A decade before the onset of the pandemic, developed nations committed US$ 100 billion of climate finance aiming to equally fund measures to mitigate and adapt to climate change.
However, delays in climate action have caused vulnerable nations to suffer the consequences – a cost termed Loss and Damage under the United Nations Framework Convention on Climate Change (UNFCCC).
Despite loss and damage being defined under its own article in the Paris Agreement, developed countries – which are largely responsible for causing climate change – have been blocking the establishment of a loss and damage finance facility under the UNFCCC and new finance to address loss and damage.
As such, the Loss and Damage Youth Coalition was surprised to hear the UK, the US, and Germany announced a commitment of around US $327 million to “tackle loss and damage caused by climate change”.
While we welcome any and all commitment to address loss and damage on the ground, we have the following responses to this new announcement:
- This commitment does not match the scale of the need. Estimates of the cost of loss and damage in 2020 amounted to between US $100 and 400 billion.1 The cost of loss and damage is estimated to increase to $300-600 billion annually by 2030, and to $1-2 trillion annually by 2050. While the G7 accounts for 62% of global net wealth, this commitment represents 5% of the US $7 billion committed to humanitarian assistance outlined in its Communiqué. In order for a commitment to loss and damage finance to match the scale of the need, wealthy governments will need to commit hundreds of billions of dollars to address loss and damage, not hundreds of millions. We note that 100 billion dollars is a thousand times more money than 100 million dollars.
- Loss and damage finance should be separate from the existing 100 billion committed to mitigation and adaptation. The announcement of this commitment states that “The new support announced today follows G7 Leaders’ commitments to the $100 billion Climate Finance goal,” which leads us to question whether this new commitment is being counted as a contribution toward the $100 billion of climate finance that developed countries agreed to provide on an annual basis starting in 2020. We note that loss and damage is separate from adaptation and requires its own separate funding stream — not one that will dip into funding for adaptation.
- Climate finance for loss and damage should be channeled through the UNFCCC. The finance announced in this commitment will be channeled to The Risk Informed Early Action Partnership (REAP) and The InsuResilience Global Partnership, which support early action and insurance solutions for disasters, respectively. But early action and insurance do not represent the full spectrum of action for addressing loss and damage. Governments and other disaster management institutions need funding to deal with all aspects of loss and damage, from disaster prevention to response, recovery, and reparations. The UNFCCC is well-placed to host such a facility as it has mechanisms for accountability and transparency, and serves as the global platform for addressing climate change at the scale required. Wealthy governments must stop blocking efforts by developing countries to set up a new finance facility for loss and damage under the UNFCCC.
As leaders seek to meet the overdue climate finance commitment by the next Conference of the Parties to the UNFCCC, the Loss and Damage Youth Coalition (LDYC) had the opportunity to meet with COP26 President Designate, Alok Sharma, in response to an open letter sent last year.
Minister Sharma indicated that one of the firm outcomes which the UK COP Presidency seeks to deliver is the operationalization of the Santiago Network on Loss and Damage.
LDYC maintains that it is imperative that Loss and Damage become permanent on the COP agenda and that it receives its own finance facility considering that the most vulnerable among us are currently on the frontlines of climate change.
We urge governments to acknowledge Loss and Damage alongside the other costs of climate change, and take action on protecting people from climate disaster.
1Sources: Germanwatch report, 2019: https://germanwatch.org/sites/germanwatch.org/files/Policy%20Briefing_Steps%20towards%20closing%20the%20Loss%26Damage%20finance%20gap_0.pdf
Bread for the World report, 2019: https://reliefweb.int/sites/reliefweb.int/files/resources/ClimateFinance_LossDamage.pdf