Author: Ina Liao

The Trust Edge at COP

After a marathon negotiation running 40 hours beyond the Friday evening deadline, parties have achieved an agreement on setting up a loss and damage fund. This achievement is deemed a major milestone for vulnerable countries. However, to the dismay of many, some countries reneged on the commitment to phase out fossil fuels to keep global temperatures from rising and the promise of providing 100 billion dollars per year for climate finance.

The decision-making process for the final text was not transparent and inclusive. Political maneuvers were made to make countries agree on the text that had been formulated. For example, in loss and damage negotiation, developed countries, including the United States, the European Union, the United Kingdom, Australia, and New Zealand, changed their stance and proposed draft text at 11 pm on Friday. Meanwhile, the second draft text summarizing the negotiations’ outcomes was released around 1:30 am on Saturday, which was beyond the scheduled finish time. Negotiators were overwhelmed with new text in the early hour morning. In addition, some small island leaders had flown back home.

“From what I ascertain, there is equal dissatisfaction in all quarters,” said Sameh Shoukry, COP27 president and Egypt Foreign Minister.

Grueling night discussion and the last-minute change leave parties with no choice but to accept the text. The final text, “cut greenhouse gas emissions,” was approved by the depleted and tired negotiators on Sunday morning. Likewise, in COP26, the text regarding coal was changed from phase-out to phase-down in the closing plenary. Under pressure from civil society to have an outcome for COP26, most countries accept the change with great reluctance. If the climate actions fall into the purely political calculation, countries need to worry about either they are excluded from the decision-making process or there is a “secret text” hiding in the treaty, how could we expect that international climate actions could move forwards?

Trust is the critical piece in negotiation. When that trust is missing, what we have is just a document. In 2009 at COP15, developed countries agreed to mobilize 100 billion dollars to developing countries annually by 2020. However, according to the OCED report, the total climate finance for developing countries was 83.3 billion in 2020. Developed countries have failed to meet the $100 billion goal and extend the deadline to 2025, which has eroded trust in the agreements.

“By the time we get to Glasgow, if they haven’t given us another $100 billion for 2021, then they are completely unable to meet their obligations,” said Saleemul Huq, director of the International Centre for Climate Change and Development before COP26 in Glasgow.

The failure to meet the $100 billion dollars goal has not only raised the trust issue among countries but also added a question mark on funding sources for the loss and damage fund. In addition, if there is no trust among countries, how could we work together and find solutions to reduce the impact of climate change?

COP27 Week1: A Laggard in Loss and Damage

What is Loss and Damage? 

Loss and damage is not a new topic at the Conference of Parties (COP), yet it is the first time to be an agenda item at COP. According to the Intergovernmental Panel on Climate Change (IPCC) Sixth Assessment Report, loss and damage refer to the destructive impacts of climate change that can not be prevented by adaptation efforts. The concept of loss and damage was first proposed in 2007, and it was not until the 2014  Warsaw International Mechanism that the issue became prominent. The slow progress on loss and damage was mainly because many developed countries feared that the ideas of compensation and liability underlying loss and damage could set off a wave of lawsuits by developing countries.

Why is Financial Mechanism for Loss and Damage Needed?

Climate-vulnerable countries express the need to establish an independent loss and damage fund since the existing mechanisms do not provide adequate financial support. The existing mechanisms for loss and damage, such as Warsaw International Mechanism and Santiago Network, mainly provide non-financial support, such as risk management and technical support. Even though Glasgow Dialogue requires parties to discuss the financial arrangements for loss and damage every two years, no financial mechanisms have been developed yet. 

Currently, the funds for loss and damage mainly come from developed countries’ donations. For example, Scotland, Belgium, Canada, Denmark, and Germany, have committed to providing over a total of 195 million euros to the loss and damage fund. However, there is a huge gap in the funding arrangements. Assuming the temperature rises to 2.5°C and 3.4°C by the end of this century respectively, the loss in developing countries is estimated to fall in the range of 290 to 580 billion in 2030, and the amount of loss will reach up to 1.1 to 1.7 trillion in 2050 (Markandya et al., 2019).

During the Negotiation: What Has been Made, What Has been Blocked?

Most countries have agreed that the funding source of loss and damage should be predictable, adequate, accessible, and transparent. However, little progress was made on the funding structure for loss and damage during week one. Divergences revolve around the following few points. 

First, some countries, including the European Union, stated that the loss and damage fund should be independent of current climate finance mechanisms. Countries that support an independent loss and damage fund are worried that loss and damage funds may be crowded out by other funds if the funds are under current financial facilities. However, some countries, including the United Kingdom, Canada, and Norway, disagree with the argument. Those countries argue that current financial mechanisms have supported some projects for addressing loss and damage; thus, setting a new mechanism will spend more time and administration costs on discussing the operation of the new funding facility.

Second, developing countries, such as Ecuador and the Philippines, stated that the form of the funds should be grant-based finance. Developing countries are worried that more loans will let them fall into a quagmire of the debt crisis. According to the International Monetary Fund (IMF) estimates, around 60% of low-income countries will be facing debt difficulties in 2021. However, developed countries, such as the United States and Switzerland, argue that the form to be in-kind donation, bilateral, or multilateral aid. 

Third, developed countries, such as the United States and European Union, argue that developing countries should quantify the needs and elaborate on the use of the fund. However, measuring non-economic loss is challenging and time-consuming. Loss and damage can result from short-term extreme weather events, such as floods or hurricanes, or long-term climate change, such as rising sea levels. Before counting the loss, economists will need to specify the time frame and the value of the goods. For the loss caused by long-term climate change, it is hard to specify when the starting point was. In addition, the values of the loss of non-economic goods, such as the loss of traditional culture, loss of biodiversity, and mental health, are subjective and difficult to generalize the methodology. Thus, even though each developing country has the capacity to do the evaluation, it might take years to finish the assessment. 

Personally, I hope progress could be made in the second-week negotiations.


The One that Left Out

It has been thirty-fifth hour since the flight from New York to Cario was canceled. Four hundred people stay in the same hotel, waiting for the next connected flight to Egypt. We missed our luggage and our two-day trip in Cario, but it is nothing but peanuts compared to people who could not bring their voices to the 27th Conference of the Parties (COP 27) due to financial difficulties. Sharm el-Sheikh is a resort town. With only a handful of funding, several youths and advocates from Global South have found themselves challenged to find affordable accommodations. Messages such as looking for extra spots in the room or where could apply for additional funding bloomed in the Yougo WhatsApp group chat three weeks before the COP.

If they could not at COP 27, how could their voices be heard?

As a Taiwanese, getting a badge for COP never comes easy. Taiwan is not a member of the United Nations. While without a seat in international climate negotiation, Taiwan is not immune to the effects of climate change. Plagued by water scarcity and heat waves, millions of people, including me, have lived two days a week without water every month. Despite the formidable net-zero goals and tight schedules for energy transitions, uncoordinated energy policies make the transition to using cleaner energy sources much more difficult. Thus, I will track two topics, loss and damage and energy transition as it relates to technology, during COP27 to understand how international mechanisms can be practiced in Taiwan. I am grateful for the support from Duke University, Nicholas Institute for Energy, Environment & Sustainability, and Nicholas School of the Environment, for letting my voice as a youth and a Taiwanese be heard at COP27.

COP27 has been deemed as “the African COP,” which has raised the discussion on financial facilities for addressing climate justice, in particular in loss and damage. Africa accounts for less than 4% of the global greenhouse gas emissions but suffers from severe climate impacts, including but not limited to drought, heat waves, and food shortage. COP27 president Sameh Shoukry has highlighted the urgency of addressing loss and damage finance several times in his public speeches. Even though parties have not reached a consensus on establishing a loss and damage fund, planning to put it as an agenda item has marked a major milestone: loss and damage are happening, and richer countries must take responsibility for historical emissions and offer financial help.

During COP27, I will work with Taiwan Youth Climate Coalition, United Daily News Group, and CSR@天下, helping organize side events at the Conference of Youth (COY 17) and writing articles on loss and damage and energy transition. By attending negotiations, official side events, and pavilion events, I hope to find practical solutions for closing the financial and technology gap in addressing climate change and witness the establishment of a loss and damage fund.

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