Loss and damage tensions palpable ahead of Cop

Loss and damage — the unavoidable and irreversible effects of climate change — looks set to remain a fraught issue at this year's UN Cop 28 climate summit and could weigh on discussions to cut emissions again.

Contentious issues persist, as a transitional committee formed to make recommendations on how the fund should be set up met last week. In a break from UN process, the discussions were mostly closed. This was to "foster frank and outcome-oriented deliberations", UN documents show, although civil society and non-governmental organisations (NGOs) raised concerns over the lack of transparency.

Countries particularly vulnerable to the effects of climate change, including small island developing states and least developed countries, have long fought for official recognition of the danger they face and for targeted finance to address it. The 198 parties to the UNFCCC — the UN's climate body — agreed on the principle of establishing a dedicated loss and damage fund at Cop 27, but parties must decide at Cop 28 how the fund should be set up and, crucially, which countries should benefit and which should contribute.

The most important step will be to find the money. Documents submitted last week suggested "innovative sources" of funding, but the lack of definition could hamper progress. The third transitional committee meeting is "critical" to provide a draft of recommendations to kick discussions off at Cop, NGO Climate Action Network (CAN) says.

"Public funding should be the main source" of financing, senior campaigner at non-profit the Centre for International Environmental Law, Lien Vandamme, says. And CAN calls for loss and damage funding to be "exclusively in the form of grants and non-debt creating financial instruments". Most climate finance is in the form of loans, putting poorer countries at a further disadvantage.

But the divide even within the transitional committee is apparent — and discussions at Cop 28 will take place at a ministerial level, where politics dominates. In documents submitted to the committee, the US called for the fund to provide "grant and concessional resources, taking into account… access to other financial contributions", suggesting a role for loans. It also wants the World Bank to host the fund and for the fund's board "to develop a system for allocations based on vulnerability".

Developing countries last week set out their wishes too, including for the fund to sit within the UNFCCC. They also called for "all developing countries that have suffered climate-related loss and damage" to receive financial resources "without discrimination or any form of exclusion" and for the fund to provide a minimum $100bn/yr by 2030. The amount is reminiscent of the $100bn/yr promised by developed countries to help developing nations finance mitigation — action to reduce emissions responsible for climate change. But the pledge has yet to be met. The US did not float a number for loss and damage.

Caribbean cues

A lack of trust between parties could derail talks. Progress on mitigation at the UN Bonn climate talks in June was blocked, as developing countries called for meaningful climate finance. Wealthy nations and multilateral development banks took steps to improve climate finance flows at a Paris summit in June. The results remain to be seen, but they may have clawed back some credibility by taking cues from Barbadian prime minister Mia Mottley, whose Bridgetown Initiative sets out a path to reform the global financial system.

Loss and damage overshadowed talks on reducing fossil fuels at Cop 27, and there may be a risk of a repeat this year, considering how much remains to be ironed out ahead of the summit, and as the event will take place in a major oil-exporting region set on expanding production. But "failing to phase out fossil fuels will undercut any progress on effective funding for loss and damage and there should be no trade-off between the two. Wealthy, polluting nations should take the lead on both", Vandamme says.

By Georgia Gratton