During the 29th Conference of the Parties to the UN Framework Convention on Climate Change (COP29), the inaugural Climate Finance, Investment, and Trade Thematic Day marked the beginning of discussions focused on achieving an extensive international climate finance agreement. This agreement aims to secure trillions of dollars for climate projects.
Developing countries hope to receive substantial commitments from wealthy industrialized nations, which have historically been the largest contributors to global warming.
COP29 was launched in Baku, the capital of Azerbaijan, by Dr. Sultan Ahmed Al Jaber, the UAE Minister of Industry and Advanced Technology and President of COP28. He emphasized the importance of enhancing the Loss and Damage Fund, which was agreed upon for activation during COP27 in Egypt in 2022 and was operationalized during COP28 in the United Arab Emirates in 2023. This progression moved the fund closer to its implementation on Arab lands, as outlined in Article 8 of the Paris Agreement.
Between Egypt and the UAE
For two years, the Egyptian and Emirati presidencies of COPs worked together to advance the establishment of the Loss and Damage Fund. The Egyptian presidency of COP27 was determined to facilitate climate negotiations and extended the conference duration until approval for the fund was secured. In support, the Emirati presidency of COP28 contributed $100 million to the fund, which was matched by Germany. This initial total of $200 million represents the minimum amount necessary for the World Bank to agree to host the fund, reflecting prior coordination between the UAE and Germany to expedite its implementation, a decision that received widespread acceptance on the first day of COP28.
Since then, additional funding from other countries has pushed the total to over $800 million. Many hopes are pinned on COP29 as the major “financial conference for the parties,” aiming to secure enough funding to compensate countries that have been irreversibly harmed by climate change.
In Azerbaijan
On the second day of the conference, Tuesday, November 12, the Group of 77 and China advocated that the New Collective Quantified Goal on Climate Finance (NCQG) should encompass financing for adaptation, mitigation, loss and damage. They proposed allocating $1.3 trillion annually for climate action, with the least developed countries receiving $220 billion and the Alliance of Small Island States getting $39 billion. This financing is expected to come from developed countries listed in Annex I of the United Nations Framework Convention on Climate Change (UNFCCC). However, the United States rejected its inclusion in the Loss and Damage Fund.
Additionally, many developed countries opposed incorporating new principles for sharing the financial burden among them.
The Loss and Damage Collaboration (L&DC) estimates the cost of loss and damage in 2024 to be about $671 billion. This amount is nearly half of the NCQG. Countries are expected to determine what percentage of the Loss and Damage Fund will be sourced from this financing.
Frustration has been expressed by some nations regarding the 2024 review of the Warsaw International Mechanism for Loss and Damage associated with Climate Change Impacts, which was initiated during COP19 in Warsaw, Poland. On the second day of COP29, several parties indicated that the recent review shows insufficient climate ambition. Consequently, delegates suggested that the Warsaw Mechanism should produce more detailed annual reports.
An Appeal
During a high-level dialogue at COP29, UN Secretary-General António Guterres made a passionate appeal for justice, stating, “In an era of climate extremes, loss and damage finance is a must. I urge governments to deliver, in the name of justice.” He emphasized that the Loss and Damage Fund requires adequate funding and described it as “a victory for developing countries.”
Guterres highlighted the issue of climate displacement, referencing a report from the United Nations High Commissioner for Refugees (UNHCR), which warned of the threats posed by climate change to humanity. The report indicated a rising number of refugees, with over 120 million forcibly displaced individuals, many residing in areas severely affected by increasing temperatures.
The number of countries at risk from climate change is projected to increase from three to 65 by 2040. As displacement rises, other countries will be pressured to accommodate these displaced populations, further straining their resources.
The UN High Commissioner for Refugees, Filippo Grandi, said, “The climate crisis is driving displacement in regions already hosting large numbers of people uprooted by conflict and insecurity, compounding their plight and leaving them with nowhere safe to go.”
Therefore, the Loss and Damage Fund needs immediate funding, as Guterres has emphasized. The intensifying effects of global warming are forcing some individuals to flee their countries and lose their homes, similar to displacement caused by wars. From this perspective, these individuals must be compensated to ensure they can live with dignity after experiencing the disasters brought on by climate change—an issue they had no control over.
