In a historic win for vulnerable countries, a loss and damage fund has been established at COP27. 

With the United Nations COP27 climate summit running late into the weekend, many were unhopeful for a substantive outcome from the climate talks. And while numerous commitments and pledges failed to impress, a certain victory is the establishment of a loss and damage fund. 

The issue of loss and damage finance, to provide aid to vulnerable countries facing irreversible climate impacts, has been the most hotly debated topic since COP26 in Glasgow. The talks didn’t seem to be making much-needed progress, with the U.S. and China blocking the issue. 

Wealthy nations have worked long and hard to avoid the issue of loss and damage.  John Kerry, the US climate envoy, said in previous public statements that ‘loss and damage’ is not the same as climate reparations. However, in quite a dramatic intervention, on Friday, the European Union agreed to finance a loss and damage fund putting pressure on the U.S. and China.

After 30 years of work, in a historic move, negotiators from nearly 200 nations struck a deal to establish the loss and damage fund in the very last hours of the conference.

“With the creation of a new Loss and Damage Fund, COP27 has sent a warning shot to polluters that they can no longer go scot-free with their climate destruction. From now on, they will have to pay up for the damages they cause and are accountable to the people who are facing supercharged storms, devastating floods, and rising seas,” said Tasneem Essop, Executive Director of Climate Action Network International.

“Countries must now work together to ensure that the new fund can become fully operational and respond to the most vulnerable people and communities who are facing the brunt of the climate crisis.” 

The Antigua and Barbuda Minister and chair of the AOSIS group of small island nations Molwyn Joseph said in a statement, “We have literally exhausted all our efforts here at COP27 to bring home the climate action commitments our vulnerable people desperately need… But after the pain comes the progress.”

However, the loss and damage fund is part of a bigger deal. Rich nations want stronger commitments from developing countries on cutting carbon emissions to stay within 1.5 Celsius of warming. The text also does not include liability and compensation provisions for loss and damage; ‘reparations’ continue to be left out.

Other details also remain uncertain. For instance, the text is vague on how the fund will be operationalized and where the money will come from. And, no deadlines have been set.

Hailed as the African COP, with such tight crackdowns on dissent, it barely felt like one. Rich countries were pushed to double climate finance for vulnerable countries but they have been left behind yet again. The final text doesn’t reflect the urgency needed to finance adaptation to climate disasters in such countries. 

The final text produced by the Egyptian presidency still fails to mention a fossil fuel phase-out, despite coal-reliant India pushing for the inclusion of all fossil fuels in a phase-down. Experts believe that India only pushed to phase down all fossils to divert attention from coal, which was mentioned in the Glasgow climate pact from COP26. 

The poor headway on ending fossil fuel proliferation can be attributed to the 630 fossil fuel delegates at the climate talk.

“The influence of the fossil fuel industry was found across the board,” Laurence Tubiana, CEO European Climate Foundation, said in a statement. “The Egyptian Presidency has produced a text that clearly protects oil and gas petro-states and the fossil fuel industries. This trend cannot continue in the United Arab Emirates (UAE) next year.”

In yet another blow to climate-vulnerable countries, 1.5 Celsius has been mentioned in the deal but only in name — real pathways to meet this goal are absent. EU officials threatened to walk out of the talks on Saturday if efforts were not taken to keep 1.5 Celsius in sight. In a press conference, they said that “no deal is better than a bad deal”.

“Since EU and Alok S are disappointed that fossil fuel phase-out is not in the text, we would like them to take leadership and revise their nationally determined contributions (NDCs) and put into plans their fossil fuel phaseout urgently and stop the expansion of fossil fuels including oil and gas,” said Meena Raman from the Third World Network.

“Not enough to play to the gallery but act if they really want to save the planet and not hide behind 2050 net zero targets which will bust the remaining carbon budget for a 1.5 degree C. They have the historical responsibility to get to real zero and in fact negative emissions and not net zero by 2050.”

China, Brazil, and Saudi Arabia were among the countries responsible for the lack of action on cutting carbon emissions. Russia even said that energy should not be part of the decision since these negotiations are about climate change and not energy.

“The work is still far from complete. Countries could not even agree on the need to phase down oil and gas use, which is absolutely critical to meeting the 1.5-degree limit,” said Cherelle Blazer, Sierra Club Senior International Climate and Policy Campaign Director. 

“We are at a point in the climate crisis where we must do what is necessary to secure a livable planet for all, and failing to make progress toward all of our climate goals is unacceptable.” 
As we head into Dubai for COP28, many climate activists worry about the progress in the climate talks since the UAE has made it clear that it sees oil and gas as key to a smooth energy transition.