Global Commitment Surfaces as UN Climate Talks in Dubai Establish $400 Million Fund for Climate Disaster Victims

In a historic move on the inaugural day of the UN climate talks in Dubai, governments collectively pledged over $400 million to inaugurate a loss and damage fund dedicated to assisting victims of climate disasters. The decision, hailed as “historic” by Cop28 president Sultan Al Jaber, was met with applause from delegates, sending a positive signal of momentum to the world.

Modest Pledges and Immediate Criticism

The initial pledges to kickstart the fund came from several countries, with Germany and the United Arab Emirates committing $100 million each, followed by the United Kingdom, the United States, and Japan making significant contributions. However, the relatively modest commitment from the United States, the world’s largest economy, drew immediate criticism, with Mohamed Adow, director of Power Shift Africa, describing it as “embarrassing.”

Avinash Persaud, a member of the transitional committee, welcomed the “hard-fought historic agreement” but noted that the pledges might not represent new and additional resources. He explained that since the fund’s approval was recent, the initial money would likely come from existing budgets.

Fund Mechanism and Host Institution

The fund, designed to receive contributions from various sources, including grants and cheap loans from both the public and private sectors, will be hosted by the World Bank for the first four years, despite initial resistance from developing countries. The mechanism aims to assist all developing countries vulnerable to the effects of climate change, although the definition of vulnerability remains unspecified in the text.

While the agreement is considered an “early win” for the Cop28 hosts, Ana Mulio Alvarez, a loss and damage expert at E3G, emphasised the need for significantly more funds to benefit vulnerable communities once the mechanism is operational.

Challenges and Compromises

The compromise deal saw developing countries initially opposing the World Bank’s role but eventually accepting with certain conditions attached. The text urges developed countries to provide financial resources to the fund, while others are encouraged to contribute on a voluntary basis.

As discussions move forward, the focus remains on broadening the donor base, with calls for China, petrostates, and high-emitting economies to contribute. “Innovative sources” of finance, such as carbon taxes on international aviation or shipping, financial transactions, or fossil fuels, are being explored to bolster the fund.

While rules for the fund’s operation have been agreed upon, challenges lie ahead in securing substantial contributions. The cost of loss and damage for developing countries is projected to reach $400 billion per year by 2030. Adow emphasized the urgency of getting money flowing into the fund to support those in need. The success of the fund ultimately hinges on robust financial backing and the commitment of nations to address the escalating impacts of climate change.