It is expected that climate finance will be high on the agenda at this years' COP28, which will be held at Dubai's Expo City from 30 November to 12 December 2023.
Climate finance refers to financing activities that mitigate and provide adaptation to the impacts of climate change. This has been a part of the United Nations agenda for many years and is part of SDG 13 on Climate Action. At the United Nations General Assembly this week, COP28 President-Designate Dr. Sultan Al Jaber emphasised the need to raise awareness of climate finance, and asked both public and private sector participants to pledge their commitment to making progress on these efforts.
Climate finance has historically focused on funding preventative measures to lower carbon emissions, by the limitation of particular harmful activities and adaptive solutions that help people and ecosystems live with climate change now and in the future.
Since 1991, in addition to mitigation and adaptation, a group of states from across Africa, Asia and Latin America have petitioned to establish a “loss and damage” fund. At COP27 in Egypt last year, they finally won the support required from the other nations.
The loss and damage fund, as outlined in the outcomes of COP27, is designed to provide financial aid for climate reparations in the developing countries which are "particularly vulnerable" to the repercussions of climate change. What was left to be decided at COP28 in Dubai was how to finance the fund and how to disburse it. In particular, how to engage and obtain the necessary capital from the private sector of more developed nations.
The “Transitional Committee”, a committee of 24 members from around the world, was founded following COP27 to make recommendations as to the funding model to be considered at COP28.
Activists argue the loss and damage fund should be financed by levies and taxation. Controversial proposals include levying a small fee on international flights, a tax on financial market transactions or the profits of fossil fuel companies (this tax being the suggestion of the UN Secretary General). What is clear is that the schemes established so far, such as the “Global Shield Against Climate Risks” to provide subsidised insurance for affected nations, are not enough.
The UK Government has said it is “actively engaging” with the Transitional Committee but will not set out any commitment to funding until the structure of the fund is determined. Following a number of reported meetings of the Transitional Committee this month, we await their proposals in December, when we are told they will provide an update on the loss and damage fund as well as on the state climate finance more broadly.