UN conference in Egypt set to kickstart conversation on climate reparations

Negotiators at this year’s UN climate conference are set to lock horns over broken promises on climate finance and global emission reductions. But developing countries have also vowed to fight hard over climate reparations, an issue that has been consistently pushed down the agenda by rich nations in previous years.

Overshadowed by the war in Ukraine, a global food crisis and rising energy costs, the Conference of the Parties to the UN Convention on Climate Change (COP27) will take place in the Red Sea resort town of Sharm El Sheikh, Egypt, from November 6 to November 18. 

According to the most recent report by the Intergovernmental Panel on Climate Change (IPCC), a UN body, almost 3.3 billion people across the world now live in climate-vulnerable situations. 

‘Loss and damage’, as it is known in UN jargon, refers to climate finance to address the unavoidable and irreversible impacts of climate crisis on developing nations that are least responsible for climate change, but are suffering some of its worst effects. It covers both economic and non-economic losses, including loss of life, cultural heritage and biodiversity. 

The devastating floods in Pakistan earlier this year, a once-in-a-100-year event that took place twice in just over a decade, have galvanized momentum around the issue, which the US and most EU countries have been reluctant to address for reasons that include fear it may open the way for other reparation claims, including for slavery. 

One of the problems is that there is no agreed upon definition of what loss and damage includes. The V20, a group of countries that are systemically vulnerable to climate change, are estimated to have lost one fifth of their wealth to climate change over the last two decades. The unprecedented monsoon season floods in Pakistan have cost the country an estimated $40 billion, killed at least 1,700 people and affected 33 million of the country’s citizens.

COP27 will mark the first time actual solutions are tabled regarding the most controversial aspect of climate finance, as poor countries on the frontlines of the climate crisis ask rich countries – which have amassed their wealth through unrestricted CO2 emissions – to help them foot the bill.

“The UN process is very time-consuming, there is a lot of procrastinating,” says Professor Mizan R. Khan, deputy director of the International Centre for Climate Change & Development at Bangladesh's Independent University, who is part of the negotiating delegation for the Least Developed Countries (LDC) group, chaired by Senegal this year, “we are not expecting concrete decisions.”

Meanwhile, developed countries still need to catch up to a promise to provide $100 bn a year in climate finance, made in Copenhagen in 2009.

Insurance or solidarity?

During its G7 presidency earlier this year, Germany has put forward a proposal for a kind of insurance fund for climate-vulnerable nations, known as the “global shield”. The proposal was supported by the G7 as well as by the EU.

But developing countries argue insurance isn’t good enough. The proposal, aimed at providing a timely response after disasters, is different from the global loss and damage financing facility that they would like to see set up.

“Insurance only takes care of rapid onset events, and doesn’t work for slow onset events like the melting of glaciers or sea level rise,” professor Khan tells TRT World.

“The other problem is that in developing countries, insurance penetration is very small,” he adds.

The V20 group has piloted an international funding mechanism, which aims to be a model for how a funding facility to address loss and damage could work. The fund, which counts only a few donors, will initially target the most vulnerable among its member countries.

“[They] have effectively put out a crowdfunding mechanism,” explains Tom Mitchell, the executive director of the International Institute for Environment and Development (IIED), speaking at a media briefing ahead of the summit.

“It changes the way that funding flows happen, acknowledging this isn’t a kind of tied aid format. This is something that is sourcing provisional funding in order to be able to act in a much more compensatory, solidarity-driven approach.”

'Justice-based' approach

Another idea that developing countries have put forward is that of a “climate-related and justice-based” global tax. This could include a tax on airline travel, shipping, a global carbon tax, or even a tax on financial transactions and fossil fuel extraction.  

“It’s one proposal in terms of having a more predictable source of funding, I think very challenging to be able to see that proposal come forward,” Mitchell told journalists.

“Politically there is resistance on carbon pricing,” Khan tells TRT World, “in Europe, Poland is the number one obstructionist, while developing countries are big coal users,” he says, adding that any tax would have to be fair.

Khan, who in previous UN conferences has headed the Bangladesh negotiating team, has been advocating for debt swaps to allow highly-indebted developing countries to convert that debt into local currency and invest those funds back into the communities most affected by a changing climate. 

“Many developing countries are establishing their own loss and damage fund,” Khan explains. 

“A portion of the debt could be converted into local currency and put into national mechanisms of loss and damage.”

The way to reach a just mechanism on loss and damage is, he believes, to raise a moral claim for it by targeting the new generations.

“In developed countries, politicians respond to voter sentiment. If young voters support loss and damage, politicians won’t be able to avoid [the issue],” he argues.