COP28 Countdown Heats Up as Countries Spar Over Loss and Damage Fund

(Bloomberg) -- COP28 is just six weeks away and countries are already trading blows over what is likely to be one of the most contentious issues at this year’s UN climate summit in Dubai.

After countries reached a major breakthrough to agree in principle to create a fund for the losses and damages caused by climate change at last year’s United Nations Conference of the Parties, or COP, in Egypt, a major divide is emerging between developed and developing nations over who should operate it and how it should be filled.

Rich countries want heavy emitters like China and Saudi Arabia to put money into such a facility, arguing the world has significantly changed in 30 years and those two are now wealthy enough to provide such aid. China and Saudi Arabia are countering the move, while other nations in the developing world are accusing the US and the EU of trying to locate a fund at the World Bank — instead of creating a standalone facility under the remit of the United Nations.

Countries have been arguing over the details of the fund this week at the fourth and final UN committee meeting to discuss loss and damage. The negotiations are due to end Friday.

“We have been confronted with an elephant in the room and that elephant is the US,” said Pedro Cuesta, the Cuban chair of the Group of 77 negotiating group, which includes both Saudi Arabia and China. “The World Bank is not the institution that can best respond, that can best comply with what we’re looking for for this fund.”

The US delegation denied blocking progress. “It is inaccurate — indeed irresponsible — to suggest that the US has been obstructionist when we have been working diligently at every turn to address concerns, problem-solve and find landing zones,” said Christina Chan, managing director and a senior adviser to US Special Presidential Envoy for Climate John Kerry. The US remains “clear and consistent about the need to deliver on the loss and damage mandate from COP26 at this last meeting of the transitional committee.”

Chan did not address the substance of the World Bank accusation.

The fight is raising concern that developed and developing countries are becoming increasingly entrenched ahead of COP28. The summit is supposed to measure how far the world has come since the landmark Paris Agreement in 2015 and lay out what more can be done to close the gap and keep global warming to 1.5C. But it is facing an uphill challenge against a backdrop of heightened geopolitical tensions and elevated inflation.

A warm-up summit to COP28 earlier this year descended into inter-country bickering and what some said was a lack of ambition from the United Arab Emirates, this year’s host nation. While there’s more confidence that Sultan Al Jaber, the president of the conference, wants an ambitious outcome, there are few signs that the rifts been rich and poor countries have come closer to being closed.

The committee “has one more day to develop clear, clean, and concise recommendations on the fund and funding arrangements to operationalize the Loss and Damage Fund,” Al Jaber said in emailed comments. “My message to the Committee is not to waste it: focus on solutions. All of the issues dividing the Committee are solvable.”

Developed countries see the World Bank as an institution that’s best-placed to host the loss and damage fund, given its global outreach and experience with similar financial bodies. It has boosted its commitment to funding climate goals this year amid global calls for multilateral banks to do more. It’s also the quickest solution, with the previous experience of setting up a standalone facility — the Green Climate Fund — taking years to operationalize.

But there is concern among poor countries that the World Bank’s climate shift is for show only. Its ex-chief David Malpass became embroiled in a controversy last year after fumbling a question at a conference on the causes of climate change, fueling criticism that he didn’t accept the scientific consensus of the impact of man-made emissions. It’s also not clear how easily it would be for countries like Cuba to receive funds from the bank given it’s the subject of US sanctions, according to people familiar with the matter.

“At this late hour, a small group of nations responsible for the most significant proportion of greenhouse gases have tried to bargain potential support for a fund,” said Cuesta. “Accepting this Faustian bargain now will break the COP.”

(Updates with Al Jaber comments in 10th paragraph.)

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