Facing mounting pressure to compensate low-income countries for damages they're suffering from climate change, wealthy nations may try to move money they've already promised to other global warming goals rather than come up with new funding, according to experts and participants at the United Nations climate conference in Egypt.
A draft document released this week at the talks says money for loss and damage — a key issue in the negotiations — should be added to climate financing that's already going to low-income countries to help them limit and adapt to global warming. The current funding arrangement, which was created more than a decade ago, reflects the fact that industrialized nations such as the United States have emitted most of the pollution heating the Earth, while poorer countries are bearing the brunt of the harm caused by rising temperatures.
But industrialized countries for years have failed to fully fund those pledges. That makes the odds slim for a big new cash infusion for loss and damage, especially as countries deal with the threat of recession and the war in Ukraine. And it's raising the possibility that developed nations will now look to transfer money from older financing commitments to potentially new loss and damage obligations, without actually increasing overall funds that low-income nations need to cope with climate change.
"We do need to see money, extra money, flow towards" loss and damage, says Michai Robertson, an advisor to the Alliance of Small Island States, which represents communities that are especially vulnerable to climate change. However, he says that a reshuffling of climate funds is likely to be "a reality that we're gonna have to contend with a lot going forward."
Failure to deliver new money for loss and damage would mean that richer countries would continue their chronic underfunding of developing nations. That's heightening fears that this year's climate conference won't galvanize a strong global response to climate change despite the urgency signaled by deadly events across the world.
Without more money, loss and damage could eat into adaptation efforts
One of the challenges of dealing with climate change is that countries have to do several things at once to protect their people, experts say. Countries need to limit, or mitigate, further warming. They need to adapt to risks people are facing. And they need to compensate poorer nations for damage already done and for impacts that can't be avoided, like communities being displaced by rising seas. All that takes funding, which, given the scope of the problem, should increase over time.
So far, several countries have pledged money for loss and damage. But the amounts are relatively small, and the money isn't new, says Taylor Dimsdale, a director at E3G, a climate change think tank. Rather, countries are "just dividing the same climate finance pie up in different ways."
If money is pulled away from mitigation and adaptation efforts, it could mean that more places and people will experience irrevocable losses and damage.
Over time, the amount of money that's available to low-income countries will probably grow, so that claims for loss and damage don't eat into funding for adaptation to extreme weather, says Gaia Larsen, director of climate finance access and deployment at the World Resources Institute's Sustainable Finance Center. But right now, "developed countries are pushing back, mostly because they don't want to provide a lot more money," she says.
Reached for comment, a spokesperson for John Kerry, the U.S. special presidential envoy for climate change, pointed to recent comments in which Kerry said the country "has been very clear about its support to deal with the loss and damage issue."
Debate centers on creating a new fund for loss and damage
It's still unclear, though, what sort of action world leaders would be willing to commit to in Egypt.
Frans Timmermans, executive vice president of the European Commission, suggested on Wednesday that a decision on whether to create a new fund or financial mechanism for addressing loss and damage should be delayed while details are worked out, including whether certain developing countries like China should contribute and how money would be distributed. China is the world's largest emitter of heat-trapping pollution and the second-biggest economy.
"Now, we believe that a process should be started where the [financial] facility could be one of the outcomes," Timmermans said in Egypt. "But we also believe that the existing instruments we have could be mobilized immediately to support the most vulnerable."
The European Union and several member states said Wednesday that they're providing more than 1 billion euros ($1.04 billion) of new and existing funds for adaptation programs in Africa. An EU spokesperson said the bloc is contributing 220 million euros of new funding, including 60 million euros for loss and damage.
"So you see that we have tools, funds, mechanisms to deliver financial assistance now and to move it quickly," Timmermans said.
Kaveh Guilanpour, vice president of international strategies at the Center for Climate and Energy Solutions, says there could be "good reasons" to hold off on creating a new fund for loss and damage at this year's climate conference.
It isn't clear whether such a fund would "rapidly result in the flow of new finance," Guilanpour says. And world leaders are looking for ways to use limited public money to attract other forms of financing, he says, including from the private sector.
Guilanpour says climate litigation along with better attribution science linking extreme weather events to climate change could expose fossil fuel companies to greater liability for the impacts of rising temperatures. That could provide a valuable source of funding for loss and damage claims.
"There is a willingness and there's a recognition [among industrialized countries] that more finance is needed for loss and damage," Guilanpour says. "But I think there's also a question about where and how is the money going to come from."
Developing countries are also looking for safeguards to ensure they get whatever they're promised.
Even if world leaders decide this week to create a new loss and damage fund, "we're gonna still have the blurring of the lines and the rebranding that you see a lot of developed countries doing right now," says Robertson of the Alliance of Small Island States.
"We're gonna need to make sure to establish some clear rules on this and what can count as funding towards this cause," Robertson says, "especially to keep them accountable."
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