EU tries to break COP27 deadlock with offer on loss and damage fund

THE European Union (EU) on Thursday (Nov 17) offered a plan to break deadlocked climate negotiations in Egypt, proposing a loss and damage finance facility for the most vulnerable countries in exchange for a pledge to phase down oil, gas and coal. The proposal, set out by EU climate chief Frans Timmermans, came after days of sluggish talks in Sharm El-Sheikh, bogged down by fights over how to compensate developing countries that are bearing the brunt of climate change in the form of flooding, droughts and other disasters. It was not immediately clear that Timmermans’s offer would yield the breakthrough he sought. “Developed countries always promise ambitious goals” and large financial contributions, but have not fulfilled those pledges, a representative of Bolivia said. “Developed countries talk a lot, but in practice they do very few.” The European Union offer would include a commitment to immediately establish a new loss and damage response fund with details worked out over the next year as well as a commitment to examine debt and reform the multilateral development banks. There also would be a pledge to ensure all financial flows are aligned with the Paris Agreement commitment to keep global warming to 1.5 degrees Celsius. In exchange, countries would vow to peak global emissions before 2025 and phase down all fossil fuels — not just coal, which was spelt out in the Glasgow climate pact last year. That would come with some accountability, in the form of an annual report on progress towards implementing the phase down of unabated coal power. Espen Barth Eide, Norway’s minister of climate and environment, called it “a promising approach”. “For every decimal of a degree increase after 1.5, loss and damage will be incredibly more expensive and more difficult,” Eide said. Timmermans also stressed that the two prongs of the offer — mitigating climate change and addressing the loss and damage caused by it — “are two sides of the same coin”. A draft text presented by the Egyptian presidency offered three possible options for language on loss and damage:

• Option 1: “Establish a fund, as part of new and enhanced funding arrangements...”
• Option 2: “Establish new and enhanced funding arrangements... with a view to establishing a fund as part of these arrangements...”
• Option 3: “Establish new and enhanced funding arrangements...”

The Timmermans intervention offered a fourth option: establish a fund at this meeting, which includes a mosaic of solutions from a broad donor base, including alternative sourcing of finance such as international aviation, shipping, or fossil fuel levies. “We sincerely hope that by this offer that we are making tonight, we can bring parties closer together because we believe it is urgent that we show to all our constituents that we want this COP to succeed,” Timmermans said. “We are increasingly faced with the horrible consequences of this climate crisis.” BLOOMBERG