COP27 and the ambiguity about responsibility Premium

With the new Loss and Damage fund, the line between victim and perpetrator has been blurred

This year, at COP27 in Egypt, a dizzying array of topics was on the table for discussion — from the more familiar emissions reductions to the more detailed rules to govern carbon markets. But of significance to developing countries, India included, are the stories to do with climate finance. As developing countries have rising energy needs and vulnerable populations, they need financial support for low-carbon transformations, building resilience to inevitable climate impacts, and other steep challenges, important among these being loss and damage (L and D) from climate-induced impacts. Possibly the biggest headline after COP27 was the establishment of a new L and D fund.

The main L and D agendas for developing countries since the Paris Agreement (2015) have been to change the existing narrative of averting L and D to addressing losses that have already occurred, and to start holding developed countries morally responsible and financially liable for the same.

Widespread droughts in Africa, floods in Pakistan, and wildfires globally were the prelude to this COP. Given these climate events are rampant, developing countries have been trying to separate L and D from adaptation. They argue that losses from these events have not and likely cannot be adapted to. And as scientists today are able to attribute these events to climate change, and derivatively, to greenhouse gas emissions, developing countries maintain that developed countries should inherit the resultant responsibility and liability.

L and D in ratified UN texts has mostly entailed prevention and pre-disaster preparation, thus conflating L and D with adaptation. This is in the interest of developed countries that do not want any new responsibilities. The decision text accompanying the Paris Agreement even took liability and compensation for L and D off the table — and developing countries were only able to get L and D on the COP27 agenda by once again foregoing conversation about liability.

Against this backdrop, the new L and D fund introduced at COP27 seems a narrative failure, save the distinction between adaptation and L and D. Following the recommendation of the G77+China, the text finally frames L and D as post-event “rehabilitation, recovery, and reconstruction”. But it excludes mention of historic responsibility and the principle of Common but Differentiated Responsibilities (CBDR). What is more, there is no clear indication that the fund will be paid for by developed countries. The decision explores a “mosaic” of solutions, encouraging a miscellany of actors to contribute, which might simply mean a slow shift of the L and D burden onto the private sector, and perhaps even to richer developing countries such as China.

The ambiguity about responsibility is in fact carefully phrased to dilute the notion that there are distinct victims and perpetrators in the case of L and D. Once liability and CBDR are removed from L and D — in essence, an adversarial notion to hold developed nations morally and financially accountable — it risks becoming toothless: more voluntary reward than recompense.

COP27 also focussed on avenues for increasing finance flows to support positive climate action in developing countries.