SHARM EL SHEIKH, Egypt—A deal was struck at United Nations climate talks on Saturday to set up a fund that would pay for climate-related damage in countries deemed particularly vulnerable, officials said, handing a victory to poorer nations that have pushed for the move for years and removing a major sticking point in broader negotiations to address global warming.
The fund would earmark money for what is known as loss and damage: When rising seas, more powerful storms and other effects that scientists link to climate change cause destruction that is sudden or potentially irreparable.
Negotiators representing developed and developing countries agreed to the measure in the final hours of the COP27 U.N. climate summit held in this Egyptian seaside resort. Officials cautioned that the deal on loss and damage was part of a broader agreement that is still under negotiation. Wealthy nations want stronger commitments from developing countries to cut emissions in the coming decade in hopes of meeting the climate targets of the Paris accord. Those call for governments to limit temperature increases to well under 2 degrees Celsius and preferably 1.5 degrees compared with the preindustrial era.
The fund would be targeted toward poorer countries deemed most vulnerable, delegates said, a key demand from wealthy nations that didn’t want money flowing to China and other higher-income countries that are deemed to be developing under the U.N. climate treaty. As part of the process for creating the fund, countries would identify new sources of financing, officials said. Wealthy countries want China, oil-rich Persian Gulf states and other higher-income countries in the developing world to contribute.
Small island countries and low-lying nations such as Bangladesh have for decades sought money to pay for loss and damage. Wealthy countries, which are responsible for most of the greenhouse-gas emissions that have caused the earth to warm, have long resisted, fearing that agreeing to make payments would leave their governments and companies at risk of lawsuits.
A senior Biden administration official said Saturday’s deal wouldn’t create legal liability.
Heading into the talks, the U.S., Europe and other rich nations said that a new fund wasn’t necessary and that money for loss and damage can flow through existing institutions that provide climate finance for the developing world.
A host of questions remain about how the fund will operate and whether it can act quickly to help countries that most scientists say have been affected by climate change. How much any one event can be attributed to global warming isn’t clear-cut. Some climate scientists are now weighing in on how much climate change affects the likelihood of a specific event occurring, as part of the emerging field of weather-attribution research. Climate change is increasing the frequency and severity of droughts, heat waves and other extreme weather events in many regions of the world, according to the U.N.’s latest climate-science report.
A transitional committee is expected to work out details over the next year, including how the fund fits with billions of climate financing that wealthy nationals are already providing, said Vicente Paolo Yu, a Filipino lawyer and lead negotiator for developing countries.
“What we wanted to get out of this COP was a political decision to have a fund funded by developed countries,” he said.
The U.S., as the largest emitter of greenhouse gases over time, is expected to lead efforts to provide climate finance for the developing world. But any funds would need to be approved by the U.S. Congress, where the efforts are likely to face Republican opposition.
Still, negotiators see the agreement as a welcome turn of events. Russia’s invasion of Ukraine roiled energy markets and sowed geopolitical tensions in the run-up to the talks. The world’s two biggest emitters, China and the U.S., weren’t even on speaking terms coming into the conference due to disputes over Taiwan.
U.S. climate envoy
managed to rekindle ties with his Chinese counterpart during the conference.
Then a rash of Covid-19 infections hit the summit. Mr. Kerry tested positive for the virus, his spokeswoman said, forcing him to isolate and work by phone with his team and negotiators from other countries. His spokeswoman said his symptoms were mild.
A breakthrough in the talks came on Thursday evening when the European Union said it was willing to create the fund, but on the condition that it target the most vulnerable developing nations and that wealthier developing countries contribute.
Egyptian officials on Saturday called a meeting of negotiators from the Group of 77—which represents 132 developing countries—the EU, the U.S., and the Alliance of Small Island States, or AOSIS. The Group of 77 negotiators insisted on a proposal for a loss-and-damage fund that would potentially provide money to all developing nations, even wealthier ones like China, not just the most vulnerable countries that are members of AOSIS.
European negotiators asked whether that was the position of AOSIS, whose members are also members of the Group of 77. The Maldives’ environment minister, representing AOSIS, asked for a 30 minute break to discuss the issue with the Group of 77.
Negotiators from the two groups returned to the room saying they were willing to support a fund that would be targeted to particularly vulnerable countries as the EU wanted.
In recent years, the demand for a separate fund became a rallying cry for poorer countries seen as most vulnerable to climate change. Many developing countries have pointed to the scale of monsoon rains and floods in Pakistan this year, which have left the country with losses and rebuilding costs assessed by the government and World Bank at $30 billion, as an example of what vulnerable countries could increasingly contend with. Less than half of Pakistan’s $816 million international emergency appeal has been funded.
—Chao Deng contributed to this article.
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