As we move towards the United Nations Framework Convention on Climate Change (UNFCCC) COP28 in Dubai this year, most developing countries are eyeing the crucial decisions that are expected to operationalise the ‘loss and damage fund’.

The L&D fund was agreed upon by all parties at COP27 under Pakistan’s leadership within the G77. The global consensus on the fund’s establishment at COP27 was a watershed moment in climate justice, acknowledging that while developing countries bear the brunt of irreversible climate change induced damages, they have historically contributed least to its cause.

The implications of this fund’s operationalisation and dynamics can be profound for climate vulnerable countries like Pakistan. As such, it is important to take note of the decisions agreed upon since COP27 and ones that are expected out of Dubai in 2023.

At COP27, it was decided that important issues relating to the L&D fund operation will be deliberated upon by a transitional committee, comprising 24 members which would then submit its recommendations ahead of the COP28 in UAE.

The committee included 14 members from developing countries and 10 from developed ones. Pakistani diplomat and climate negotiator Ali Waqas Malik represented Pakistan in the committee negotiations. The committee met thrice in 2023 and navigated a series of difficult but important issues that frequently escaped consensus.

Some of the more important questions the committee touched upon included those pertaining to hosting of the L&D fund by an entity and its governance structure, besides questions of who will pay and who will be eligible to receive the funds.

On the first issue, the World Bank was proposed by the US as the hosting entity of the L&D fund, which was overwhelmingly opposed by developing nations. Their reservations included the World Bank’s high costs, weak track record when it comes to climate change, and most importantly, potential US ideological influence in the Bank’s decisions. Some other concerns by experts included the difficult accountability of the World Bank as opposed to an independent international body formed solely for the purpose of managing and disbursing a loss and damage fund.

Nevertheless, a temporary compromise was reached, with the World Bank poised to host the fund for the first four years with guarantees that it would eventually become independent.

Who pays?

However, disagreements remain, especially with regards to the distribution of financial responsibilities. Developing countries advocate for those designated as ‘developed’ in 1992 by the UNFCCC to bear the fund’s financial burden, while the latter group seeks to include wealthier nations still classified as developing, such as Singapore, Qatar, and Saudi Arabia.

The agreement ‘urges’ developed nations to lead in financial contributions but only ‘encourages’ others to support. This nuanced language reflects the persistent debate over who pays, how much, and under what conditions, with the fear of reparations looming large for higher-income countries with historically high emissions.

The US was unable to expand the donor pool in the preliminary negotiations, but this is expected to be a contentious point in the final negotiations at COP28. Developing countries also pushed for a minimum mobilisation of $100 billion in the fund for a safety net against climate calamities. It was also agreed that fundraising for the fund will occur every four years, with contributions accepted at any time from the private sector and innovative sources like taxes on fossil fuels.

Eligibility for receiving funds was debated, with the agreement ultimately stating that developing countries “particularly vulnerable” to climate change are eligible, though there’s no agreed definition of vulnerability.

Concerns for COP28

Pakistan, along with other developing nations, enters COP28 in Dubai with apprehensions regarding the World Bank’s role as the fund’s host. These concerns stem from the Bank’s past reluctance in addressing climate change and the potential for political influence over fund operations. The Bank’s expertise in loan negotiations, rather than rapid humanitarian financial assistance, adds to the reservations, fuelling fears that the urgency needed for L&D finance will not be met. To alleviate these concerns, proposals have been made to ensure speedy disbursement of funds, akin to the rapid response required in humanitarian crises.

Experts anticipate that COP28 will crystallise key decisions on the L&D fund’s operationalisation. The stakes for Pakistan and other similarly climate vulnerable nations are particularly high as any bureaucratic limbo or an unwillingness to commit substantial funds by majority parties would not only undermine Pakistan’s climate resilience efforts but also solidify a concerning trend in global climate finance.

One is reminded of 2009 when, at the COP15 in Copenhagen, a $100 billion commitment per year by 2020 never materialised and disillusioned many developing countries.

It is essential that COP28 cuts through the red tape, ensuring that the fund serves its purpose efficiently and equitably. For many countries like Pakistan, it represents a chance to shape a global mechanism that could provide vital support in the wake of climate calamities.

The decisions made in Dubai will have lasting impacts, and the world, especially Pakistan, watches with bated breath, hopeful for a future where resilience and climate justice is not just a pipe dream.

Header image via Shutterstock