COP 27 concludes with agreement to set up loss and damage fund

By A Staff Reporter, Kathmandu, Nov. 21: The United Nations Climate Change Conference (COP 27) concluded on Sunday in Sharm El-Sheikh, Egypt, with a breakthrough agreement to provide “loss and damage” funding for vulnerable countries hit hard by climate disasters.

The parties established a historic loss and damage fund as part of the Sharm El-Sheikh Implementation Plan on climate change after loss and damage were included in the agenda for the first time. The new fund will see donors contribute to a global fund to save lives and livelihoods from climate change-related disasters.

Parties also agreed on institutional arrangements to operationalize the Santiago Network for Loss and Damage, to catalyze technical assistance to developing countries that are particularly vulnerable to the adverse effects of climate change.

The Santiago Network for loss and damage was established at COP 25 in 2020 in Chile to provide technical assistance to countries and communities impacted by climate-induced extreme events. It took more than two years to get all parties on the same page. Last year, at COP 26 in Glasgow, parties failed to come together on the issue. Considering all these facts, this COP 27 became a way forward on loss and damage.

Manjeet Dhakal, a climate analyst and the advisor to the Least Developed Countries chair, tweeted on Sunday, ‘’A landmark decision made at COP 27, but it is a political commitment, there is a long way to go - to be clear about the funding process, how much funding will be directed and how will be responsible for that.’’

He said, “Parties agreed to address the loss and damage fund (L&D) but there are most controversial decisions on the fund that need to be resolved until next year.” Deals on dedicated funds definitely are historical, but there will uphill battle to get clarity on the fund, including who should pay into it and how much, he added.

“This outcome moves us forward,” said Simon Stiell, UN Climate Change Executive Secretary. “We have determined a way forward on a decades-long conversation on funding for loss and damage – deliberating over how we address the impacts on communities whose lives and livelihoods have been ruined by the very worst impacts of climate change,” he said in a press statement issued by UNFCCC on Sunday.

Set against a difficult geopolitical backdrop, COP 27 resulted in countries delivering a package of decisions that reaffirmed their commitment to limit 

global temperature rise to 1.5 degrees Celsius above pre-industrial levels. The package also strengthened action by countries to cut greenhouse gas emissions and adapt to the inevitable impacts of climate change, as well as boosting the support of finance, technology and capacity building needed by developing countries.

Creating a specific fund for loss and damage marked an important point of progress, with the issue added to the official agenda and adopted for the first time at COP 27.

A climate change activist from Nepal, Dr. Bimal Regmi, said that previous funds like the least developed countries, the Green Climate Fund and the adaptation fund had run out of money, so very few contributions from developed countries. We should lobby to make it more resourceful and efficient, including direct access by countries.

A climate change activist Raju Pandit Chhetri tweeted from Egypt saying, “The major outcome of the Sharm el-Sheikh #COP27 is the establishment of a fund to address #LossAndDamage. It’s a big win for vulnerable developing countries. Now the details of the fund must be worked out for its operationalization. Work begins!!”

Governments took the ground-breaking decision to establish new funding arrangements, as well as a dedicated fund, to assist developing countries in responding to loss and damage. 

Governments have also agreed to establish a ‘transitional committee’ to make recommendations on how to operationalize both the new funding arrangements and the funding at COP 28 next year. The first meeting of the transitional committee is expected to take place before the end of March 2023.