COP27: Austria becomes latest country to pledge climate reparation funds

Austria has promised $50 million to developing countries facing unavoidable climate damage, becoming the latest in a small group of European countries to pledge climate reparation funds.

Compensation linked to extreme weather and global warming has leapt up the political agenda at the UN climate conference taking place in Sharm el-Sheikh, Egypt, from November 6 to November 18.

Under pressure from developing nations, countries have agreed to hold their first formal talks on climate reparations. ‘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. 

Earlier in the day, Scotland had pledged an additional £5 million, joining Belgium, Denmark and Germany in committing small amounts of loss and damage funding. Other rich nations have resisted such payments for fear of spiralling liabilities for their outsized contribution to causing climate crisis.

Falling short of previous pledges

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.

Meanwhile, rich countries have yet to fulfill a promise to provide $100 billion in climate finance per year to help poorer nations adapt to climate change. 

“We welcome the pledges from Austria and Scotland," said Agnes Hall, Global Campaigns Director at international environmental group 350.org.

"The deep inequalities between nations, and the vast difference between the carbon emissions of countries in Europe and North America and countries in Africa, Asia and South America, have their foundations in a long history of unfair treatment," Hall added. "However, to right those wrongs, European nations need to do much more in Sharm El-Sheikh and beyond." 

Germany plans to make funding available based on its Global Shield Against Climate Risks insurance scheme. Critics say the scheme could create large gaps in coverage in developing nations, whose negotiators have been calling for more reliable sources of funding. 

Austria will provide the $50 million over the next four years, the climate ministry said. The funds could support the "Santiago Network", a UN scheme providing technical support to countries faced with damages from climate-fueled natural disasters, and a programme providing early warning systems to countries prone to extreme weather.

"The most vulnerable countries in the Global South are suffering particularly badly from the consequences of the climate crisis – and are rightly demanding more support from industrialised countries," Austria's climate minister Leonore Gewessler said.

She said Austria would also add another 10 million euros to this year's budget for climate finance.

Developing countries have called for a dedicated loss and damage funding facility to be launched at COP27. The United States and 27-country European Union - of which Austria is a member - have previously opposed the idea.