Climate finance invariably provokes sharp disagreements between wealthy and poor nations. Leaders of the wealthy countries offer insultingly small amounts of money to countries that will be severely affected by climate change, but do not have the resources to respond.
Low lying small island states face devastating consequences from sea level rise. Since 1990, they have been active in climate change negotiations, with funding for loss and damage being a main focus of their attention.
Warsaw International Mechanism
The Warsaw International Mechanism for Loss and Damage, which was agreed in 2013, recognised loss and damage as a sub-category of adaptation, but made no mention of how it would be financed.
In the lead up to the Paris Agreement of 2015, loss and damage was one of the most contentious areas of negotiation. Intense discussions between the US and the small island states led to an agreement that recognised loss and damage as a third aspect of climate change, alongside mitigation and adaptation. But wealthy countries ensured there was a clause to say that Loss and Damage “does not involve or provide a basis for any liability or compensation”.
John Kerry, the US climate envoy, stated the US’s position clearly: “We’re not against [loss and damage]. We’re in favor of framing it in a way that doesn’t create a legal remedy because Congress will never buy into an agreement that has something like that…The impact of it would be to kill the deal.” https://tinyurl.com/bduuh3ef
Despite this recognition of the need for finance for loss and damage, no way has been agreed to do this.
Unfulfilled pledges
In 2010 at Copenhagen COP15 meeting, wealthy countries pledged to pay $100 billion per year to less wealthy countries for climate mitigation and adaptation. The OECD claims that an average of about $60 billion per year has been paid. But Oxfam says this is a huge overestimate, since it includes loans and projects that are not driven by climate considerations. https://tinyurl.com/2p9c7mpc
The US is a particularly selfish contributor to international climate funds. The total contributions to the Green Climate Fund amount to a scandalous $ 1 billion.
The International Institute for Environment and Development (IIED) says “in developing countries alone, the economic cost of loss and damage is estimated to be $290-580 billion by 2030, increasing to between $1 to $1.8 trillion by 2050.” https://tinyurl.com/mtpe7c2t
Reparations
At COP26 in November 2022, the Alliance of Small Island States (AOSIS) indicated their intention to seek reparations from wealthy nations for climate change and for debt cancellation. (link) It is clear, though, that wealthy countries will fight tooth and nail against any attempts to hold them legally liable for loss and damage.
People who suffer loss and damage from climate change should be supported. This is true not only for small island states, or poorer less developed countries, but wherever loss and damage occurs. Who pays for this is fundamentally a political question. Are the world’s poor going to be left to their own devices, or will they get assistance from the accumulated wealth that exists in the world?
Climate campaigners have correctly pointed out that insurance is no solution. No insurer will provide cover for events that will definitely happen. International funding will be essential.
Who pays?
Ugandan climate activist, Vanessa Nakate, and Loss and Damage experts, Professor Saleem Huq and Harjeet Singh, took part in a film during the lead up to COP26. The film, “This is Loss and Damage – Who Pays?”, calls for an international mechanism funded by the fossil fuel polluters who caused the crisis. https://tinyurl.com/3fbc447b
The current international order, which sets nation against nation, is a fundamental obstacle to providing realistic levels of finance to deal with climate change. The elites of every country, invariably tied to their own corporate interests, will always try to get other countries to pay.
While it is obvious that most of the money will have to come from rich countries, what is important is how this happens. Right wing politicians (with open or hidden support of the corporations) will seize on any measure that increases taxes on the middle and working class. They will place huge pressure on their governments not to release even a modest fraction of the money needed by poorer countries. (See John Kerry’s quote above.) They will say that ordinary people in wealthy countries are being blamed for loss and damage in poor countries.
Global climate alliance
A global campaign for adequate funding for loss and damage (and for mitigation and adaptation) will have to target the large corporations, especially the fossil fuel companies, as well as the very rich. This is the basis for a global climate alliance that includes Most Affected People and Areas, as well as the workers and the poor in all countries.
While this is also the basis for a socialist solution to the climate crisis, such an alliance will be critical in the coming years and decades, when the world will have to find solutions in the midst of chronic environmental and political crises.
