Countries agree to set up a new fund, but decisions still need to be made about who will contribute to the fund and who will benefit.
The UN climate conference agreed on Sunday to establish a fund of “wasting and destruction” to help poor countries affected by climate change, overcoming years of resistance by rich countries that contribute the most to the world’s emissions.
Pakistan’s Climate Minister Sherry Rehman, who was involved in the campaign for developing countries to meet their commitments at the two-week UN COP27 conference in Sharm el-Sheikh, Egypt, hailed the decision as “reversal of climate justice”. .
But what is written in the agreements opens up many important details for the next year and beyond, including who will contribute to the fund and who will benefit.
Here’s what you need to know about the deal:
What is ‘waste and damage’?
In the context of the UN climate talks, “losses and damage” refers to financial losses caused by climate-related events or impacts, such as sea level rise.
Climate aid is currently focused on reducing carbon dioxide emissions to reduce global warming, while about a third goes to humanitarian projects to adapt to future climate change.
“Loss and damages” costs are different, mainly to cover the cost of damages that states cannot avoid or replace.
But there is no agreement at the moment on what should be counted as “loss and damage” due to climate change, which may include damage to property, as well as more complex natural or cultural resources.
A report on 55 vulnerable countries estimates that their climate-related damages over the past two decades totaled $525bn, or 20% of gross domestic product (GDP). One study suggests that by 2030, such losses could reach $580bn a year.
Who pays whom?
Concerned countries and campaigners have previously argued that rich countries that have caused climate change through their greenhouse gas emissions should pay.
The United States and the European Union rejected the conflict, fearing it would escalate, but changed their stance at the COP27 conference. The EU has said that China – the world’s second largest economy, but designated by the UN as a developing country – must also pay.
A few governments have created a small but symbolic amount of waste and waste money: Denmark, Belgium, Germany and Scotland, as well as the EU. China has not yet offered any payment.
Some of the funds available to the UN and the development bank help countries that are facing destruction and destruction, although they are not officially written to achieve this goal.
What remains to be determined is the details of the countries or disasters that are to be compensated.
What does the COP27 agreement say?
The fund that was agreed at the UN meeting in Egypt will help developing countries that are “vulnerable” especially due to climate change, the language chosen by rich countries to ensure that the money goes to the most difficult and to reduce the group of potential recipients.
The agreement provides a framework for future decision-making, with recommendations to be made at next year’s UN climate conference for decisions including who will manage the fund, how the money will be distributed – and to whom.
The agreement calls for this money to come from a variety of sources, including financial institutions, and not rely on rich countries to pay for it.
Some countries have suggested that other existing funds may also be a source of funding, although some experts say factors such as long delays make the funds unsuitable for dealing with damage and loss.
Other proposals include a call by UN Secretary-General Antonio Guterres to impose a beneficial tax on oil companies to raise revenue.