Incremental win – COP-27 commits to compensation fund, but leaves important questions for later

Source: The post is based on the following articles

“COP27: A lost opportunity” published in the Indian Express on 21st November 2022.

“Incremental win – COP-27 commits to compensation fund, but leaves important questions for later” published in The Hindu on 21st November 2022.

“Weather Shifts In Climate Talks” published in The Times of India on 21st November 2022.

Syllabus: GS – 3: Climate Change.

Relevance: About Loss and Damages (L&D) fund.

News: The UNFCCC 27th Conference of Parties (COP27) members agreed to expand the COP’s agenda to include the demand to compensate countries that suffer climate change-related loss and damages.

About the creation of a Loss and Damages (L&D) fund

The initiative to Loss and Damages (L&D) was first initiated by the island nation of Vanuatu and the Alliance of Small Island States.

This is because the mitigation and adaptation do not address the concerns of countries with the highest vulnerability to climate change. But recent impacts such as floods in Pakistan led to the amplification of the demands for climate reparations.

The US and the EU resisted this sighting a) Existing funds should be diverted for the reparations, b) The EU demands big emitting developing countries should be included as potential donors, not as recipients.

But the developing countries saw this as a tactic to create a rift amongst themselves and criticised it. In the end, they agreed to generate a fund.

What is the structure of the Loss and Damages (L&D) fund?

L&D refers to impacts of climate change that cannot be avoided either by mitigation (cutting greenhouse gas emissions) or adaptation (modifying practices to buffer against climate change impacts).

Coverage: The fund will only support countries most vulnerable to climate change. Hence, it might not include India.

L&D also include not only economic damage to property but also loss of livelihoods, and the destruction of biodiversity and sites that have cultural importance. This broadens the scope for affected nations to claim compensation.

Contributors: The estimated L&D is already over $500 billion. But, COP 27 only commit to generating a fund. The amount of contributions by nations will be determined in future COP negotiations. The contribution also includes the private sector and philanthropies.

So, the L&D fund might take years before it can meaningfully operate.

Significance: From now on, a certain “liability” will be put on big polluters and they will be under a moral, if not legal, obligation to support vulnerable countries.

What are the important proposals left in COP27?

– The COP 27 agreement does mention that $4 trillion will be required every year to meet the renewable energy targets till 2030. This again highlights that the rich countries are nowhere close to delivering on their commitment to providing $100 billion every year.

– The progress on action to keep temperatures from rising beyond 1.5°C of pre-industrial levels was also limited.

– All the studies indicate that controlling global warming requires action on all fossil fuels, not just coal. India initiated talks, and it was supported by nearly 80 countries, including the US and EU. But Russia and Saudi Arabia vehemently opposed the inclusion of oil and gas, and therefore it was not included in the final decision.

What are the other significant developments in COP – 27?

Just Energy Transition Partnership (JET-P): In COP-27, a $20 billion deal was struck between Indonesia and G7 countries at the G20 meeting in Bali to phase down coal use in Indonesia in a just manner.

Note: A similar deal worth $8. 5 billion was signed between South Africa and G7 last year.

Question on wealthy developing countries claims: China is the largest current emitter and second-largest historical emitter of GHGs. But, China prefers to be called a developing country in climate negotiations. This approach was followed by newly wealthy countries like Saudi Arabia, South Korea and Singapore.

This was questioned by many countries. At COP27, developed countries got the support of many small island states and LDCs. So, from now on, countries like China will find it challenging to avoid greater responsibility for the climate crisis.