On the first day of COP28, a loss and damage fund was established in order to provide financing for developing countries facing hardship amongst the increasingly adverse effects of climate change.
Developing countries have cited a need for such a fund for several years, and last year’s COP27 ended with a decision to establish the loss and damage fund. The new agreement includes some countries’ specific financial commitments as well as initial plans outlining how the fund will be run.
The UAE, the host of the conference, announced a $100 million commitment and called for other countries to do the same. Germany also committed $100 million, while the United Kingdom committed more than $75 million, the United States committed $17.5 million, and Japan committed $10 million. The fund will be hosted by the World Bank for the next four years, with its official launch in 2024, according to a Time report.
“The hard work of many people over many years has been delivered in Dubai,” said COP28 President Sultan Al Jaber. “The speed at which the world came together to get this fund operationalized within one year since Parties agreed to it in Sharm El Sheikh is unprecedented.”
Financing Required to Address Unequal Burden Faced by Developing Countries
While the establishment of the fund has been regarded as the first step in providing aid to low-income countries, considerably more funding will reportedly be required to meet the need for recovery measures. According to a report from the UN, modeled costs of climate adaptation for developing countries are estimated to require $387 billion each year.
While the high-income G20 countries are responsible for 80% of global emissions, low-income countries have faced disproportionate amounts of climate change-caused damages from floods, ocean rise, and a number of other extreme weather events. The new agreement will focus on such countries as they are most vulnerable to climate change, though any climate-affected community or country may reportedly receive aid from the fund.
Beyond funding for climate-related damages, financial support for developing countries is cited as a crucial element of meeting global decarbonization targets. The UN has also identified a $4 trillion gap in energy transition investments for developing countries.