Cop27 talks continues over EU climate loss and damage fund proposal | cop27

Crucial climate talks have dragged on past their deadline with no end in sight, as governments wrangle over how to pay for the rebuilding of poor countries ravaged by climate breakdown.

There was turmoil in the negotiating halls of the Cop27 UN summit in Egypt. Delegates rushed from room to room as countries scrambled to decide their response to a last-ditch proposal from the European Union that would establish a new fund providing cash for countries suffering climate-related disaster, known as loss and damage.

Such a fund has been the core demand of developing countries during the two weeks of these negotiations. The EU offer was announced early in the day. By late on Friday night, a piece of informal proposed text backed by the EU, the US, the UK, Australia and New Zealand was circulated to delegates.

Seen by the Guardian, the proposal included a fund to be made operational within two years, and options for a commission to be set up that would examine whether it could work in concert with other existing financial institutions, such as the World Bank.

Developing country groupings were considering the proposal late into the night.

Frans Timmermans, vice-president of the European Commission, had earlier said EU member states would only provide cash if “the donor base was broadened”.

That means expecting payments – and tougher targets on cutting greenhouse gases – from countries such as China, the world’s biggest emitter and second-biggest economy, as well as high emitters with vast oil revenues such as Saudi Arabia and Russia, and potentially from rapidly industrializing nations such as South Korea and Singapore.

Those countries have all been classified as “developing” since the UN Framework Convention on Climate Change, parent treaty to the Paris agreement, was signed in 1992. That has meant they have been absolved from contributing to climate finance for the vulnerable, and many have lax targets on cutting emissions.

But in the past 30 years, their emissions and economies have ballooned. China’s cumulative emissions are now second only to those of the US, while Russia, India, Indonesia and Brazil are also in the top 10.

The draft proposal calls for “a wide variety of parties and sources” to contribute money, and to “expand sources of funding”, but does not specify that large emerging economies such as China must contribute cash.

China did not respond to requests for a response earlier on Friday. Last week, the country’s climate chief, Xie Zhenhua, indicated that China did not face an obligation to pay for loss and damage in vulnerable countries.

“We strongly support the concerns from developing countries, especially the most vulnerable countries, for addressing loss and damage because China is also a developing country and we also suffered a lot from extreme weather events,” he said, through a translator. “It is not the obligation of China to provide financial support under the UNFCCC.”

Some vulnerable nations warmly welcomed the EU proposal. Seve Paeniu, finance minister for the low-lying Pacific island nation of Tuvalu, said it was a “major breakthrough”. Vanuatu and Palau took similar positions. “To me, that is a major concession,” Paeniu said. “It is our hope that it will be ending up in the text of the conference decision.”

Others gave a muted or ambivalent response to the EU proposal, even though they had been calling for the establishment of a loss and damage fund. Many poorer developing countries have traditionally sought to present a united front with China, which has offered investment to economies in Africa, Latin America and south-east Asia.

Carla Barnett, secretary general of the Caribbean Community group of countries, said: “There’s only one option for small island developing states, a financing fund that delivers a just pathway for the future of our countries. Division and delay tactics will not work. This is a matter we defend on the basis of justice.”

Many others would not respond officially, but the Guardian understands that some are pleased with the EU proposal but will not speak out for fear of angering their allies. Civil society activists and some countries accused the EU of trying to create division in the developing world.

Mohamed Adow, director of the Power Shift Africa thinktank, said: “The fund shouldn’t be used as a poison pill to fix old divisions around expanding the donor base. [This] won’t meet the needs of vulnerable countries.”

One negotiator for the G77 plus China alliance told the Guardian: “It is a predictable attempt by the EU to break up the G77 in talks. Of course, it’s not a breakthrough. It’s completely disingenuous.”

Timmermans denied those claims. “I’m doing this for my kids,” he said. “We can’t afford to have a failure. If our steps forward are not reciprocated by others, there will be a failure. I hope that can be avoided.”

Meanwhile John Kerry, Joe Biden’s special envoy for climate, began self-isolating on Friday night after testing positive for Covid. He had been closely engaged in the negotiations and although he will continue to negotiate by phone, the news comes as a blow as talks between Kerry and his Chinese counterpart, Xie, were considered by some as a potential way of breaking the deadlock.

A state department spokesperson said: “Secretary Kerry is self-isolating after testing positive for Covid-19 in Sharm el-Sheikh. He is fully vaccinated and boosted and experiencing mild symptoms. He is working with his negotiations team and foreign counterparts by phone to ensure a successful outcome of Cop27.”

As well as the EU proposal, the frantic last official day of the fortnight-long talks saw:

  • The final publication of the revised draft text for a “cover decision” from the conference of the parties, cut down from 20 pages in its original version to 10, and including commitments to increase the funding to help developing countries adapt to the impacts of extreme weather.

  • Fears of countries attempting to backslide on the target of limiting global temperature rises to 1.5C above pre-industrial levels. Some language in the draft text emphasized the upper limit of 2C from the Paris agreement, which scientists have shown would bring dangerous levels of extreme weather and inundate small islands.

  • India appearing to have failed in its attempt to have a commitment to phase down all fossil fuels included in the outcome of the conference, which was missing from the draft.

  • The Egyptian hosts coming under fire as delegates worried that the talks were progressing too slowly, with the negotiating timetable still unclear and an endpoint not yet in sight as the official deadline of 6pm local time for the end of the conference passed.

  • Calls for reform of the World Bank included in the draft text, to the relief of many countries that have made it a key aim at these talks.

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