Rich Countries' Proposal Can Block India, Pakistan From Accessing Loss and Damage Fund

Climate conference last year had managed to set up a loss and damage fund for climate vulnerable countries. But for the first time since COP27, a pitched battle has emerged as to who exactly is eligible to use this fund

New Delhi: If rich countries have their way with the loss and damage fund, India might be stripped of any benefits from the global fund raised to fight climate change. Developing countries, including Pakistan and India, have opposed this push from the developed world.  

The disagreement has led to heated discussions at the third meeting of a technical committee, on the loss and damage fund, held at Dominican Republic’s capital city Santo Domingo last week. For the first time since COP27 detailed discussions have taken place on who is eligible to access the loss and damage fund. 

This happened barely a week prior to the G20 meeting in New Delhi, where climate activists are hoping that India will push for developed countries to meet their climate finance commitments. This includes supporting the newly established loss and damage fund as well as enhanced support for adaptation and mitigation. 

The loss and damage fund was agreed upon at the annual COP 27 last year in Egypt. Countries who are members of the United Nations Framework Convention on Climate Change (UNFCCC) set up this fund to help developing countries respond to losses suffered due to climate change. They decided “to establish new funding arrangements for assisting developing countries that are particularly vulnerable to the adverse effects of climate change, in responding to loss and damage,” in the final decision adopted at Egypt’s Sharm el Sheikh. 

Hailed as the most significant outcome of COP27, the establishment of this fund was commended as a landmark decision by climate activists and experts. The developing countries have demanded to mobilise at least $100 billion by 2030 to the fund. 

Experts, however, warned that the fund was but an empty pot and its exact working is yet to be finalised. They added that it is important to see how discussions shape up at the meetings of the Transitional Committee (TC) — a technical body set up to provide recommendations on the working of the fund. 

The body was tasked with holding at least three meetings in 2023. Represented by member countries, the TC was set up to discuss and come up with recommendations on how the fund must function. Members had met for the first time in March this year and then later in May.

No one should be left behind

Between August 29 and September 1, countries gathered for the TC’s third meeting to take the discussions forward.

At the meeting, developing countries were united to ensure that developed countries did not narrow down the loss and damage fund to benefit only a few. Discussions reached a point where heated arguments were exchanged over which countries would qualify as “developing countries that are particularly vulnerable to climate change.”

Richer countries push for tweaks in their favour, even as developing countries require more money to deal with their climate change issues, and the former increasingly attempts to dilute their financial responsibility. 

By fair play or foul means, rich countries continue to attempt to tip the balance in their favour. At Sharm el Sheikh, the European Union and other developed countries had attempted to break the unity of the developing countries, by trying to break away the Small Island Developing States (SIDS) and Least Developed Countries (LDCs) from other developing countries. This was an attempt to limit the number of countries who would be eligible to use the fund. 

However, the developing countries led by Pakistan ensured that their unity was maintained which was integral for the establishment of the fund. 

Exactly a year ago, Pakistan faced unprecedented devastating floods leading to loss of lives and property. The floods are just one of the many extreme weather events that have taken place in the past few decades due to climate change. Despite being some of the lowest contributors to climate change historically, Pakistan and other developing countries are some of the most vulnerable to its impact. Keeping this in mind, the neighbouring country arrived at COP27 with a resolve to set up the loss and damage fund, which would help ensure a proper funding arrangement for developing countries to deal with losses. 

“The ‘loss and damage’ is happening due to lack of ambitious emissions reduction in the past and rich countries’ greed for fossil fuels,” says Indrajit Bose, Global Policy Lead at Climate Action Network (CAN) International. “Historical emissions of developed countries cannot be ignored. After all the devastation that Pakistan suffered last year, is it not eligible to access resources from the fund?” 

Representative image. Women cross a flooded street in Pakistan. Photo: Asian Development Bank/Flickr CC BY NC ND 2.0

While several disagreements prevailed at the meeting last week, the issue of eligibility was brought up several times by countries like Australia and France.

Differences in interpretation

In their recommendations to the TC on August 23, developing countries submitted that “all developing countries that have suffered climate-related loss and damage, without discrimination or any form of exclusion, are eligible to receive financial resources from the Fund.” Reiterating this at the meeting, Egypt’s TC member, Mohammad Nasr, stressed that “all developing countries are particularly vulnerable.” 

He added that no developing country leader is happy asking for international support during disasters and that it puts them in a difficult position. Representatives from Brazil and Columbia, too, agreed that all developing countries must be eligible to use the fund. 

Developed countries, however, intervened saying that they interpret it differently. The bloc argued that the text, “countries vulnerable to climate change”, does not extend to all developing countries. 

In fact, during a closed session at the meeting that was not accessible to civil society, France’s representative Jean-Christophe Donnellier had suggested that only countries that are part of SIDS and LDCs must be eligible for the fund. David Higgins, member of the TC from Australia, said that his understanding of the text is that the loss and damage fund will only support those classified as “particularly vulnerable countries.” 

What makes for a particularly vulnerable country is ambiguous. While the term “particularly vulnerable country” has no formal definition, the phrase “countries that are particularly vulnerable to the adverse effects of climate change” is explained in the UN Convention. This was also pointed out by the developing country co-chair Richard Sherman as a response to the Australian representative.

Back at COP27, the European Union had put in a condition that they would agree to the creation of such a fund only if the highest emitters contributed to the fund and were also excluded from using the fund. China and India are currently one of the top emitters in the world. 

“The US proposal used a different approach to limit scope, by seeking to prioritise countries with populations of less than five million people, and essentially push other countries to deal with existing MDBs, thus limiting the scope by limiting eligibility,” said Julie-Anne Richards, Strategy Lead at The Loss and Damage Collaboration (L&DC). 

To prevent the exclusion of countries, developing countries proposed that decisions on who should use the money should be based on the extremity of climate related events, rather than country groupings. This means that instead of money from the fund going to only select countries, it must be released based on the severity of disasters and the country’s capacity to deal with it. 

“India’s own position at the G20 is emphasising the importance of the global south — also with respect to where growth in the next few decades will be,” said Aarti Khosla, founder of Climate Trends. “There hasn’t been much progress in securing any climate finance at the G20 so far. If, however, the discussions of a new goal happen without any transparency or accountability, they hold no meaning.” 

Mrinali is the Climate Change Research Lead with Land Conflict Watch, an independent network of researchers studying land conflicts, climate change and natural resource governance in India.