COP27 | U.N. Climate Talks Poised for Deal Creating ‘Loss and Damage’ Fund

What’s in today’s article:

• Key points of the draft decision
• Draft decision’s mitigating clause and India’s influence on it
• Loss and damage points in the draft decision
• Concerns

Why In News:

• The draft decision text of the COP27 of the UN climate negotiations, which was just revealed, included both of India’s important points in the mitigation clause.
• In addition, the draft agreement seemed to be on track to meet a crucial demand of developing countries by creating a new fund for loss and damage.

Key points of the draft decision:

• No fossil fuel phase down is listed in the text
• Keep 1.5-degree Celsius goal alive
• Require a transformation of the financial system
• Urges counties to “significantly scale” adaptation finance.
  • Since it misses the call to double financing, it’s weaker than Glasgow pact (COP26).
• Requests countries who haven’t done so to update and strengthen their climate plans before COP28
• Welcomes the new UN net zero rules for corporations to stop greenwashing.
  • Greenwashing is the practice of making false claims in order to mislead consumers into believing that a company’s products are more environmentally friendly or have a higher positive environmental impact than they actually do.

Draft decision’s mitigating clause and India’s influence on it:

• Mitigation clause: It now calls upon countries to –
  • Accelerate the development, deployment and dissemination of technologies.
  • Adopt policies to transition towards low-emission energy systems.
  • Rapidly scale up the deployment of clean power generation and energy efficiency measures.
  • Accelerate efforts towards the phase-down of unabated coal power.
  • Phase-out of inefficient fossil fuel subsidies, while providing targeted support to the poorest and most vulnerable, recognizing the need for support towards a just transition.
• Two important insertions suggested by India:

1. “Phase-down” of unabated coal power.
2. The conditionality of the fossil fuel subsidies which relates to “offering targeted assistance to the poorest and most vulnerable.”
   • Initial draft used “phase-out” (instead of phase-down) for coal and missed the targeted support point, resulting in facing objections from India.
   • India had got both these points inserted in the Glasgow Climate Pact (COP26) last year. These two will now continue to be in the final decision of the COP27.
   • The draft decision text will now be discussed in the plenary for final decision (outcome of the COP27) with consensus, involving 195 countries.

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Loss and damage (L&D) points in the draft decision:

• The text addresses the basic demand – a fund as well as new ‘funding arrangements’.
• It seeks to link L&D with 1.5-degree Celsius warming limit (an indirect reference to mitigation).
• The main body of the text begins with acknowledging assistance needed for “particularly vulnerable” developing countries but the decision on funding makes a more general reference to ‘developing countries’.
• There are multiple references to the use of existing funds.
• Seeks to expand sources of funding, including “innovative sources”.
• Pushes for financial reform discussions at International Monetary Fund (IMF) and World Bank (WB) next year.

Concerns:

• No funds have been pledged for the fund. Climate disaster-affected developing countries are still a long way from being able to obtain financial resources to reconstruct.
• The exact definitions of terms such as “particularly vulnerable”, “most vulnerable” are potential points of disagreement which have been left to be resolved at a later stage.
• Additional burden being put on the developing countries. One of the contentions is to ask each country to revise its climate action plans, formally known as nationally-determined contributions (NDCs), with progressively stronger actions every year.
• Developed countries have failed to deliver on their promise to mobilise a relatively small sum of USD 100 billion each year. The draft text just “urges” developed countries to reach this aim and makes no mention of a timeline.