Climate Change Loss and Damage Fund System

What is the Loss and Damage Fund System?

This issue, which has been on the agenda for years but has never been included in the climate agenda at climate summits or other meetings, is among the most fundamental issues for those who talk about climate justice. The loss and damage fund system has basically emerged from the fact that developing and undeveloped countries think that the countries that are at the top of carbon emissions are also to blame for the extraordinary events that occur due to climate change. Therefore, since countries with excessive carbon emissions are responsible for climate change, they should help countries that suffer losses and damages due to the effects of climate change.

In 2022, the "establishment of a fund for losses and damages" was welcomed by the parties, although it entered the COP27 agenda in Sharm El Sheikh, Egypt at the last minute. The floods that devastated Pakistan that year were the trigger, as was Typhoon Haiyan in 2013, which led to the first effective action on loss and damage.

This issue has been consistently ignored by developed countries, particularly the US, responsible for 25 percent of all carbon emissions into the atmosphere to date, and the EU, responsible for 22 percent, lest it brings historical responsibility to light. However, the slogans of "climate justice" and "Leave no one behind (LNOB)", which are constantly on the world agenda, have shown their effect, and an important step has been taken to compensate for losses and damages in line with the main principle of "Polluter pays principle".

Climate Change Loss and Damage Fund System?

In particular, UN Secretary-General Guterres and EU representatives called for the same willingness to compensate for losses and damages for +1.5℃. EU officials also shared that they are in favor of the idea of establishing a fund for losses and damages, but that it would not be sufficient for this fund to be supported only by developed countries, and that countries that are among the "developing" countries according to the framework convention developed 30 years ago but are currently emitting significant greenhouse gases, should also contribute to the fund. (United Nations Framework Convention on Climate Change, UNFCCC)

In fact, it is envisaged that the objections of developing countries, which have been insisted on for many years, that the development of nations is open to change due to its dynamic structure, and therefore that the annexes of the convention 30 years ago do not reflect today's world, may be voiced by different countries in the future and this situation may benefit all countries.

At this meeting, it was decided to establish a transition committee to carry out technical work on details such as the establishment of the loss and damage fund system, which country will contribute to what extent, how countries can benefit from the fund, who will carry out monitoring and audits, and the evaluation of alternative funding sources.

After more than two weeks of protracted negotiations at COP27, an overarching declaration on the establishment of a fund for losses and damages and the gradual phase-out of coal use at +1.5℃, adhering to the Glasgow language, was presented to the world press as the Sharm El-Sheikh Implementation Plan.

A new financing mechanism, the so-called Loss and Damage Fund, was included in the decision texts of COP27, although it is not yet fully named. Developing countries, African countries, small island states, etc. see this as a great victory.