Calls for climate reparations, adaptation, and finance grow loud ahead of COP27

New Delhi: The annual United Nations (UN) climate change conference (Conference of the Parties-27 or COP27) is scheduled to begin in Egypt’s Sharm El Sheikh in a month and a half. The two most significant, and intensely debated, issues likely to be on the COP27 agenda are climate finance for adaptation to climate impacts, and reparations for Loss and Damage caused by extreme weather events.

These issues are particularly important to India. “In view of extreme weather events, increasing finance for adaptation and a decision on a new collective quantified climate finance goal will be critical for us and we think those will be the major issues at COP,” a senior environment ministry official said.

“The Loss and Damage initiative will take centre stage in the upcoming COP. The countries which do not have any role in climate change are the worst affected ones,” Bhupender Yadav, Union environment minister said on September 20, during a Clean and Green Globe conference organised by the Federation of Indian Chambers of Commerce and Industry.

Loss and Damage refers to compensation for the impacts of extreme climate events and slow onset events such as sea-level rise or glacial retreat, while adaptation refers to adjustments in ecological, social, or economic systems in response to actual or expected climatic impacts, according to the United Nations Framework Convention on Climate Change (UNFCCC). It refers to changes in processes, practices, and structures to moderate potential damages.

Denmark on Tuesday pledged over $13 million (100 million Danish crowns) to support developing nations deal with losses caused by extreme weather events, becoming the first country to offer “Loss and Damage” compensation to vulnerable countries, Reuters reported. Antonio Guterres, UN secretary-general, also called on rich nations to pay up for climate devastation in poor countries during his speech at the UN General Assembly on Tuesday.

“Polluters must pay. Today, I am calling on all developed economies to tax the windfall profits of fossil fuel companies. Those funds should be re-directed in two ways: to countries suffering Loss and Damage caused by the climate crisis; and to people struggling with rising food and energy prices. As we head to the COP27 UN climate conference in Egypt, I appeal to all leaders to realise the goals of the Paris Agreement. Lift your climate ambition. Listen to your people’s calls for change. Invest in solutions that lead to sustainable economic growth,” he said.

Another reason there will be a strong demand for adaptation finance is because COP27 is being held in Africa, which has been suffering from an acute food and humanitarian crisis due to the climate crisis. The Greater Horn of Africa has already suffered the longest drought in 40 years, and parts of the region are bracing for a fifth consecutive failed rainy season, the World Meteorological Organization (WMO) said last month.

“The important thing that is going to emerge at COP27 is not the further enhancement of NDCs [Nationally Determined Contributions]. A large number of countries, including India, have already updated their NDCs. The issue that may take centre stage at COP27 is not mitigation but adaptation. Mitigation has played its role in the global discourse, but with global supply chains currently under disruption and extreme events with disastrous impact all around us, the appetite for further intense discussion on mitigation will be much less. The performance of various countries on their 2030 NDCs will be assessed in any case in a year or two through the global stock-take,” said RR Rashmi, distinguished fellow and programme director, Earth Science and Climate Change, The Energy and Resources Institute, during a webinar on Pathways for India’s long-term strategy to achieve Net Zero by 2070 on Wednesday.

“The best bet for furthering the ambition is to have more progress on long-term and implementable strategies for growth in as many countries as possible. The focus of COP27 logically therefore should and will be on adaptation. COP is being held in Africa where adaptation is a very important issue. But what kind of outcomes are expected to be seen is hard to judge,” Rashmi added.

“Unfortunately, Loss and Damage is not even on the formal agenda. On adaptation, there will be discussion on global adaptation goal. There is no agreement on a long-term adaptation finance goal either. At best, what this COP can achieve is to formulate a clear strategy on indicators for global adaptation goals. It is not simply about finance, it is also about adaptation strategy. For example, early warning systems in each country to predict the extreme weather events. In India, you can see the ability to address extreme disasters has gone up because of early warning systems. Similarly, the systems and resources to create resilient infrastructure and address land degradation, or water scarcity. These should be part of the global adaptation goal in addition to higher finance,” he added.

“The really interesting thing about COP 27 is whether or not, given the fact that the COP is being held in Africa and that we have had these extreme weather events this year which include really serious disruptions in South Asia, in Europe, in US, we get a head of steam on the political agenda for some sort of serious consideration on adaption financing as well as loss and damage. The UN secretary general called for some kind of distributive tax on the fossil fuel industry. More than a decade ago there used to be a lot of discussion on a currency transaction tax which is a good way of generating money for the global system. Those kinds of conversations may be back and about direct payments for compensation. If there was a serious opportunity to discuss finance to ameliorate impacts of climate change then this is that moment,” said Navroz Dubash, professor at the Centre for Policy Research, who focuses on climate change policy and governance who addressed the same webinar.

The issue of reparations has been contested by developed countries during past COPs. India intervened strongly three times to emphasise Loss and Damage and the finances needed to mitigate the impacts of global warming at the Bonn climate conference in June. “Averting, minimising and addressing Loss and Damage is mandated in the Article 8 of the Paris Agreement,” an environment ministry official had said from Bonn.

Several country groupings including G77 and China, the Alliance of Small Island States, Small Island Developing States and Least Developed Countries pressed for a separate agenda on establishing a separate Loss and Damage finance facility at COP26. The view on having a separate financing facility was opposed by the US, Australia, and the European Union, which instead pushed the importance of insurance, catastrophe bonds and bilateral assistance during the dialogue, officials had said.

Through climate models and observational data, climate scientists have already established how the climate crisis has made extreme weather events this year several times more likely.

These include the the spring heatwave in India and Pakistan during March to May and the monsoonal floods in Pakistan and parts of India. The March-April spring heatwave spell in India and Pakistan was about 30 times more likely to happen because of human-caused climate crisis, the World Weather Attribution (WWA) network, an international team of leading climate scientists, said in May.

The results of their rapid analysis showed that the unusually long and early onset heatwave spell in India and Pakistan is very rare, with a chance of occurring only once in 100 years. Pakistan floods that devastated large parts of the country in August, leaving hundreds of thousands of people homeless and killing around 1,500 people was made highly likely due to climate crisis, WWA concluded in a statement on September 15.

The 5-day maximum rainfall over the provinces Sindh and Balochistan is now about 75% more intense than it would have been had the climate not warmed by 1.2 degree Celsius, whereas the 60-day rain across the basin is now about 50% more intense, meaning rainfall this heavy is now more likely to happen. There are large uncertainties in these estimates due to the high variability in rainfall in the region, and observed changes can have a variety of drivers, including, but not limited to, climate change,” a statement by WWA said.

“There are two arguments for Loss and Damage: The Pakistan floods are on top of everyone’s minds ahead of COP27. One that private sector commercial insurance completely breaks down in the case of climate disasters of this magnitude. In the past people have talked about insurance mechanisms with a layer of public finance but in front of such disasters it completely breaks down. Then, where will the additional money for loss and damage come from?

The COP26 discussions happened before the Ukraine war broke out. If, at that time, developed countries said don’t expect $100 billion per year until 2023, now additional Loss and Damage finance seems beyond what people are willing to discuss. However, there are ideas about innovative new sources of finance such as windfall tax on fossil fuel companies; a fee on voluntary carbon market transactions for buyers; a tax on business class travel; debt for climate swaps. So, there are additional sources of raising finance.

More than the finance, it is the sceptre of being held legally liable that stops developed countries from talking about loss and damage at the negotiations,” explained Ulka Kelkar, director, climate programme at World Resources Institute, during the briefing on Wednesday.