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- Countries at COP27 have finally agreed to establish a loss and damage fund to help poor nations cope with climate impacts.
- Details of the fund will be worked out by a transitional committee and will be up for discussion at COP28.
- The decision is a big win for poorer nations, who have been campaigning for assistance for loss and damage over 30 years.
- For more financial news, go to the News24 Business front page.
Countries at the United Nations COP27 climate summit in Egypt have adopted a final agreement that establishes a fund to help poor nations cope with the extreme weather events caused by global warming.
Following tense negotiations that ran through the night, the summit's Egyptian presidency released a draft text of the overall agreement early on Sunday and also called a plenary session to push the document through as the final, overarching agreement for the UN summit.
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.
Still, the adoption of the fund is a big win for poorer nations which have long called for financial compensation because they are often the victims of climate change – such as worsened floods, droughts, heat waves, famines and storms – despite having contributed little to the pollution that is heating up the planet.
"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.
Calls by developing countries for such a fund have dominated the two-week summit, pushing the talks past their scheduled finish on Friday.
"This is how a 30-year-old journey of ours has finally, we hope, found fruition today," Pakistan Climate Minister Sherry Rehman said.
One-third of her nation was submerged this summer by a devastating flood and she and other officials used the motto: "What went on in Pakistan will not stay in Pakistan."
Collins Nzovu, Zambia's minister of green economy and environment, said he was "excited, very, very excited".
"Very exciting because for us, success in Egypt was going to be based on what we get from loss and damage," he said.
"This positive outcome from COP27 is an important step toward rebuilding trust with vulnerable countries."
According to the agreement, the fund would initially draw on contributions from developed countries and other private and public sources such as international financial institutions.
While major emerging economies such as China would not initially be required to contribute, that option remains on the table and will be negotiated over the coming years.
This is a key demand by the European Union and the United States, who argue that China and other large polluters currently classified as developing countries have the financial clout and responsibility to pay their share.
READ | SA hopeful that COP27 can be a 'success' for Africa
The fund would be largely aimed at the most vulnerable nations, though there would be room for middle-income countries that are severely battered by climate disasters to get aid.
Experts said the adoption of the fund was a reflection of what can be done when the poorest nations remain unified.
"I think this is huge to have governments coming together to actually work out at least the first step of … how to deal with the issue of loss and damage," said Alex Scott, a climate diplomacy expert at the think-tank E3G.
But, like all climate financials, it is one thing to create a fund and another to get money flowing in and out, she said.
The developed world still has not kept its 2009 pledge to spend $100bn a year in other climate aid – designed to help poor nations develop green energy and adapt to future warming.
“In many ways, we’re talking about reparations,” said University of Maryland environmental health and justice professor Sacoby Wilson.
“It’s an appropriate term to use,” he said, because rich northern countries had received the benefits of fossil fuels, while the poorer global south nations were suffering the effects of climate change.
