Reflecting on COP 27 & the Loss and Damage Fund through the Indian lens

By Nabeela Siddiqui & Rajesh Ranjan

During the UN Climate Change Conference (COP27) in Egypt, participating countries reiterated their commitment to limit global temperature rise, enhance efforts to reduce emissions, address climate impacts, and provide support to developing nations. A significant development during the conference was the establishment of a dedicated fund for addressing Loss and Damage. To operationalize the fund and determine funding arrangements, a transitional committee was formed and tasked with making recommendations at COP28. Interestingly, the concept of a Loss and Damage Fund was first advocated by the island nation of Vanuatu in 1991, during the intergovernmental climate negotiations facilitated by the United Nations Framework Convention on Climate Change (UNFCCC).

Loss and damage was also included in the Paris Agreement of 2015, although the reference was weakened to exclude any mention of “liability and compensation.” However, it is disheartening that gender issues did not receive sufficient attention in the discussions concerning the Gender Action Plan during the climate talks. The climate crisis is fundamentally tied to inequality and injustice, with vulnerable communities bearing the brunt of climate-induced disasters and other crises. It is imperative for global leaders to prioritize the needs of these communities and set aside political differences in order to tackle the urgent challenges posed by the climate crisis.

In recent times, there has been a growing push to create a specialized financial institution aimed at tackling the losses and damages resulting from the impacts of climate change. This proposal has been put forward by the G77+ bloc, along with China, which represents a significant negotiating group. The envisioned Loss and Damage Fund aims to provide financial assistance to vulnerable nations grappling with the adverse effects of climate change, with funding primarily sourced from developed countries. Developing nations are particularly pushing for the creation of this fund, as they believe that existing mechanisms fall short in covering losses that go beyond adaptation and mitigation efforts. During COP27, there was expressed concern regarding the failure of developed countries to meet the goal of mobilizing USD 100 billion per year by 2020. In response, developed nations were urged to fulfil this commitment, and there were calls for multilateral development banks and financial institutions to mobilize climate finance to support climate change mitigation and adaptation efforts.

During COP27, India focused its negotiations on the principles of equity and the best available scientific evidence to draw attention to the unfulfilled commitments of developed countries. India joined forces with the G77+China group, which represents over 80% of the world’s population, to advocate for fair and equitable outcomes. In both COP26 and COP27, India played a role in decisions that expressed regret and concern over the failure of developed countries to meet their climate finance commitments. Through collaborative efforts with the G77+China, the BASIC coalition (Brazil, South Africa, India, and China), and the Like-Minded Developing Countries coalition, positive outcomes were achieved on issues such as loss and damage, equity, finance, and adaptation. India actively participates in all three coalitions and consistently highlights the importance of historical responsibility, equity, common but differentiated responsibilities, respective capabilities, and the operationalization of principles of equity and climate justice. India emphasizes its right to a fair and equitable share of the global carbon budget.

India holds a prominent position in the global efforts to address climate change due to its large population, considerable emissions, and susceptibility to the consequences of climate change. As COP 27 approached, India likely reiterated its stance on climate equity, advocating for the principle of “common but differentiated responsibilities and respective capabilities.” This principle emphasizes that developed nations, having historically contributed the most to greenhouse gas emissions, should play a leading role in offering financial and technological assistance to developing countries in their endeavours to combat climate change and manage its detrimental impacts.

As a result of the collaborative efforts, these issues have been collectively addressed by developing countries in joint submissions to the United Nations Framework Convention on Climate Change (UNFCCC), as well as in various joint statements and declarations at different levels, including ministerial discussions. The issue of loss and damage remains contentious, primarily due to concerns from developed countries regarding legal liability and compensation claims. One of the main challenges in establishing loss and damage funds is securing sufficient financial commitments from developed nations. Negotiating the funding amount and ensuring its adequacy to cover the costs associated with loss and damage poses a significant challenge. While some developed countries propose alternative sources of financing, such as humanitarian aid, disaster-risk management, and insurance, these solutions alone cannot fully address the problem.

Post-COP27, the creation of loss and damage funds could encounter several challenges. Distributing funds equitably among developing countries is a key challenge, with developing nations arguing for a larger share due to their increased vulnerability to climate-related disasters. Ensuring effective and transparent use of funds is another challenge, as developing countries may call for monitoring mechanisms to prevent misuse and corruption. Uncertainty surrounding the magnitude of future loss and damage makes it difficult to determine the required funding and its allocation. Furthermore, the lack of political will from developed nations to acknowledge their role in climate change and take appropriate action poses a significant hurdle in securing commitments for funding loss and damage initiatives. These challenges are only a few examples, and there may be additional complexities that arise during negotiations.

To effectively address the magnitude of the loss and damage issue, a comprehensive approach that combines various financing sources is crucial. Following COP27, India expressed its support for establishing a loss and damage fund and also highlighted the need for transparent and accountable governance of the fund to ensure the efficient utilization of allocated resources. Furthermore, it is disappointing that during COP27, gender issues were once again neglected and politicized, despite extensive research indicating the disproportionate impact of the climate crisis on girls and young women, as well as their crucial contributions to addressing the crisis. The outcome concerning loss and damage highlights the effectiveness of collaboration between civil society, small nations, and non-state actors in advocating for justice. However, it is important to recognize that the agreement to establish a fund is merely the initial step, and critical matters such as the funding amount, sources, beneficiaries, and implementation methods remain unresolved.

This article is written by Nabeela Siddiqui & Rajesh Ranjan. Nabeela is an Assistant Professor, VMLS, Chennai & Rajesh is an alumni of NLU Jodhpur and a Samta fellow.