“The TC Needs a Bit of Luck and a Lot of Political Will to Deliver a Loss and Damage Fund That Can Soar”

Associate Director Liane Schalatek recently attended the first meeting of the Transitional Committee in Luxor, Egypt. Head of Communications Carl Roberts asked her a few questions about the committee's work and future.

You just attended the first meeting of the Transitional Committee for funding arrangements for loss and damage, which was held in Luxor, Egypt in late March. What is the committee and what is the purpose of its work?

The Transitional Committee is a group of 24 specialized climate negotiators, 14 from developing countries and 10 from developed countries supported by some technical experts from the UN climate convention and a number of international organizations, including other UN agencies, humanitarian organizations, climate funds and development banks.  They have been tasked by the international community at the last global climate summit in November 2022 (COP27) to work over the course of the year in a series of four meetings and two additional workshops. Their mandate is to figure out how to best arrange and scale up financing support for developing countries and poor and vulnerable people and communities that are already suffering tremendous losses and damages to lives, livelihoods, and infrastructure from already occurring and worsening climate impacts including from extreme weather events like typhoons, torrential rain and flooding, heat waves or prolonged droughts, which have been happening with increasing frequency and intensity. One only has to remember the massive flooding in Pakistan last year that cost more than 1,700 people their lives, affected more than 20 million people, and caused an estimated damage of at least US$ 15 billion, even without considering enormous reconstruction costs. In the past, very little money has been made available to address such loss and damage, despite the fact that there is a mandate to support developing countries in climate action under the international climate regime and on loss and damage specifically under the Paris Agreement. This is a matter of grave climate injustice as the people in developing countries who have contributed the least to climate change are those already affected worst by losses and damages caused by unavoidable climate change impacts.

By December, when the next international climate summit convenes in Dubai (COP28), the committee is supposed to submit its recommendations for the global climate community to consider and approve. Most prominently, their proposal should detail what a new Loss and Damage Fund (LDF) to be designed as part of funding arrangements to support developing countries should look like, including its scale, how it is governed, what it should fund, who should receive the financial support, and where the money for the new fund should come from.

What was discussed at the first meeting of the Transitional Committee? Do the outcomes of the meeting look hopeful?

The mandate that the Transitional Committee was given is very broad and the issues that it is supposed to work through are very complex and interlinked, namely proposing better funding arrangements for responding to loss and damage, designing the core structure and operational approach of a new fund, trying to find enough money to support the growing needs of developing countries to deal with those climate impacts they can no longer adapt to, and also making sure that new structures and approaches consider and complement the so far largely uncoordinated bits and pieces of funding support for loss and damage that are already happening. The committee at its first meeting agreed on the way it will work and on an ambitious work plan involving three additional TC meetings and two technical workshops with a tight timeline for that work. It selected two co-chairs, Richard Sherman of South Africa and Outi Honkatukia of Finland, to guide them through the year and keep them on task. They also started engaging on the substance and heard experts presenting some of the support activities already happening, often in the aftermath of climate disasters, for example through humanitarian agencies. They also were reminded of the enormous funding gaps that exit, such as for prolonged support for reconstruction efforts after climate disasters or preparing for long-term unavoidable climate impacts which can include the relocation of communities due to sea level rise with coastal areas, and even entire small islands being lost.  

The committee agreed that it will work on all four main issues under discussion (funding arrangements, the new fund, sources of funding, and coordination with existing efforts) jointly and in all meetings, rather than sequencing issues or prioritizing some over others. Members also came away from the presentations with the shared understanding that the need for new funding arrangements and a new fund to respond to loss and damage is not questioned by any committee member. This is cause for some hopeful optimism that the committee, which will have to agree by consensus, is able to deliver substantive recommendations for a decision at COP28 that would operationalize new funding arrangements and the new fund rapidly.  Going into the first committee meeting there was some concern that rather than having a concrete outcome the committee might end its mandate by calling for continued deliberations extending into 2024 and with some countries questioning whether a new fund was needed in the first place.

What are some of the main issues and questions the Transitional Committee will have to tackle? What are points of agreement and disagreement on the committee? What are the different interest groups, and what are their interests?

The decision that set up the Transitional Committee and gave it its mandate at the last climate summit was hard fought and seemed unlikely at the time, because developed countries have long resisted the push by developing countries and civil society for making more money available and establishing a new fund focused on addressing loss and damage. They want to avoid any legal liability for climate damages. Instead developed countries’ expected financing support is carefully framed in the terminology of international responsibility and solidarity. With the agreement, in principle, to work on making the LDF operational as part of broader funding arrangements as quickly as possible, the wrangling between developed and developing countries in the Committee will now focus primarily on two key issue clusters.

The first is on what the focus, and accordingly the scale, of the new fund should be. Should it be addressing a comprehensive range of issues responding to loss and damage as well as economic impacts like destroyed infrastructure as well as non-economic ones like loss of culture or heritage? And should it  cover both fast-onset events like climate disasters and slow onset events, like sea level rise? Should it therefore provide financing to support actions related to all five R’s of recovery, reconstruction, rehabilitation, resettlement and resilience, as most developing countries want?  Or should its focus be more limited and targeted, a surgical approach that determines where the greatest gap in existing coverage is and hone in on this gap as a priority, as most committee members from developed countries suggest? This could be an exclusive focus for example on addressing slow onset activities only, leaving the response to disasters to humanitarian actors and development organizations and looking at strengthening their capabilities and the functioning of existing institutions first. With form following function according to this argumentation, this would mean a much smaller and less endowed fund than what poorer countries envision. They are worried that all that talk about the “current landscape of institutions” and the “gaps within that current landscape” (which is in paragraph 6 of the decision given the Committee its mandate) will be used by developed countries as a distraction from getting concrete about the new fund itself, who should govern it, its operational modalities and how much funding it would need to do its work (at the heart of paragraph 5 of the same decision). At stake is also the relevance of the new fund itself. Will it be one of many actors, a small side-kick in a ‘mosaic of solutions’ in the evolving financing landscape for addressing loss and damage, which for example includes the new Global Shield put forward by the German G7 Presidency at COP27, or be its center-piece with the function to coordinate and maybe help direct the activities of others? 

The second big issue cluster of contention is who should receive money from the new LDF and who should put money into it. Developed country representatives want to reserve access to the fund to groups of developing countries they perceive to be particularly vulnerable, namely small island developing states (SIDS), least developed countries (LDCs) and fragile and conflict afflicted states (FCS) and exclude for example countries like China, Brazil, Saudi Arabia or India – which are categorized as developing countries under the international climate regime – from receiving support.  They also feel that in particular emerging market economies with higher incomes and better institutional capacities, given their own growing greenhouse gas emissions, should pay into the fund as well, not just industrialized countries, and thus broaden the so-called ‘contributor base.’ In contrast, committee members from developing countries, including from China and India, point to the language of the UN international climate regime and the principle of equity in looking at ‘common but differentiated responsibilities’ of developed and developing countries, including in who needs to provide funding support to whom under this framework. They see language in the decision that the new funding arrangements and the fund are ‘for assisting developing countries that are particularly vulnerable to the adverse effects of climate change’ as proof for the eligibility of all developing countries to receive LDF support. This legal phrasing, ‘developing countries that are particularly vulnerable’, which the international climate regime uses in other contexts as well, is not the same as talking about ‘particularly vulnerable developing countries.’ It acknowledges that vulnerability to adverse climate change impacts is not restricted to narrowly defined sub-groups of developing countries.

What is needed to make the work of the Transitional Committee as transparent and inclusive as possible?  What is the role that civil society stakeholders play, and how can they contribute to the process? And why is it key that they be involved?

Only a limited number of civil society representatives were able to be on location at the first meeting, a consequence both of a late notification as well as some overly restrictive participation quotas (only three per observer group), which should be at least expanded if not lifted for future TC meetings.  Nevertheless, the first meeting provided some promising elements on which to build further. It was webcast [see here for day 1, day 2 and day 3 recordings], allowing for observers that could not travel to Egypt to follow along, and meeting documents were made available to the broader public. The committee also reserved a time-slot during its first meeting day to hear from and engage with civil society participants representing women and gender groups, environmental groups, youth groups, and Indigenous Peoples and trade unions. It will also further discuss how to best bring in observers into the proceedings of the committee at its next meeting and invited them to contribute with written submissions throughout the year to inform the discussions of the three more TC meetings to come. It will be important that all of these submissions will be transparently reflected on the committee’s webpage and not only be listed, but actually inform and be integrated in technical work.  

Civil society stakeholders have much to contribute: they have experience engaging with and monitoring the operations of other climate funds such as the Green Climate Fund or Adaptation Fund – and can provide analysis and suggestions on what lessons learned should be applied in designing the new fund. They work directly with affected communities on the ground and can amplify their voices, concerns, and needs in pushing for a people-centered fund that promotes human rights and simplifies access to its funding for community-led actions, and prioritizes gender-responsive actions that support people’s right to live and survive with dignity. Their continued advocacy over the course of the year will be necessary to ensure that the TC ends its work with recommendations leading to concrete outcomes, first and foremost a new LDF of scale and stature accountable to the international climate regime that is primarily resourced with public funding from developed countries and provides grant support to developing countries and directly to affected communities based on their needs and priorities for addressing loss and damage. A draft governing instrument for the new fund is the most important result of the TC’s work.

However, currently observers are not in the same room with the members of the committee and need their special invitation to engage in discussions during the meetings. The expertise, including the lived experience of local communities and particularly affected population groups, such as women and marginalized gender groups, Indigenous Peoples, or the disabled in developing countries that have already suffered from losses and damages, are also not yet reflected in expert groups and discussions, such as the cadre of technical experts which supports the committee members in compiling and synthesizing information and proposing approaches and structures, or in proposed workshops. Their representation and direct participation is crucial and should be financially supported through the committee to the largest extent possible.

What comes next for the Transitional Committee after the first meeting?

With the first meeting ended, the work of the committee now really begins. The technical experts and a small secretariat will be busy compiling and synthesizing information, drafting background documents and preparing expert inputs, including a revised and reworked version of a mandated synthesis report by the secretariat on existing funding arrangements and innovative funding sources relevant for addressing loss and damage. Committee members, but also countries not represented on the committee, and observers are invited to submit case studies on loss and damage and a first set of submissions on the issues under the mandate of the TC by April 25 to inform the discussions at the second meeting of the Committee, which will be held in late May. Already at the end of April committee members will convene for a hybrid technical workshop. And in June committee members will engage with the broader climate community under scheduled climate negotiations during the second Glasgow Dialogue session in June in Bonn. The expectation is the committee will work on its draft recommendations at its third meeting scheduled for the end of August.  The committee is expected to share draft recommendations during a ministerial consultation in fall for an added political push and wrap them up at its forth meeting in late October, before they go to the international climate summit COP28 in Dubai in late November for the needed consensus approval by all of the parties to the international climate regime and the Paris Agreement.

Ultimately, the TC needs a bit of luck and a lot of political will to deliver a much needed well-designed new LDF that can soar and to establish supportive broader funding arrangements that adequately help developing countries and the most vulnerable communities and people to address devastating loss and damage.