Hope Fades as UN Negotiations Struggle to Establish Climate Fund
The recent UN climate change negotiations have hit a roadblock in their efforts to establish a climate fund aimed at supporting countries vulnerable to the impacts of climate change. At the COP27 summit in Egypt last year, an agreement was reached to create a loss and damage fund, seen as a breakthrough in addressing the consequences of climate change. However, a year of talks has failed to materialize the fund in the way developing countries had hoped.
The key questions surrounding the fund remain unanswered. Who will contribute to the fund? Where will it be housed? Who will have control over it? And who will have access to the funding? These unresolved issues have resulted in a lack of progress in establishing the fund.
A transitional committee consisting of developing and developed country representatives was formed to address these questions following COP27. Despite its regular meetings over the past year, the committee failed to reach an agreement on important aspects of the fund, such as its host and administrator.
With COP28 scheduled to begin in Dubai at the end of November, time is running out to finalize these crucial arrangements. However, reaching a consensus among almost 200 participating countries is expected to be challenging, given the widespread dissatisfaction with the current state of negotiations.
Developing countries have expressed concerns about the World Bank acting as the host of the fund. They worry about the bank’s reputation, its donor-dominated structure, its focus on loans rather than grants, and its lack of climate expertise. These concerns are likely to resurface during the upcoming talks in Dubai.
The role of the United States in the World Bank is also a point of contention. As the largest shareholder, the U.S. traditionally nominates the bank’s president. Small island developing states, which are among the most vulnerable to climate change, advocate for moving the fund away from a donor-recipient model and towards a partnership that prioritizes protecting the planet.
Furthermore, the high administrative costs associated with the World Bank are another cause for concern. Some have suggested that the bank’s fees are increasing, diverting a significant portion of aid away from the intended recipients. This raises questions about the bank’s justification for hosting the fund, especially considering its continued support for the fossil fuel industry.
Another issue is the financing of the fund. While the agreed text suggests that developed countries should take the lead in providing funding, they have pushed back against any notion of financial obligation. Instead, they may opt to rebrand existing forms of climate finance or development aid rather than offering new money.
Compensation is a term that is notably absent from the negotiations. Although discussions on loss and damage often invoke the idea of reparations, liability, and compensation, this language has been avoided within the COP process. Instead, countries are opting for terms like solidarity to frame the discussion on finance, revealing where power lies.
Looking ahead to COP28, there are concerns about the potential failure to deliver on the promises made regarding loss and damage finance. Previous agreements have often fallen short due to bureaucratic delays and insufficient resources. It remains uncertain how the urgent need for support among vulnerable communities and countries will be addressed if the pace of progress continues to be slow.
The establishment of a functioning loss and damage fund will serve as a litmus test for the legitimacy of the entire climate change negotiation regime at COP28. As discussions unfold in Dubai, all eyes will be on the negotiators to see if they can overcome the challenges and ensure that the fund becomes a reality.
