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COP27: Summit agrees on climate fund for ‘loss and damage’ in landmark deal

Sharm el-Sheikh, Egypt

Delegates from nearly 200 counties at the COP27 climate summit have agreed to set up a loss and damage fund meant to help vulnerable countries cope with climate disasters, in a landmark deal early Sunday morning in Sharm el-Sheikh, Egypt.

The complete COP27 agreement, of which the fund is a part, also reaffirmed the goal of keeping global warming to 1.5 degrees Celsius above pre-industrial levels – a key demand from a number of countries.

But while the agreement represents a breakthrough in what has been a contentious negotiation process, it did not strengthen language around cutting planet-warming greenhouse gas emissions.

The final text also made no mention of phasing out fossil-fuels, including oil and gas.

The final agreement marks the first time countries and groups, including longtime holdouts like the United States and the European Union, have agreed to establish a fund for nations vulnerable to climate disasters made worse by pollution disproportionately produced by wealthy, industrialized nations.

Negotiators and non-governmental organizations observing the talks prasied the establishment of the fund as a significant achievement, after developing nations and small island countries banded together to amplify pressure.

“The agreements made at COP27 are a win for our entire world,” Molwyn Joseph, chair of the Alliance of Small Island States, said in a statement. “We have shown those who have felt neglected that we hear you, we see you, and we are giving you the respect and care you deserve.”

The fund will focus on what can be done to support loss and damage resources, but it does not include liability or compensation provisions, a senior Biden administration official told CNN.

The US and other developed nations have long sought to avoid such provisions that could open them up to legal liability and lawsuits from other countries. And in previous public remarks, US Climate Envoy John Kerry had said loss and damage was not the same thing as climate reparations.

“‘Reparations’ is not a word or a term that has been used in this context,” Kerry said on a recent call with reporters earlier this month. He added: “We have always said that it is imperative for the developed world to help the developing world to deal with the impacts of climate.”

Details on how the fund would operate remain murky. The text leaves a lot of questions on when it will be finalized and become operational, and how exactly it would be funded. The text also mentions a transitional committee that will help nail down those details, but doesn’t set specific future deadlines.

And while climate experts celebrated the win, they also noted the uncertainty going forward.

“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,” World Resources Institute CEO Ani Dasgupta said. “At the same time, developing countries are leaving Egypt without clear assurances about how the loss and damage fund will be overseen.”

An outcome on a fund came this year in large part because the G77 bloc of developing nations stayed unified, exerting increased leverage on loss and damage than in past years, climate experts said.

“They needed to be together to force the conversation we’re having now,” Nisha Krishnan, resilience director for World Resources Institute Africa told reporters. “The coalition has held because of this conviction that we did need to stay together to deliver this – and to push the conversation.”

For many, the fund represents a hard-fought years-long victory, pushed over the finish line by the global attention given to climate disasters such as Pakistan’s devastating flooding this summer.

“It was like a big buildup,” former US climate envoy Todd Stern told CNN. “This has been around for quite a while and it’s getting all the more aggravating to vulnerable countries because there’s still not a lot of money getting put into it. As we can see the actual disaster impacts of climate change are getting more and more intense.”

Global scientists have for decades warned that warming must be limited to 1.5 degrees above pre-industrial levels – a threshold that is fast-approaching as the planet’s average temperature has already climbed to around 1.1 degrees.

Beyond 1.5 degrees, the risk of extreme drought, wildfires, floods and food shortages will increase dramatically, scientists said in the latest UN Intergovernmental Panel on Climate Change (IPCC) report.

But while summit delegates affirmed the goal of keeping global warming to 1.5 degrees Celsius, climate experts expressed dismay about a lack of mention of fossil fuels, or the need to phase them down to keep global temperatures from rising. As it did last year at the Glasgow summit, the text calls for a phasedown of unabated coal power, and “phase-out of inefficient fossil fuel subsidies,” but does not go further to call for a phase-out of all fossil fuels, including oil and gas.

“The influence of the fossil fuel industry was found across the board,” Laurence Tubiana, CEO European Climate Foundation, said in a statement. “The Egyptian Presidency has produced a text that clearly protects oil and gas petro-states and the fossil fuel industries. This trend cannot continue in the United Arab Emirates next year.”

It took some dramatic action to even hold onto the 1.5-degree number struck in Glasgow last year.

On Saturday, EU officials threatened to walk out of the meeting if the final agreement failed to endorse the goal to limit warming to 1.5 degrees Celsius above pre-industrial levels. In a carefully choreographed news conference, the EU’s Green Deal tsar Frans Timmermans, flanked by a full line-up of ministers and other top officials from EU member states, said that “no deal is better than a bad deal.”

“We do not want 1.5 Celsius to die here and today. That to us is completely unacceptable,” he said.

Aside from the final agreement, the summit brought several other significant developments including the resumption of formal climate talks between the US and China – the world’s two largest greenhouse gas emitters.

After China froze climate negotiations between the two countries this summer, US President Joe Biden and China President Xi Jinping agreed to reestablish US-China communications when they met last week at the G20 summit in Bali, paving the way for US climate envoy John Kerry and his Chinese counterpart Xie Zhenhua to meet again formally.

“Without China, even if the US is as we are moving towards a 1.5-degree program, which we are if we don’t have China, nobody else can make to that goal,” Kerry told CNN last week.

The two sides met throughout the second week of COP, trying to pick up where they left off before China suspended the talks, according to a source familiar with the discussions. They were focused on specific action points, such as enhancing China’s plan to reduce emissions of methane – a powerful greenhouse gas – and their overall emissions target, the source said.

Unlike last year, there was no big, joint climate announcement from the two countries. But the resumption of formal communication was seen as an encouraging sign.

Li Shuo, a Beijing-based global policy adviser for Greenpeace East Asia said this COP “saw extensive exchanges between the two sides, led by Kerry and Xie.”

“The challenge is they should do more than talk, [and] also need to lead,” Shuo said, adding the restarted formal dialogue “helps to prevent the worst outcome.”

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