COP27 approves  ‘historic” loss and damage fund to assist climate battered developing countries

“This COP has taken an important step towards justice. I welcome the decision to establish a loss and damage fund and to operationalize it in the coming period: UN Chief Antonio Guterres

Sharm-El Sheikh: After a long and hard deliberations, the countries at COP27 finally adopted an agreement to set up a fund (Loss and Damage fund) to help poor country being battered by climate change.

The decision was approved after tense negotiations that ran through the night at COP27 closing plenary.  The approval for creating a dedicated loss and damage fund still left many of the most controversial decision on the fund, including who should pay into it.

“History was made today at #COP27 in Sharm El-Sheikh as parties agreed to the establishment of a long-awaited loss and damage fund for assisting developing countries that are particularly vulnerable to the adverse effects of climate change,” the official twitter handle of the UN climate summit in Egypt posted.

“After two weeks of extensive negotiation #COP27 has concluded with hallmark implementation plan #SHIP and a historic deal for agenda item and outcome on #LossAndDamage funding” it said.

The plenary session approved the document’s provision to establish a “loss and damage” fund to help developing countries bear the immediate costs of climate-fuelled events such as storms and floods.

However, many of the more contentious issues regarding the fund were pushed into talks to be held next year, when a “transitional committee” will make recommendations for countries to then adopt at the COP28 climate summit in November 2023.

The recommendations will cover “identifying and expanding sources of funding”, which refers to the vexed question of which countries should pay into the new “loss and damage” fund.

The success of the talks hinged on a fund to address loss and damage fund, which was proposed by the G77 and China (India is part of this group), least developed countries and small island states. Vulnerable countries had said that they would not leave COP27 without a loss and damage finance facility.

This loss and damage fund will be a lifeline for poor families whose houses are destroyed, farmers whose fields are ruined, and islanders forced from their ancestral homes,” said Ani Dasgupta, president of the environmental think-tank World Resources Institute, minutes after the early morning approval was announced.

Financing or a new fund to deal with loss and damage, for example money needed for relocating people displaced by floods, was a long-pending demand of poor and developing countries, including India.

Developed nations, particularly the US, had opposed this new fund over fears that it would hold them legally liable for massive damages caused by climate change.

UN Secretary General António Guterres said COP27 has taken an important step towards justice. “I welcome the decision to establish a loss and damage fund and to operationalize it in the coming period. Clearly this will not be enough, but it is a much-needed political signal to rebuild broken trust,” he tweeted.

“This COP has taken an important step towards justice. I welcome the decision to establish a loss and damage fund and to operationalize it in the coming period” he said.

In his video message, Guterres highlighted that COP27 concluded with “much homework” still to be done and little time in which to do it.  

Developing countries made strong and repeated appeals for the establishment of a loss and damage fund, to compensate the countries that are the most vulnerable to climate disasters, yet who have contributed little to the climate crisis.