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World - Loss and damage and climate financing - what it means

At COP27 in Egypt next week, negotiations surrounding climate finance and loss and damage payments will be crucial to the discussions. Read on to brush up on what these terms mean.

The global context

In the 20 years between 2000 and 2020, 7,348 natural disasters were recorded which have impacted over 4 billion lives, with US$2.97 trillion in economic losses. The continued burning of coal, oil and gas is warming our planet and supercharging our weather systems, fueling more extreme weather events right around the world. Climate change does not adhere to lines on a map – no matter where you are in the world, the impacts of climate change are being felt today. However, events disproportionately affect communities that are already vulnerable, like those facing crises related to conflict, food insecurity, and the economic shocks of the COVID-19 pandemic.

The Intergovernmental Panel on Climate Change (IPCC) indicates that even if the world rapidly decarbonises, greenhouse gases already in the atmosphere and current emissions trends will make some significant climate impacts unavoidable through to 2040.

‘Climate financing’ and ‘loss and damage’ payments are two ways developed countries’ leaders can address the cause and effect of climate change internationally. Though strongly recommended and supported by the United Nations and human rights organisations, the costs and roll outs of these two much needed programs are highly contested and are likely to feature in negotiations and our news headlines this year.

What are they

Quick definitions:

Climate finance is money paid by developed countries to help developing countries invest in renewable energy and address climate impacts.

Loss and damage is money paid by countries who’ve benefited financially from fossil fuel investment, to countries feeling the direct unavoidable losses and permanent damage arising from climate change.

Now for the detail.

Climate finance:

Climate finance refers to developed countries giving money to help developing countries build clean energy systems, reduce emissions, and cope with the overall impacts of climate change.

Adequate and accessible climate finance is fundamental to the world’s response to the climate crisis and often at the centre of international climate negotiations. Back in 2009 developed countries committed to mobilise $100 billion per year in climate finance to developing countries by 2020, but countries have consistently fallen short of these targets since.

So far, Australia’s contributions towards this global commitment have fallen well short, and we will need to lift our annual contribution by around 10 times if we are to fulfil our fair share towards this global goal. The delivery of this funding is crucial as a symbol of global solidarity and an important element to continue building trust between developed and developing countries and accelerate climate action in the developing world.

COP27 needs to provide certainty around the delivery of the $100 billion. It will also need to show progress on meeting a commitment from last year in Glasgow to double the amount of funding made available specifically to support climate change adaptation, as well as progress towards agreement on a new finance goal that will take effect from 2025.

Read more.