Climate-Vulnerable Nations Could Receive Long-Awaited Compensation by 2025
At COP29 in Baku next month, countries will finalize the details of the much-anticipated loss and damage fund, which aims to assist nations most affected by climate change. Dubbed the ‘finance COP,' this meeting could finally see money flowing to low-income, climate-vulnerable countries by 2025.
The loss and damage fund has been designed to compensate these countries for damages caused by climate-induced natural disasters. Despite facing delays and challenges, significant progress has been made in recent months, potentially allowing for the first disbursements next year.
Key Focus at COP29: Delivering Funds to Countries in Need
Finance is a major focus for COP29, and countries will aim to resolve remaining questions regarding how the fund will be administered. In preparation for this, significant steps have already been taken, including the appointment of a board to oversee the fund and selecting the World Bank as the fund's institutional home. The Philippines will host the fund's headquarters, while Ibrahima Cheikh Diong, a Senegalese-American banking expert, was appointed as the fund's executive director.
The COP29 presidency hopes to convert financial pledges made by various countries into tangible support for the communities most in need. As COP29 president-designate Mukhtar Babayev stated, "This breakthrough in Baku marks a crucial step in enabling action on climate change."
A 30-Year Struggle for Climate Justice
The journey to establish the loss and damage fund has been decades-long. Small island nations, African countries, and climate activists have championed its cause, advocating for financial support for countries suffering catastrophic losses due to climate change. Wealthier nations have been cautious, concerned that the fund could be seen as reparations for their historical greenhouse gas emissions.
The foundation for the fund was laid at COP27 in Egypt in 2022, where an agreement was reached to support developing countries facing climate-related disasters. The fund officially launched at COP28 in Dubai last year, with more than $700 million in initial pledges, signaling a major step toward climate justice.
A Funding Gap
However, despite early optimism, the total pledged so far only stands at around $800 million—well below what experts believe is needed. The 14 developing countries on the fund's board have called for $100 billion annually by 2030, but some estimates suggest that the true annual cost of climate-related loss and damage in developing nations could reach $400 billion by then.
Bahamas Prime Minister Phillip Davis has emphasized the urgency, saying, "This is a drop in the ocean, compared to the trillions needed to address the escalating costs of the negative impacts of climate change." He urged wealthy nations to take responsibility, stating that the fund's full operationalization is essential for global peace and security.
Looking ahead to COP29, the presidency is calling for further contributions from developed nations to ensure the fund can meet the growing needs of climate-vulnerable countries.