In what is widely seen as an extraordinary win on the first day of the annual UN climate change negotiations, countries have begun breathing life into a climate finance fund agreed to last year — although the devil is in the details.

Typically, the first days of the UN climate change conferences are dedicated to world leaders making grand speeches, while the countries’ negotiators jostle over agenda items to be discussed at the conference. Experts told Canada’s National Observer it may be unprecedented for such a big decision to be agreed to this early, and should help pave the way for more ambitious agreements as the summit unfolds. This year’s conference, COP28, runs until Dec. 12 in Dubai.

“Normally, even if certain agreements are reached midway through the climate talks, they are often withheld until the end, with decisions used as bargaining chips,” Climate Action Network International’s head of global political strategy Harjeet Singh told Canada’s National Observer. “In fact, there is a phrase for these negotiations: 'Nothing is agreed until everything is agreed.'

“Starting COP28 on a positive note sends a message of hope that the multilateral process can deliver,” he added. “Although the decision to operationalize the loss and damage fund could be much stronger, it represents a much-needed trust-building measure.”

Operationalizing the fund is a technical term that basically amounts to putting cash in a pot so it’s accessible. At last year’s summit in Egypt, countries agreed to launch a fund but to date, it has not been operational.

Following an agreement on how the fund will work Thursday, countries began committing a flood of cash. The United Arab Emirates and Germany each contributed US$100 million, representing the largest contributions from individual countries. The United States, United Kingdom, Japan and the European Union also contributed. Friday morning, Canada announced it would contribute US$11.6 million. In total, over US$400 million was announced. So far, that’s about 0.1 per cent of what’s needed each year, developing countries say, pointing to needs of at least US$400 billion.

"We must not leave climate-vulnerable developing countries to face these consequences alone," Environment and Climate Change Minister Steven Guilbeault said. "The creation of this fund is historic, and Canada is honoured to be among the first donors to this fund at COP28.”

According to Canada’s submissions to the UN, it supports expanding the list of countries that contribute to the fund so that major economies like China, Saudi Arabia and others technically considered “developing” in the international system pay up, too. Canada, and other countries like the U.S., also oppose linking contributions to the fund to liability and compensation for the climate crisis out of fear that major historical and current emitters like Canada could be held to endless liability for damages around the world.

Canada also played an important role helping launch the fund last year. In an interview with Canada’s National Observer months before that year’s summit, Environment and Climate Change Minister Steven Guilbeault said he was open to negotiating a loss and damage fund provided the conversation could move past questions of liability. Experts told Canada’s National Observer that because he was the first minister from a developed country to indicate an opening, that significantly helped pave the way to agree to a fund last year.

“This is a hard-fought historic agreement,” said Avinash Persaud, developing country negotiator and special climate envoy to Barbados, in a statement. “It shows recognition that climate loss and damage is not a distant risk but part of the lived reality of almost half of the world’s population and that money is needed to reconstruct and rehabilitate if we are not to let the climate crisis reverse decades of development in mere moments.”

On the first day of the annual UN climate change negotiations, countries have begun breathing life into a climate finance fund agreed to last year — although the devil is in the details.

A hard-fought deal is somewhat of an understatement, given that developing countries have been calling for a loss and damage fund for roughly three decades. Last year when the fund was agreed to, many climate advocates were concerned it could be subjected to long delays as developed countries dragged their feet in negotiations.

Since countries agreed to launch the fund last year, rich countries have argued for it to be housed within the World Bank, an international financial institution frequently criticized for predatory lending to developing countries. The argument in favour is that it’s an existing institution with the expertise to disperse significant amounts of money, proponents of the World Bank say. But opponents, particularly in Global South countries, point out the U.S. controls nearly 20 per cent of World Bank shares, making it the dominant shareholder and able to wield huge influence over how it functions.

The agreement to formally operationalize the fund Thursday reflects this division and appears to have struck a delicate balance. The fund will be housed in the World Bank for an interim period of four years to allow money to start being dispersed without committing the fund to be indefinitely under significant influence of rich countries.

Other important elements of the fund include an independent secretariat and board, and all countries considered “developing” in the international system are eligible to tap the fund with specific amounts earmarked for least developed countries and small island developing states.

“The work is far from over. After the gavel drops at COP28, we cannot rest until this fund is adequately financed and starts to actually alleviate the burden of vulnerable communities,” said Samoan Ambassador to Europe Pa’olelei Luteru and Alliance of Small Island States chair in a statement. “Success starts when the international community can properly support the victims of this climate crisis with efficient, direct access to the finance they urgently need.”

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Thank you for explaining some of the details related to the Loss and Damage Fund.

It occurs to me that even developed countries will have difficulty contributing to this fund because they will be spending increasing amounts on dealing with the damage in their own countries. Canada has already spent billions on climate impacts: the wildfires, the floods and the damage to infrastructure. It will only get worse. It's time for the oil companies to pay for some of these costs.

The self-congratulatory rhetoric of this announcement is pretty disingenuous. Lauding “hundreds of millions” towards the “loss and damage fund” is laughable, when annual global fossil fuel subsidies exceed seven TRILLION dollars. Leaders are not serious about climate change, and fossil fuel lobbyists and the psychotic corporations they support are laughing all the way to the bank.

Meanwhile, Canada is blowing away BILLIONSOF $ on pipelines and other subsidies to the fossil fuel industries in order to create even more GHG's all over the world.

Wake me on December 12th.

Hopefully there may be a grain of truth and progress in the final COP28 statements, but it's wise to prepare for disappointment. Again.

Follow the money. It's far, far more powerful than words.