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New climate disaster fund offers hope to poorer countries

Louise Osborne
November 30, 2023

A loss and damage fund aimed at offering financial assistance to climate-vulnerable nations has been officially launched on the first day of the crucial UN climate talks in Dubai.

People working a field
Climate change is linked to a two-year drought in Uganda and other parts of East AfricaImage: Badru Katumba/AFP/Getty Images

After years of seeing her home country of Uganda hit by the impacts of climate change caused by the burning of fossil fuels, Ireen Twongirwe is angry. 

"You can't predict what is coming, you know? Like you find when it's the season for rain now sunshine comes in, when it's the season for sunshine, now rain comes in. So, you know, it's hard to predict," said Twongirwe, executive director of the nonprofit Women for Green Economy Movement Uganda.

The unpredictability she described is destroying crops and livelihoods, which she said leads to "all sorts of conflicts in communities and the country at large" due to price increases.

East Africa has been suffering severe drought since 2020. The worst in 40 years, it has left more than 4 million people in need of humanitarian aid. World Weather Attribution scientists, who investigate the link between extreme weather events and climate change, have said the drought was made 100 times more likely by hotter temperatures linked to the burning of fossil fuels.

People sitting in front of a fire
Even a year after floods in Pakistan, villages continue to lack food, shelter, basic sanitation facilities and access to waterImage: Ali Kaifee/DW

And it is by no means a unique story. In some regions, heat waves, droughts, hurricanes and other weather extremes are becoming stronger and more frequent as we warm the planet with greenhouse gas emissions. Communities in poorer countries that have done the least to contribute to climate change often face the brunt of the impacts of a heating planet. 

"The reality is that we hear about them when disaster hits them — for a couple of days or weeks," Harjeet Singh, head of global political strategy at Climate Action Network International, told DW. "But after that, we all forget about them. We don't provide them enough support to recover from these impacts to rebuild their homes and livelihoods."

'Historical agreement' on loss and damage

After more than a decade of pleas from developing nations for financing to address climate change-caused loss and damage, negotiators at last year's UN COP27 climate summit in Egypt agreed to establish a designated fund. One year later, it has been formally launched.

"I congratulate parties for this historic decision. This sends a positive signal of momentum to the world and to our work," Sultan al-Jaber, the United Arab Emirate's COP28 president, said at the talks in Dubai.

The aim of the new fund, which has been described as a "historic agreement," is to help poorer countries meet the cost of losses and damages linked to increasingly extreme weather. It could also provide money to deal with what are known as "slow onset" impacts, such as rising sea levels, which could see island nations such as the Maldives but also Tuvalu or Barbuda submerged by the end of the century.

COP28 President Sultan al-Jaber speaks into a microphone
COP28 President Sultan al-Jaber welcomed the agreement on ThursdayImage: Sascha Schuermann/Getty Images

After COP27, country delegates have come together as part of a series of transitional committee meetings for a loss and damage fund to hash out the details and financing. After four sessions broke down in disagreement, negotiators finally came to an accord in early November — although observers said some parties were far from happy with the result.

One of the main sticking points was around the institution designated to host the fund. Richer nations like the United States favored the World Bank, but Alpha Kaloga, the Africa head negotiator on loss and damage involved in establishing it in the first place, said developing nations had strong reservations. 

"The World Bank is an institution that is excluding many developing countries in terms of eligibility criteria," he said, adding that following extreme events, the bank would give loans to African countries with already high levels of debt. "We think if we have to take loans, it has to be highly concessional."

Historical responsibility for climate change

Assessing the vulnerability of countries eligible to access loss and damage funding following an extreme weather event, and which countries would have to contribute to financing, has also been a bone of contention.

Developed nations want contributions from the oil-rich Gulf states and China, which despite being the world's second-largest economy after the US is categorized as a developing country.

Though China emits more carbon dioxide than any other country, the United States remains the biggest historical emitter. Since 1750, it has spewed almost twice as much CO2 into the atmosphere as China.

"When it comes to legal and moral obligation, that lies with rich countries because of their historical responsibility," said Singh of Climate Action Network International. "But large countries like China or the Gulf nations, that are oil states if they want to donate, can always put money in."

A man walks in front of a COP28 sign
Delegates from around the world are meeting in Dubai at COP28 to find agreement to stave off the worst impacts of climate changeImage: Amr Alfiky/REUTERS

The transitional committee's recommendation presented to COP28 delegates for consideration does not call for a commitment from industrialized countries to pay into the fund, but instead urges them to contribute and encourages developing nations to do the same.

Financial targets for a new fund

Despite the agreement on a fund, no clear target for the volume of financing has been determined. The United Arab Emirates announced on Thursday it would put $100 million (€92 million) into the fund, and Germany has pledged the same amount. 

Developing nations hope it will reach billions. Flooding caused by heavy rainfall in 2022 in Pakistan led to economic loss and damage valued at $30 billion alone. According to the London School of Economics, loss and damage in developing countries could reach a total of between $290 and $580 billion annually by 2030.

Although public money from richer countries should form the bulk of the new fund, Singh said other "innovative" streams of revenue such as levies on fossil fuel extraction and financial transaction taxes or a tax on business air passengers should also be explored. 

COP28 launches climate 'loss and damage' fund

Industrialized nations don't have a strong track record. In 2009, they agreed to mobilize $100 billion a year by 2020 to help address the needs of developing countries in a warming world. They didn't reach the target until 2023, which Preety Bhandari, a senior adviser in the Global Climate Program with the World Resources Institute, said has led to a lack of trust.

"If there are going to be shifting goal posts on commitments, as has been the case with the $100 billion financing, then is this entire multilateral venture under threat?" she asked. But Bhandari also stressed the importance of establishing a loss and damage fund. 

"We have to try. We can't give up just because there has not been adequate progress. If the issue is not put on the table, if we give up right up front, then the whole battle is lost."

Edited by: Tamsin Walker