A fund to respond to loss and damage caused by the climate crisis looks set to be agreed to at Cop27 in a major breakthrough that could unlock progress in the rest of the talks.
The draft text on the most contentious agenda item at the crucial climate summit in Egypt says countries have decided to “establish a fund for responding to loss and damage”.
This was the key demand of developing countries that are particularly vulnerable to the climate crisis, who have repeatedly said they wanted a fund no later than 2024.
They argue that they are bearing the brunt of climate devastation despite their relatively small carbon footprints.
The text says a transitional committee will be established to operationalise the new fund and other funding arrangements.
The committee will consider certain issues such as “identifiying and expanding” sources of funding which will then be discussed – and potentially adopted – at Cop28 in the United Arab Emirates next year, the text says.
Rich countries that have developed into economic powerhouses by burning fossil fuels had previously acknowledged that loss and damage needs to be addressed. But many, including the United States, had pushed back on the concept of a new fund.
Some historically wealthy and high-emitting nations fear being held financially liable for years of spewing out greenhouse gas emissions into the atmsophere.
The loss and damage caused by the climate crisis is incalculable but by 2030 is estimated to cost developing countries between $290bn and $580bn annually, rising to $132–741bn by 2050.
The news of the breakthrough comes hours after the European Union’s climate envoy said European ministers were ready to walk away from negotiations if they failed to move forward and deliver an outcome that rises to the challenge of tackling the climate emergency.
He called on other parties to reciprocate European efforts to reach a deal on loss and damage which had been a major sticking point in the negotiations.