Activists worldwide have had a plethora of demands for leaders at this year’s United Nations Climate Change Conference COP27 in Egypt, but it seems none have been louder than the calls to use the event to champion the concept of “loss and damage” funding.
You can find out more about loss and damage in our explainer here, but the term essentially refers to the cost required by nations to recover — both economically and socially — from climate impacts.
For decades, extreme storms, rising sea levels, severe droughts, and powerful wildfires have increased in frequency and intensity thanks to human-induced climate change, giving countries, particularly developing nations, less time to rebuild financially.
Governments whose countries are on the front lines of the climate crisis want solutions, specifically now calling for the establishment of a global financing mechanism that can provide ongoing support in recovering from climate related-crises.
The urgent calls have been coming through loud and clear in the first week of COP27, with some of the world’s richest nations responding with one-off payments. It’s important to highlight, however, that while these pledges are small steps in the right direction, and important political signals, questions remain about the source of the funding from some nations — while many activists and campaigners highlight that it is also nowhere near enough.
On Monday, Belgium’s Minister for Development Cooperation Frank Vandenbroucke said the country would provide €2.5 million (around US$2.5 million) in loss and damage funding for Mozambique, with the money expected to provide the climate-vulnerable East African nation with storm warning systems and advanced intel on at-risk coastal areas.
The funds form part of a broader €25 million, seven-year package of climate support for Mozambique.
"We are going to intervene on the ground to help the inhabitants to better protect their communities and their environment against natural disasters such as cyclones and floods, which are increasingly violent due to climate change,” Vandenbroucke said in a statement, according to EuroNews.
Austria’s Climate Ministry announced it would allocate €50 million from its existing budget over the next four years to fund loss and damage in the world’s most vulnerable countries, with Climate Minister Leonore Gewessler claiming her country was “becoming a pioneer in international climate financing.”
The funds are expected to support the UN’s Santiago Network, a scheme dedicated to providing the technical assistance required to implement new “approaches for averting, minimizing, and addressing loss and damage at the local, national, and regional level.”
Gewessler added that €10 million in new money would now be dedicated to climate financing more broadly.
"€5 million of this amount will go to the Adaptation Fund, which will provide financial support to countries in the Global South to help them adapt to the negative effects of the climate crisis,” Gewessler said in a statement. "The most vulnerable countries...are suffering particularly badly from the consequences of the climate crisis — and are rightly demanding more support from industrialized countries.”
New Zealand joined Belgium and Austria, committing NZ$20 million (almost US$12 million) to loss and damage globally.
"Dedicated funding for loss and damage places Aotearoa New Zealand at the leading edge of wealthy countries supporting action to address loss and damage from climate change. It strongly signals our support for Pacific priorities,” said Foreign Minister Nanaia Mahuta. “Comparatively wealthy countries like Aotearoa New Zealand have a duty to support countries most at-risk from climate change.”
The funds will be allocated from an already announced “scaled-up climate finance commitment” from October last year. The former NZ$1.3 billion commitment covers 2022 to 2025.
Chancellor Olaf Scholz said Germany would provide €170 million to the Global Shield Against Climate Risks initiative — a fund dedicated to providing climate risk insurance and prevention support for at-risk nations. Just over €80 million will be devoted to the “central financing structure” of the shield, with the rest for “complementary” climate risk programs.
The funding will come from Germany’s existing Federal Ministry for Economic Cooperation and Development budget. The shield is expected to be formally launched at COP27 on Nov. 14.
On Wednesday, Canada joined Belgium, Austria, New Zealand, and Germany by redefining its climate spending, announcing that $24 million (about US$18 million) from the nation’s former $5.3 billion International Climate Finance Commitment would be dedicated to the “needs and priorities of developing countries.”
From the $24 million, $7 million will be dedicated to loss and damage by supporting the work of the Global Shield. An additional $1.25 million will go to the Santiago Network.
Taoiseach (Prime Minister) of Ireland Micheál Martin committed €10 million to the Global Shield initiative.
"Across the world, we are witnessing the reality of a changing climate — record temperatures, wildfires, floods, and droughts. What were once exceptional events are now occurring with increased frequency and ferocity,” Martin said in a COP27 address. “People in the poorest parts of our planet are being driven from regions that can no longer support and sustain them.”
It would be remiss to talk about recent loss and damage financing without mentioning Scotland and Denmark, the first two nations to offer the specific climate funding. Scotland made history at COP26 in Glasgow last year, making an initial £2 million (about US$2.3 million) pledge, followed by an additional £5 million this week.
Denmark, meanwhile, committed 100 million Danish kroner (US$13.7 million) in September this year.
The loss and damage funding for Scotland comes from its existing Climate Justice Fund, while Denmark’s is new money.
While all the above pledges are welcome, vulnerable nations and global campaigners say the hundreds of millions committed at COP27 is “but a drop in the ocean compared to what’s actually required,” and far from the continuous, all-encompassing systemic response hoped for.