Loss and damage fund approved on the first day of COP28 climate summit

On the first day of the Conference of Parties (COP28) in Dubai, the landmark loss and damage fund (LDF) was approved in just hours of the premier climate conference starting its negotiations. With a resounding ovation by 190-member countries, this first-of-its-kind climate compensation fund was approved by the COP28 Presidency.

India, since the last COP, has been a strong votary of the LDF. The Indian delegation led by the environment, forest and climate change (MoEFCC) ministry voted strongly in favour of the LDF, citing the support it will give to poorer countries, especially those facing the wrath of global warming.

The fund aims at supporting poor nations bearing the brunt of global warming through extreme weather events. The LDF was created during COP27 in Egypt last year. A Transitional Committee was formed to draft the finer contours of the fund.

The panel submitted its report earlier this month to the United Nations Framework Convention on Climate Change. The fund would be housed with the World Bank in its initial years. Richer, polluting countries such as the US, UK, UAE, China, etc., are expected to fund the LDF.

In a statement, the COP28 Presidency said: “What was promised in Sharm El Sheikh has already been delivered in Dubai. The speed at which the world came together to get this fund operationalised within one year since Parties agreed to it in Sharm El Sheikh is unprecedented.”

Some of the nations, such as countries in the African Union, are members of the India-led International Solar Alliance (ISA) and island nations that have partnered India under the Coalition for Disaster Resilient Infrastructure (CDRI). India could also be a beneficiary of the LDF if it plans to set up an adaptation strategy in its climate action plan.

While the LDF is a step in the right direction, there is still a long road of negotiations left at Expo City, which will pan out in the coming two weeks. The details of funders and receivers are yet to be finalised. The decision to park the fund with the World Bank has also been criticised by various developing nations.

Harjeet Singh, head of Global Political Strategy at Climate Action Network International, said: “Amid the historic decision to operationalise the fund within a year of its establishment, addressing underlying concerns becomes critical. On one hand, rich countries have pushed for the World Bank to host this fund under the guise of ensuring a speedy response. Conversely, they have attempted to dilute their financial obligations and resisted defining a clear finance mobilisation scale."

Singh also pointed out the absence of a defined replenishment cycle, which he said raises questions about the LDF’s long-term sustainability.