Historic compensation fund approved at UN climate talks

The decision establishes a fund for what negotiators call loss and damage. It is a big win for poorer nations which have long called for cash — sometimes viewed as reparations — because they are often the victims of climate worsened floods, droughts, heat waves, famines and storms despite having contributed little to the pollution that heats up the globe.

The agreement struck in this Egyptian Red Sea resort city is a victory for developing nations that have for decades fought for some form of compensation for the “loss and damage” they’re suffering due to floods, droughts, famine, heat waves and storms worsened by climate change despite emitting a small fraction of heat-trapping carbon pollution.

It is also long been called an issue of climate justice.

“Today, the international community has restored global faith in this critical process that is dedicated to ensuring no one is left behind,” said Antigua and Barbuda’s Molwyn Joseph, who chairs the organization of small island states that has been vocal on loss and damage. “The agreements made at COP27 are a win for our entire world. We have shown those who have felt neglected that we hear you, we see you, and we are giving you the respect and care you deserve.”

A deal of sorts came after a game of climate change chicken over the cause of warming: fossil fuel burning.

Early Sunday morning, delegates approved the compensation fund but had not dealt with the contentious issues of an overall temperature goal, emissions cutting and the desire to target all fossil fuels for phase down. As dawn was breaking the European Union and other nations fought back what they considered backsliding in Egyptian presidency’s overarching cover agreement and threatened to scuttle the rest of the process.

The package was revised again and this time didn’t have what the Europeans would consider backsliding.

“It’s not as strong as we would like it to be but it does not break” with what was decided at last year’s U.N. climate conference, said Norway Climate Minister Espen Barth Eide. “It does not raise ambition further so that’s something we have to work with in COP28” next year.

This year’s talks “were very focused on the fund and less on the mitigation (cutting emissions) part,” Eide added.

The agreement includes a veiled reference to the benefits of natural gas as low emission energy, despite many nations calling for a phase down of natural gas, which does contribute to climate change.

The new agreement does not ratchet up calls for reducing emissions. But it does retain language to keep alive the global goal of limiting warming to 1.5 degrees Celsius (2.7 degrees Fahrenheit) over pre-industrial times. The Egyptian presidency kept offering proposals that harkened back to 2015 Paris language which also mentioned a looser goal of 2 degrees. The world has already warmed 1.1 degrees (2 degrees Fahrenheit).

Nor does the deal expand on last year’s call to phase down global use of “unabated coal” even though India and other countries pushed to include oil and natural gas in language from Glasgow. That too was the subject of last minute debate.

However, that fight was overshadowed by the historic compensation fund.

Harjeet Singh of the environmental group Climate Action Network International said the new fund had effectively “sent a warning shot to polluters that they can no longer go scot-free with their climate destruction.”

“From now on, they will have to pay up for the damages they cause and are accountable to the people who are facing supercharged storms, devastating floods and rising seas,” he said.

Outside experts hailed the decision as historic.

“This loss and damage fund will be a lifeline for poor families whose houses are destroyed, farmers whose fields are ruined, and islanders forced from their ancestral homes,” said Ani Dasgupta, president of the environmental think tank World Resources Institute, minutes after the early morning approval. “This positive outcome from COP27 is an important step toward rebuilding trust with vulnerable countries.”

“Quite a few positives to celebrate amidst the gloom and doom” of not cutting emissions fast enough to limit warming to 1.5 degrees, said climate scientist Maarten van Aalst of the Red Cross Red Crescent Climate Center, which responds to climate disasters.

It’s a reflection of what can be done when the poorest nations remain unified, said Alex Scott, a climate diplomacy expert at the think tank E3G.

“I think this is huge to have governments coming together to actually work out at least the first step of … how to deal with the issue of loss and damage,” Scott said. But like all climate financials, it is one thing to create a fund, it’s another to get money flowing in and out, she said. The developed world still has not kept its 2009 pledge to spend $100 billion a year in other climate aid — designed to help poor nations develop green energy and adapt to future warming.

“Loss and damage is a way of both recognizing past harm and compensating for that past harm,” said Dartmouth climate scientist Justin Mankin, who calculated dollar amounts for each country’s warming. “These harms are scientifically identifiable.”

“In many ways we’re talking about reparations,” said University of Maryland environmental health and justice professor Sacoby Wilson. “It’s an appropriate term to use” he said, because the rich northern countries got the benefits of fossil fuels, while the poorer global south gets the damage in floods, droughts, climate refugees and hunger.

The Egyptian presidency, which had been under criticism by all sides, proposed a new loss and damage deal Saturday afternoon and within a couple hours an agreement was struck, but Norway’s negotiator said it was not so much the Egyptians but countries working together.

Germany climate envoy Jennifer Morgan and Chilean Environment Minister Maisa Rojas, who shepherded the deal on to the agenda and to the finish line, hugged each other after passage, posed for a photo and said “yeah, we made it!”

According to the agreement, the fund would initially draw on contributions from developed countries and other private and public sources such as international financial institutions. While major emerging economies such as China would not initially be required to contribute, that option remains on the table and will be negotiated over the coming years. This is a key demand by the European Union and the United States, who argue that China and other large polluters currently classified as developing countries have the financial clout and responsibility to pay their way.

The fund would be largely aimed at the most vulnerable nations, though there would be room for middle-income countries that are severely battered by climate disasters to get aid.

Wanjohi Kabukuru, David Keyton, Theodora Tongas and Kelvin Chan contributed to this report.

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