COP28, the annual climate conference currently underway in Dubai, commenced on a momentous note as 196 parties unanimously approved the operationalisation of the Loss and Damage fund.
This fund, three decades in the making, aims to assist developing and poor nations facing the brunt of climate change impacts. The decision was announced on Thursday with an initial pledge of $475 million.
The initial funding breakdown includes significant contributions from various nations, with the host UAE pledging $100 million, the European Union committing $275 million, the US contributing $17.5 million, and Japan offering $10 million. While this financial commitment is a crucial step, concerns persist about the overall size of the fund and the transparency of its operations.
The concept of loss and damage addresses the irreversible costs of extreme weather and slow-onset disasters caused by climate change. Originating in the early 1990s, the Alliance of Small Island States advocated for the establishment of a loss and damage fund within the framework of international climate change discussions.
Despite being a part of annual UN climate summits, the idea faced resistance from some developed nations. The breakthrough came in 2022 at COP27 in Egypt, where a commitment was made to establish the fund. Subsequent meetings focused on securing international agreements on the fund's operations, commitments, and eligibility criteria.
According to research by the World Meteorological, 55 vulnerable countries have already incurred a total loss of $525 billion in the past 20 years, a figure projected to rise to $580 billion by 2030.
Initially hosted by the World Bank, the Loss and Damage fund received pledges from various nations. The UAE and Germany each pledged $100 million, the UK pledged $75 million, the US committed $17.5 million, and Japan contributed $10 million.
However, the US contribution faced criticism for being perceived as small compared to other nations. Analysts, including Ani Dasgupta of World Resources Institute, emphasised that the contributions must align with the size of each nation's economy.
The Loss and Damage fund aims to assist developing countries vulnerable to climate change impacts. While the focus is on the most vulnerable, there is room for middle-income countries severely affected by climate disasters to receive support.
Concerns about the World Bank's role in overseeing the fund have been raised, questioning its environmental credentials and operational transparency. Critics also note that, despite the initial pledges, the fund falls short of covering the full range of climate change effects.
In a statement at the conference, Ambassador Pa’olelei Luteru, Alliance of Small Island States Chair, told media that the work is far from over.
He stated, "Success starts when the international community can properly support the victims of this climate crisis, with efficient, direct access to the finance they urgently need."