US aims to limit loss and damage fund

The US, which long opposed a fund, wants it to focus on a narrow set of disasters in a small number of countries

A man rides a boat past toll plaza amid flood water on main Indus highway, following rains and floods during the monsoon season in Sehwan, Pakistan, (REUTERS/Akhtar Soomro)


When countries adopt a global fund for climate disaster losses and damages at the Cop28 climate talks, the USA will be arguing to limit its use, according to U.S. officials.

Developing nations successfully demanded at last year’s Cop27 climate summit funding for loss and damage caused by climate change, including a dedicated fund, which countries will adopt this year.

In climate negotiations, “loss and damage” refers to existing costs incurred from climate-fueled weather impacts, such as last year’s devastating Pakistan flooding.

EU puts Maroš Šefčovič in charge of climate policy

The new Loss and Damage fund should target the most vulnerable countries and focus on areas not already covered by development banks or emergency relief funds, two U.S. State Department officials told Reuters.

The European Union has taken a similar position. But the G77+China umbrella group of countries classified as developing by the United  Nations argues that they are all particularly vulnerable and should be eligible.

Need to specialise

US negotiator Christina Chan is part of a 24-country committee deciding how the fund will work before the Cop28 climate summit in Dubai can officially adopt it this year. The committee will meet again next week in the Dominican Republic.

“We don’t really want redundancy with existing funds, because that’s not an effective and efficient way to deal with the issue,” said Sue Biniaz, deputy special envoy for climate at the State Department.

Instead, she said, the new fund should develop an expertise “as opposed to covering everything in the universe.”

Germany set to miss net zero by 2045 target as climate efforts falter

The U.S. had wanted a two-year process to analyse funding gaps before launching a fund, but it went along with the Cop27 consensus for action this year, Biniaz said.

At the committee’s last meeting in July, the U.S. proposed focusing the fund on covering slow-onset events such as sea level rise and desertification, as such needs can fall through the funding cracks, said Chan. This would mean less focus on climate disasters like floods, heatwaves and storms.

She said the US also suggested the fund be used for post-disaster reconstruction if a country needs more beyond eligible development bank grants.

Reluctant evolution

The U.S. position on loss and damage has evolved in recent years, from a point at which Washington and the EU resisted even discussing the issue for fear of legal liability for historic emissions.

At Cop27, the EU agreed to a fund on the condition that China pays into it – although it later abandoned that insistence. The US did not block the Cop decision approving the fund.

Biniaz said she “violently opposes” arguments by some countries and environmental groups that developed countries have a legal obligation to pay into the fund.

Nonprofit Action Aid has said, for example, that the 1992 U.N. Framework Convention on Climate Change implies this obligation with the idea that industrialized nations responsible for emitting most of the carbon dioxide in the atmosphere over the last century should do more to address climate change.

“That’s just completely inaccurate,” she said on whether developed countries are liable, adding that the 2015 Paris Agreement did not include such an obligation.

Other sources

Instead, both Washington and Brussels say the fund should be filled from myriad sources including industry taxes, philanthropic donations or other schemes. Biniaz said one example might be revenues from the U.S.-proposed carbon reduction accelerator.

The U.S. and EU have also said a big economy like China could contribute, despite its low per person income and relatively small historic contribution to climate change .

Biniaz said this came up during recent bilateral meetings with China, but she did not offer more details.

Other negotiators and officials have proposed ideas including creating new revenue streams through taxing environmental pollution, such as methane emissions or shipping pollution and windfall profits from oil and gas.

Ecuadorians reject Amazon oil drilling in historic referendum

“We need to have a global system with a broad contribution heavily weighted to the richest people to make the biggest contribution,” said Avinash Persaud, special finance envoy to Prime Minister Mia Mottley of Barbados.

With many national budgets strained, Persaud said the idea of taxing emissions was gaining popularity in some countries.

Who benefits?

Another sticking point likely to emerge is who should benefit from a fund, with disagreement over which countries are most vulnerable

“It's very difficult to create a straight cut dividing eligible and noneligible,” said Dileimy Orzoco, senior policy advisor at climate advisory group E3G.

The world’s least developed nations and small island developing nations want to be prioritised for funding.

Others worry that limiting funds to these countries will leave out some of the worst hit by climate impacts, such as middle-income countries like Pakistan or the Philippines.

Read more on: US | |