EU Sparks Debates at COP27 Over Loss and Damage Fund

Global climate talks at the COP27 conference in Egypt have dragged on as countries continue to debate the best way to help nations most vulnerable to the effects of climate change. On Friday, Frans Timmermans, the European Commission vice-president, made a proposal on behalf of the EU to create a loss and damage fund. This proposal comes after he spoke with G77 countries, those that are still developing and see this fund as a central goal.

European Union flags fly outside of the EU Commission headquarters in Brussels, Belgium Photo: Yves Herman / Reuters REUTERS/Yves Herman

The loss and damage fund would cover the finances needed for rescue efforts and rebuilding infrastructure after climate disasters and extreme weather. Rich countries, however, have been reluctant in establishing this fund due to concerns about the time it would take to fully implement it and how it would function. Timmermans stated that he believes existing measures would work in the future as well, “but since they [the G77] are so attached to a fund, we have agreed.” 

However, he also made it clear that there would be clear conditions, including focusing the fund primarily on the most vulnerable and affected countries and using a donor-based contribution structure to finance the effort.

The proposal has received positive feedback overall. The vulnerable countries the plan seeks to help  have commented extensively on it. Carla Barnett, the Secretary General of the Caribbean Community weighed in, saying, “There’s only one option for small island developing states, a financing fund” and that this is a matter of justice. Moreover, Mary Robinson, Chair of The Elders and former president of Ireland, praised the proposal as a pathway towards development: “We’ve gone from not even having loss and damage finance on the agenda at COP27 to having a fund, a mechanism, and a flow of finance all within our grasp.” Australia is another country in support of the fund.

Yet there are concerns regarding the fund’s clarity. Yamide Dagnet, director for climate justice at the Open Society Foundations, noted that more needs to be addressed regarding “who is included and who is excluded into this framing, which has never been clearly defined in UN terms and could limit the benefits of the fund.” 

Criticism of the fund comes primarily from the US and China. The US in particular is opposed to the idea of  a fund and has yet to make a statement regarding the loss and damage fund. China also faced pressure following the proposal, due to their avoidance of obligations to provide financial support, despite having extremely high emissions and being one of the world’s largest economies. 

In regard to the issue of who has to provide more financially, Timmermans insisted that donors should be based on the Paris agreement and consider the economics of countries at present, and not as initially mentioned in 1992 when the UNFCCC was established. This approach would push previously unobligated countries like China and Saudi Arabia to do more. 

Climate activists protesting outside of the COP27 summit in Egypt on Nov. 18. Peter Dejong/Associated Press

Although China did not respond to the EU proposal on Friday, xie Zhenhua, the climate chief of China, stated that China is under no obligation to pay for loss and damages since China is still a developing country that suffers from major weather events. 

Preety Bhandari, from the World Resources Institute, added that the fund boils down to a few options. It is possible the fund will get established now or the following year in Dubai, otherwise the US would have to arrange financing agreements outside of the UN, working with the World Bank and other international institutions to better address the climate crisis. 

The EU’s proposal demonstrates how Europe tends to implement and take the lead on climate change policies, while countries in other parts of the world have to be pushed to take more action.