UN climate fund battle looms as US objects to taking lead

A fight over a global fund to help countries deal with climate change is set for the UN climate summit this month, after the US objected to playing a greater role in the financing of it in a tentative agreement reached at the weekend.

The last round of talks to set out how to get the so-called loss and damage fund up and running before COP28 ended in acrimony late on Saturday night in Abu Dhabi, with the US absenting itself at a critical juncture.

According to several people involved in the talks, the US lead negotiator left the room while other countries on the 24-person committee agreed to a set of recommendations involving financing and structure.

After the gavel came down, the US returned and made its objections to the final text, seeking a provision that contributions to the fund be voluntary. This was denied as the agreement had been adopted, but was noted.

Following the end of what was the fifth round of meetings after a previous fraught session in Egypt failed, the US Department of State said it was pleased the committee had been able to “reach agreement on many aspects of loss and damage funding, including a new fund”.

But it added: “We regret that the text does not reflect consensus concerning the need for clarity on the voluntary nature of contributions; any contributions to funding arrangements, including to a fund, are on a purely voluntary basis.”

The intention to create a loss and damage fund was a key outcome from last year’s UN COP27 climate summit in Egypt. But nations have clashed in talks over the past year about the fundamental questions of where it should be based, who should fund it and who should benefit.

The recommendations approved on Saturday now need to be signed off at COP28, which begins at the end of the month in Dubai. A failure to establish the fund would be a major blow.

The US and other rich western nations have been in conflict with developing countries over who should play a formal role in financing the fund.

Developing countries said that developed nations — responsible for about 80 per cent of historical greenhouse gas emissions — should play a lead role, alongside other funding sources such as philanthropy and carbon pricing.

But the US has pushed back against any suggestion that developed countries have an obligation to pay.

There was also an effort by western nations to request Saudi Arabia contribute, as a wealthy fossil fuel producer, but this was rebuffed.

The agreed text says the loss and damage fund will “invite financial contributions with developed country parties continuing to take this lead to provide financial resources for commencing the operationalisation of the fund”.

Where the fund will be based has also proved a hurdle. After initial fierce resistance to it being hosted by the World Bank, where the US is the biggest shareholder, developing countries relented on Saturday and agreed the lender could act as an interim host.

The bank’s role will be regularly reviewed over the next five years, following criticism from the group of 77 developing countries plus China, based on past experience of dealings with the bureaucracy of the lender.

“A lot of the text is basically riddled with conditions and compromises,” said one negotiator involved in the talks.

But it was an “important step forward and will bring positive momentum to other climate actions”, said Avinash Persaud, special climate envoy to Barbados, an influential member of the committee whose prime minister Mia Mottley has been an advocate for international financial institution reform.

“This was a challenging but critical outcome . . . If we had failed, it would have cast a long shadow over COP and started to unravel a host of climate actions that depend on mutual trust between developing and developed nations,” Persaud said.

Michai Robertson, another negotiator who represents the Alliance of Small Island States, a group of nations vulnerable to climate change, said: “At the end of the day, [the final text] was the best compromise we could come to.”

He noted that the recommendations still needed to be backed by almost 200 countries worldwide to be adopted at COP28.

“We need to see funding dispersed to those who are devastated by climate change. My point of celebration will only come when I see money going to addressing those climate change challenges, especially for small islands,” Robertson said.

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