought for the Fund welcomed the decision: “After 30 years of effort, from developing countries on the frontline of climate impacts and from civil society, a Loss and Damage Fund has been agreed in the UNFCCC. The Loss and Damage Fund – whilst not perfect – is a critical step towards climate justice and will play a vital role in supporting developing countries and communities on the front line of climate impacts.”

Establishing a Loss and Damage Fund

It’s been a long time coming, in the face of resistance from wealthy governments and fossil fuel corporations.

The Paris Agreement on Climate Change, adopted at COP21 in 2015, recognised the importance of “averting, minimising and addressing loss and damage associated with the adverse effects of climate change, including extreme weather events and slow onset events.”

However, faced with the refusal of rich industrialised countries to commit resources to a new fund, the 2015 Agreement noted that “it does not involve or provide a basis for any liability or compensation.”

Since then, Pacific nations, other Small Island Developing States and Least Developed Countries have been at the forefront of a campaign to overturn this decision, recognising that funds to adapt to the adverse effects of climate change are not enough.

After extensive global negotiations, last year’s COP27 in Egypt decided to establish a new Loss and Damage Fund. Then, throughout this year, there have been fierce negotiations at a Transitional Committee responsible for designing the new financial mechanism.

After a deadlock at the 4th Transitional Committee meeting in October, climate finance advisor Liane Schalatek of the Heinrich Böll Foundation explained: “The meeting tanked because rich countries drew up too many red lines and displayed little political will for compromise. Instead they played hard ball with the lives and livelihoods of vulnerable countries and communities already suffering catastrophic losses and damages.”

A further emergency meeting in November forged an uneasy compromise. The United States, Australia and other developed countries had fought within the Transitional Committee for the new fund to be housed at the US-dominated World Bank, rather than as an independent, stand-alone institution. The carefully crafted compromise (which the United States still refused to endorse!) agreed the World Bank would temporarily house the new Fund, but with a series of conditions and reviews in 2024 that would open the way for the creation of an independent body.

Espen Ronnenberg is a climate advisor at the Pacific Community (SPC) and a long-time COP negotiator for Forum island countries. For Ronnenberg, “we were not entirely in favour of the World Bank, however we were able to get a number of safeguards into the Transitional Committee decision. With those safeguards in place, we think that having the Fund under the World Bank will be fine.”

“We have what have been described by our negotiators as three exit ramps,” he said. “The first step will be for the World Bank to confirm that they can accommodate the conditions that have been set down. Then the Board of the Fund will be meeting and will have the opportunity to analyse and consider whether the conditions have been met by the World Bank. If not, that’s exit ramp number two. Then there will be a period of trial, when the World Bank will be operating the Fund and there will be a review – which is the third exit ramp. If the review finds that the World Bank has not met the conditions that have been put down, then we have to look for another host for the Fund.”

For Lavetanalagi Seru of the Pacific Islands Climate Action Network (PICAN), it’s “one of the most difficult decisions we have to make at the COP, to accept this compromise. However, we already made our decision from our strategy meeting to move on, rather than allow the renegotiation of the text, because we already have some of those safeguards in place.”

On 30 November, the opening day of COP28, governments agreed to break protocol and operationalise the new Fund, clearing the way for world leaders to make ambitious pledges of support. It was a relief for many SIDS, fearful they would have to battle over the next two weeks to protect the Fund all over again.

Tuvalu’s former Climate Change Ambassador Ian Fry is the inaugural United Nations Special Rapporteur on Human Rights and Climate Change.

“Prior to the start of the conference, I wrote a letter as Special Rapporteur to the President of COP28 above the Loss and Damage Fund,” Fry said. “I had grave reservations about where the Fund was heading. There is no clear recognition of human rights as an underlying objective of the Fund. We also had reservations about the World Bank being the institution administering the fund. We’ve had many years of experience dealing with the World Bank, and there was concern that the money would not go to the most vulnerable.”

With the Fund now established, Forum island states will continue to negotiate in coming days to improve its operation. For example, they argue that Loss and Damage funding should be delivered as grants and not loans, given loans will exacerbate the debt crisis already facing many climate vulnerable countries and SIDS would have to repay loans for damage they didn’t create in the first place!

Negotiators will also work to ensure that the new Fund makes decisions based on a human rights approach, as well opening up the Fund’s board with gender-balance and seats for indigenous peoples, frontline communities and civil society.

Most importantly, there will be a call for OECD industrialised nations to move beyond making voluntary pledges to the Fund. It’s estimated that any global loss and damage funding will require US$400 billion a year to meet the needs of developing countries. While this seems an astronomical sum for ordinary people, it’s a long way short of the amount spent on armaments and warfare every year – and initial pledges at COP28 are nowhere near enough.

Show me the money

As the new Loss and Damage Fund enters into operation this week, developed nations have started to announce pledges of support.

In Dubai, pledges of Loss and Damage funding have come from Italy (€100 million); Germany (US$100 million); France (up to €100 million); the United Kingdom (£40 million); and European Union (€25 million). The conference host United Arab Emirates (UAE) has also agreed to contribute US$100 million (It seems like a generous contribution, until you remember that the oil-rich nation will spend that amount on fossil fuel production every three days between now and the end of this decade!).

Two of the world’s economic powerhouses – and largest greenhouse gas emitters – have pledged paltry amounts. Japan, which claims to be a key development partner to Pacific Island states, has pledged just US$10 million. The United States committed just US$17.5 million for developing countries around the world. Given the size of the US economy and the 134 developing countries in the G77 group, Washington’s pledge looks like the small change found down the back of the couch.

As Islands Business goes to press, the largest Pacific Islands Forum member Australia has yet to publicly announce its pledges for the Loss and Damage Fund, the Green Climate Fund and the new Pacific Resilience Fund – watch this space!

The challenge for Australia is that its international climate finance is drawn from the Official Development Assistance (ODA) budget, rather than new and innovative sources of finance (such as levies on shipping or financial transactions, or the transfer of fossil fuel subsidies towards more appropriate use). According to Australia’s 2023-4 budget papers, the Albanese government is planning to stabilise – but not increase – its ODA budget from 2026 until 2036. So where will the money come from to meet the steadily rising targets for climate finance, which the Paris Agreement says must ramp up after 2025? How can Australia hope to host COP31 in 2026 with support from Pacific Island States, if it hasn’t the will to develop new and additional sources of climate finance?

Once again, diplomats from Small Island Developing States are at the forefront of addressing this dilemma. Pacific states like Solomon Islands and Marshall Islands are working to forge an agreement at the international Maritime Organisation to dramatically cut shipping industry pollution, by introducing a $100 per tonne levy on maritime emissions. Revenues from this levy could go towards Loss and Damage funding as well as investing in low-carbon shipping technologies.

For United Nations Special Rapporteur Ian Fry, funding for the Loss and Damage mechanism needs more structured commitments.

“The crucial thing is, where is the money going to come from?” Fry said. “If we look at the impacts of climate change already, we’re talking in terms of billions of dollars. The Fund is never going to work if it only has to rely on pledges. From my perspective, it’s good that we have the Fund, because something is better than nothing. But I seriously think it’s not going to be adequate for the needs of the most vulnerable, and particularly the Pacific.”

The stakes are high

While there are small victories at COP28, the global climate talks always take one step forward then three steps sideways.

The failure of OECD countries to meet the 2020 target for climate finance agreed in the Paris Agreement still rankles amongst many developing nations. As financial and diplomatic resources are poured into the wars in Ukraine and Palestine, when will wealthy countries and corporations allocate the same resources towards the greatest security challenge facing island communities?

After the announcement on the Loss and Damage Fund, former Fiji Prime Minister Voreqe Bainimarama tweeted: “While I’ll never celebrate irreversible climate impacts, this Loss and Damage agreement is a start. But ‘voluntary’ contributions won’t cut it. Frontline nations like Fiji didn’t choose this battle, and the worst emitters shouldn’t choose if they pay for the damage they’ve caused.”

For Pacific Islands Forum Secretary General Henry Puna, “Our priority in the Pacific is the 1.5°C threshold, and unfortunately the big emitters are not listening to the science, they’re still carrying on their merry way. The science is saying that clearly, unless we reverse the track, we’re overshooting the 1.5° threshold.”

Civil society and church groups also argue that funding for loss and damage, while welcome, is no substitute for urgent action to reduce greenhouse gas emissions. They want countries like Australia to ban the opening of new oil, gas and coal projects that will only worsen emissions.

As the Pacific Conference of Churches proclaimed after its 12th General Assembly, held in Noumea in November: “We urge COP28 to hear the cry of our people, land and ocean and to remember that without maintaining the 1.5-degree target, all climate adaptation and loss and damage funding is blood money.”