Early 'Loss and Damage' Progress at COP27

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The UN's COP 27 climate conference in Egypt has started on a relatively harmonious note, after an agreement was reached on Sunday to include compensation for "loss and damage" in the official agenda for the two weeks of talks.

However, the goodwill could soon evaporate if rich countries prove unwilling to help poor countries cope with climate change at a time when all nations are grappling with high energy prices, soaring inflation and other serious challenges.

Compensation for loss and damage could indeed become the defining issue of this year's conference, exacerbating tensions between rich and poor after recent severe floods in Pakistan and Nigeria highlighted the consequences of climate change.

At the heart of the debate is the idea that past and present carbon emissions of wealthier nations have contributed to climate-related damage in less developed countries and that they therefore have a moral responsibility to help them.

Long a demand of the small island nations most at risk from rising seas and floods, this issue has been discussed during financial sessions at previous UN climate conferences, but never before as a stand-alone agenda item.

Litmus Test

"Loss and damage can no longer be swept under the rug. It is a moral imperative," UN Secretary General Antonio Guterres told the opening session of the conference in the Egyptian resort town of Sharm el-Sheikh.

"Getting concrete results on loss and damage is a litmus test of the commitment of the governments to the success of COP27," he added.

Guterres called for a clearly defined loss and damage roadmap "reflective of the scale and urgency of the challenge" to deliver "effective institutional arrangements for financing." He also repeated his call for governments to tax windfall fossil fuel profits.

"Let's redirect that money to people struggling with rising food and energy prices and to countries suffering loss and damage caused by the climate crisis," the UN Secretary General urged world leaders attending the session.

Campaigners welcomed the elevation of loss and damage at this year's conference as "historic," but demanded substantial progress, including an agreement to create a dedicated fund with sufficient financial resources to provide compensation.

Paltry Funding

Losses in areas such as housing, infrastructure and communities could rise to $580 billion per year in 2030, according to the French Institute of International Relations, but funding for loss and damage remains paltry so far.

The largest pledge to date, a fairly modest $13 million, was made by Denmark in September.

Nicola Sturgeon, first minister of Scotland, which offered $2 million at the COP26 gathering in Glasgow last year, said in Sharm-el-Sheikh on Monday that she would announce a further financial commitment soon.

With Western governments reluctant to commit to massive increases in public funding for climate aid, efforts are instead focusing on trying to boost private sector funding for initiatives in developing economies.

The US and EU are both working on proposals to help achieve this, including an increase in "blended" finance packages where funding is provided by multilateral development banks and private sector institutions.

Carbon offsets are seen as another way to to boost the flow of private funds to developing countries, with some press reports indicating that the US could unveil a new carbon credit initiative at COP27 on Wednesday.

Oil Industry Voices

Oil- and gas-producing nations are a more prominent presence at COP27, especially compared with the last few conferences held in European cities.

While producers are often criticized at these gatherings for prolonging dependence on oil and gas, this year's host Egypt has given them a greater opportunity to make the case that they are facilitating the energy transition rather than impeding it.

Speaking on Monday at the Middle East Green Initiative Summit in Sharm el-Sheikh, Saudi Crown Prince Mohammed bin Salman said that the kingdom's sovereign wealth fund will now be targeting net-zero emissions by 2050 within its investment portfolio.

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