COP28 talks reach deal on climate-damage fund

Fund is the first under the UN that will pay for loss and damage.

COP28 president Sultan Ahmed Al Jaber presides the opening ceremony of the UN climate summit in Dubai on Thursday. Picture: AFP

Governments have reached an agreement on the architecture of a UN fund to pay for climate-related damage in poor countries, ending a year of contentious talks over where the fund will be located, which countries should benefit and who should finance it.

Negotiators from more than 190 governments approved the deal on Thursday at the start of the COP28 climate summit in Dubai, lending momentum to UN talks aimed at speeding up global efforts to prevent the worst effects of global warming.

The fund is the first under the UN that will pay for loss and damage, which occurs when rising seas, drought or effects of climate change are so destructive that communities can no longer adapt. The world’s governments agreed to establish the fund at last year’s UN conference in Sharm El Sheikh, Egypt. Since then, they have been debating the details over how to set it up.

The United Arab Emirates, the host of the summit, said it would contribute $US100m ($151.1m) to the fund. Germany also pledged $US100m. The UK pledged £20m ($38.2m), and the U.S. committed $17.5 million, the U.A.E. said Thursday.

A draft text of the agreement says the fund will be managed by the World Bank in Washington during the first four years of its existence but have its own secretariat. The fund’s board could choose to make the World Bank the permanent host if the board determines that the fund has sufficient independence from the bank. If not, the board would select a country to host the fund.

The subject dominated the debate for much of the year. Developing countries wanted a completely new fund, separate from existing international institutions that they say are tied down by red tape created by wealthy countries. The US and other developed countries said creating a new bureaucracy would only slow the arrival of funds to poor countries.

The draft agreement urges developed countries to contribute to the fund and encourages other countries to do so. That was a key request from the US and other wealthy nations, which want higher-income countries deemed as developing under the UN system — such as China and the Persian Gulf nations — to contribute. The agreement also states that the contributions will be voluntary. The US didn’t want to promise funds given opposition from congressional Republicans to sending money abroad to pay for climate damage.

The US earlier this month had objected to the draft agreement, saying the text didn’t state clearly enough that the contributions are voluntary. But the Biden administration is now endorsing the agreement, a US diplomat said.

Scientists say global warming is imposing rising costs on economies around the world. Storms have become more powerful. Rising seas are encroaching on coastal communities. Drought is afflicting some countries, while others face flooding because the warming atmosphere can hold more water — until it is released in torrential downpours. For some communities, the effects are so severe that they are forced to relocate.

“This is a hard-fought historic agreement,” said Avinash Persaud, the climate envoy for Barbados, who helped negotiate the deal. “Money is needed to reconstruct and rehabilitate if we are not to let the climate crisis reverse decades of development in mere moments.” Developed countries want to reserve the funds for poor countries that are on the front lines of climate damage and not wealthier developing countries such as China. Those include small island states such as Barbados, low-lying coastal nations such as Bangladesh and drought-prone countries in Africa.

The draft text says the funds will be targeted toward countries that are “particularly vulnerable” to loss and damage, but it also allows that all developing countries can access money from the fund.

The Wall Street Journal