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Climate compensation fight looms over Egypt summit

BONN, Germany — A fight between rich and poor countries over compensation for climate damage threatens to overshadow this year’s United Nations summit in Egypt after two weeks of talks ended with little progress on Thursday. 

The issue of loss and damage — the economic and social costs of global warming — dominated discussions in Bonn, where delegations met to lay the groundwork for the COP27 climate conference taking place in Sharm el-Sheikh in November. 

While there was widespread consensus that these costs present a massive challenge that will require significant resources, wealthy and developing countries remained far apart on what to do about it. 

Developing countries argue that new funding is needed to pay for climate damages — and that wealthy countries, given their responsibility for the bulk of historical greenhouse gas emissions causing global warming, should loosen their purse strings. 

“They’re not going to cut emissions fast in the short term, so they should provide finance for loss and damage as a matter of justice and compensation,” said Arun Prakash Bhatta, a delegate from Nepal. 

Wealthy countries, worried about opening the door to unlimited claims of compensation, are pushing back. The finance fight created an impasse at largely technical talks in Bonn, with the two sides even unable to agree on whether, how and when to talk about the matter. 

Delegates from the developing world were left frustrated after wealthy nations — led by the European Union and the United States — blocked a request for placing the financing for loss and damage on the official COP27 agenda. 

“The climate emergency is fast becoming a catastrophe. Yet within these walls, the process feels out of step with reality and the pace is definitely too slow,” Conrod Hunte, the lead negotiator for the Alliance of Small Island States, told the Bonn closing plenary on Thursday. 

With countries unable to reach agreement in the former West German capital, an explosive debate now looms over the November summit as developing countries plan to take their demand for formal negotiations to Egypt. That could mean a messy public fight to start COP27, something an official from Cairo told POLITICO the hosts are very keen to avoid.

EU ‘playing hardball’ 

Developing countries departed the banks of the Rhine with mixed feelings on Thursday. 

Last year’s COP26 summit had ended with a compromise that involved setting up a two-year “Glasgow dialogue” on loss and damage, shattering a long-standing taboo to even mention the issue. 

The dialogue, which kicked off in Bonn, has been criticized as empty talk as it has no mandate to achieve results — but it nevertheless helped build momentum for loss and damage demands, many delegates said. 

The wider disagreement over funding, however, held up talks on even the most technical details. 

Developing countries and NGOs accused the EU of blocking discussions on the so-called Santiago Network, a mechanism that’s intended to provide technical assistance to countries affected by climate damage but is currently little more than a website. 

They also singled out the EU and the U.S. as the main opponents to any steps toward dedicated loss and damage financing, including placing the matter on the COP27 agenda. 

“The European Union has been playing hardball and is not moving an inch in terms of making real progress,” said Harjeet Singh, who attended the Bonn talks as an observer for Climate Action Network International, a network of NGOs. 

Teresa Anderson of NGO ActionAid International concurred, saying that “rich countries, particularly the EU, spiked the discussion about loss and damage at every single turn.” 

‘Too little, too late’

EU delegates rejected that characterization. An EU official in Bonn said the bloc was prepared to scale up support for loss and damage, and that the disagreement was “more about what’s the right response — in both process and substance.” 

The EU response, the official added, “was to say let’s look at the existing system of institutions and agencies that are out there and see whether or not those institutions can be strengthened to better meet those needs. If there are gaps that arise, we’re open to talking about how those gaps can be filled. But we don’t want to start that conversation with the assumption that a [new fund] is needed.”

The U.S., in a statement during a Glasgow dialogue session last weekend, said it “has heard and understands” the need for more support, but said that “this does necessarily equate to a new fund.” 

Developing country delegates acknowledged that such comments represented a step forward, given rich nations’ previous reticence to discuss loss and damage. 

But many said they were frustrated at having to explain the scale of the problem again and again, with one delegate complaining that the dialogue at times amounted to an exercise in “educating” rich countries on the climate risks faced by the developing world. 

In loss and damage discussions, island nations described devastating climate impacts in detail — such as how their national budget would be decimated by fish migrating due to warming waters — but saw no progress toward action coming out of the talks.

“We have no more assurances after two weeks here in Bonn that the finance we need now will be delivered at scale or speed,” Hunte, the island alliance’s lead negotiator, said. While “it is no longer taboo” to mention loss and damage finance, he added, the dialogue had been “too little, too late. We’re here to negotiate, not educate.” 

Many delegates also pointed out what they saw as a mismatch in priorities, with rich countries readily spending billions on the fallout of the pandemic and the war in Ukraine but rejecting demands to step up climate-related funding. 

“The money is out there,” one Latin American delegate said. “It’s a question of justice, of trust, to deliver it, but there’s a feeling that developed countries are annoyed that we are calling for that — as if it’s a whim.”

Karl Mathiesen contributed reporting.

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