Nov 30, 2023 - Energy & Environment

Climate aid fund established on first day of COP28 after 30-year controversy

COP28 chairman Sultan Ahmed al-Jaber speaks at a podium at a UN climate summit.

Sultan Ahmed al-Jaber speaks Thursday during the opening ceremony of the COP28 Climate Conference in Dubai. (Photo by Sean Gallup/Getty Images)

COP28 climate summit head Sultan Ahmed al-Jaber notched a win on the first official day of talks in Dubai, with the adoption of an agreement to set up a "loss and damage" fund to help developing nations.

Why it matters: The fund has been highly contentious for decades, once thought of as the third rail of international climate talks. It would use voluntary contributions from mainly wealthier countries and direct those funds to developing nations to help them withstand climate impacts.

  • "The responsibility now lies with affluent nations to meet their financial obligations in a manner proportionate to their role in the climate crisis," said Harjeet Singh, head of global political strategy for the Climate Action Network International.

Details: The agreement establishes the "Climate Impact and Response Fund," which will be housed within the World Bank on an interim basis.

  • Many developing countries opposed this structure during multiple rounds of negotiations, in part because industrialized nations like the U.S. exert more influence over that institution.
  • The U.S. has emphasized all contributions to the fund are voluntary and not an admission of legal culpability for causing climate-related damages.

Flashback: This move completes work conducted last year, at COP27 in Egypt.

  • At the time, countries agreed to create a fund but did not make decisions about how it would be structured, where it would be located, who would contribute and other key details.
  • The steps taken Thursday spell out those details, but leave the pledges, or deposits into the fund, left to each nation to decide.

State of play: Developing countries have said these pledges should total at least $100 billion per year, but what was initially offered Thursday fell well short of that figure.

  • For example, Japan pledged $10 million. The U.S., which is the biggest historical emitter in the world, proposed $17.5 million. Germany offered $100 million.
  • The European Union pledged €200 million for the fund, and the UAE said they would contribute $100 million.

What's next: Other hot button issues are up for consideration in the talks running through Dec. 12.

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