The COP27 climate summit closed in November with many people celebrating a historic agreement to create a dedicated fund to help vulnerable countries cope with the financial losses of climate change.
The loss and damage fund marked a major win for the conference, which was otherwise marred by poor organisation and scant progress in cutting greenhouse gas emissions.
But agreeing to a fund is just the start. Next year, negotiators will gather at COP28 in Dubai to discuss the specifics of how it will work, including how much money will need to be raised and where from. Expect fireworks.
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鈥淩ight now, all we have is an empty bucket 鈥� we need to make sure it gets filled,鈥� says Mitzi Jan Tonelle, a climate activist in the Philippines.
In Egypt, the European Union said it would only agree to a dedicated loss and damage fund if it was supported by a 鈥渂road donor base鈥� of countries, namely a group of higher-emitting nations that, under UN rules, aren鈥檛 usually expected to provide climate finance, such as China and petrostates like Qatar and Saudi Arabia. Steering this demand for cash will be a tricky mandate for COP28 host nation the United Arab Emirates, one of the world鈥檚 largest oil producers.
鈥淲e have to be honest about the expectations around finance,鈥� says , a former climate negotiator who is now at the US-based Center for Climate and Energy Solutions. 鈥淟imiting funding only to a subset of countries, particularly the G7, is not going to result in the amount of funds necessary.鈥�
And countries alone may not be enough to finance the fund, especially as high-income nations tighten their belts in response to rising inflation and an energy crisis.
Those concerns are fuelling a push for COP28 to consider alternative sources of financing, with fossil fuel firms in the crosshairs. Speaking to delegates at the start of COP27, the prime minister of Barbados, Mia Mottley, said oil and gas companies should be made to pay for the climate loss and damage they helped to cause.
鈥淗ow do companies make $200 billion in profits in the last three months and not expect to contribute at least 10 cents in every dollar of profit to a loss and damage fund?鈥� she asked.
It is a stance backed by UN Secretary-General Ant贸nio Guterres, who, in September, called on all advanced economies to tax the windfall profits of fossil fuel companies.
Other finance could come from overhauling the World Bank and the International Monetary Fund. These organisations, alongside other multilateral development banks (MDBs), should be forced to channel more money into climate projects in lower-income countries, on more favourable terms, said Mottley.
This could include offering cheap financing for renewable energy or climate resilience schemes, for example, or allowing countries hit by natural disasters to pause debt repayments while they recover. Mottley鈥檚 ideas gathered steam at COP27, which saw an agreement for MDBs to 鈥渄efine a new vision鈥� that was 鈥渇it for the purpose of adequately addressing the global climate emergency鈥�.
For decades, high-income, polluting nations have resisted attempts to establish a dedicated funding regime for loss and damage. Now they have relented, big emitters around the world will be watching nervously for what comes next.
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