Cop27: Draft loss and damage text says countries will set up fund

A fund to respond to the irreparable destruction caused by the climate crisis looks set to be agreed at Cop27 in what would be a major breakthrough that could unlock progress in the remaining talks.

In a draft text on the most contentious agenda item at the crucial climate summit, the Egyptian presidency has proposed establishing a fund for compensating poor nations that have suffered loss and damage due to the climate crisis fuelled by rich nations’ greenhouse gas emissions.

A loss and damage fund is the key demand of developing countries that are particularly vulnerable to climate-fuelled extreme weather and rising sea levels, which have repeatedly said they wanted a fund no later than 2024.

They argue that they are bearing the brunt of climate devastation despite their relatively small carbon footprints.

The text says a transitional committee will be established to operationalise the new fund and other funding arrangements.

The committee will consider issues such as “identifiying and expanding” sources of funding which will then be discussed - and potentially adopted - at Cop28 in the United Arab Emirates next year, the text says.

Sherry Rehman, Pakistan’s climate change minister, said Pakistan had pushed “very hard” until the last minute for a loss and damage fund.

“A positive outcome is close. Not perfect or optimal, but one that addresses the basic demand of developing nations,” she told reporters. I believe if we stick to our positions, stay united, we will make landfall.”

Harjeet Singh, head of global political strategy, Climate Action Network International, said the draft decision on loss and damage finance “offers hope to vulnerable people that they will get help to recover from climate disasters and rebuild their lives”.

Rich countries that have developed into economic powerhouses by burning fossil fuels have previously acknowledged that loss and damage need to be addressed. But many, including the United States, have pushed back on the concept of a new fund.

Some historically wealthy and high-emitting nations fear being held financially liable for years of spewing out greenhouse gas emissions into the atmosphere.

The loss and damage caused by the climate crisis is incalculable but by 2030 is estimated to cost developing countries between $290bn and $580bn annually, rising to $132–741bn by 2050.

The draft text on loss and damage published by the presidency comes hours after the European Union’s climate envoy said European ministers were ready to walk away from negotiations if they failed to move forward and deliver an outcome that rises to the challenge of tackling the climate emergency.

He called on other parties to reciprocate European efforts to reach a deal on loss and damage which had been a major sticking point in the negotiations.

The latest version of the Cop27 cover letter still includes a “placeholder for funding arrangements decision.”