The ghosts of the COPs, from Glasgow to Sharm El-Sheikh

Like at the end of the Glasgow COP, in Sharm El-Sheik there were contrasting statements, some lamenting the lack of progress on climate change mitigation, others welcoming the commitment, which was considered to be historic, to create a special fund to finance the loss and damage related to climate change, However, the fact that the countries of the South have secured the creation of such a fund could be a Pyrrhic victory.

In Sharm El-Sheikh, as in Glasgow, the issue of climate change financing was not addressed in a dynamic and realistic way, neither for mitigation nor for adaptation. The problem may have arisen from the initial ambiguity of the North’s commitment to provide $100 billion for developing countries in response to climate change: the $100 billion was a "ghost" in Scotland, and apparently was still a ghost in Egypt! 

Although partial achievement figures were announced, the $100 billion target seems mythical (isn't this the same figure that was put forward for the reallocation of SDRs?). Is it seen as additional to official development assistance (ODA), as initially written, and since contested? Labelling crowds out additionality, which is admittedly difficult to establish, and the figure to be achieved, in order to be compared to ODA, must be a flow. But this flow, which is supposed to reach $100 billion, does not necessarily have to be provided under the same conditions as ODA. Even more important than the question of the financial terms of the flows thus identified is the question of their allocation. Is the share devoted to adaptation adequate? And according to what criteria is, and should, this share be distributed among different countries? The relative share of financing for adaptation was clearly deemed insufficient at COP 27, and the question of the criteria for the geographical distribution of this financing was not really addressed.

Faced with the realisation that an additional $100 billion per year in funding was not being provided and that only a small proportion of it was going towards adaptation of the most vulnerable countries, the reaction of the most vulnerable countries was to seek a different form of commitment from the international community. This led to the demand in Sharm El-Sheikh, long expressed and clearly reiterated in Glasgow, that the loss and damage suffered by vulnerable countries as a result of climate change should be offset by the developed countries which, because of their historical CO2 emissions, can be held responsible.

By agreeing to set up a fund to compensate for the loss and damage caused by climate change, the countries that have historically been the main emitters of CO2 (apart from China) have acknowledged their responsibility for climate change, thus affirming an essential principle of international justice. This is where the agreement can be recognised as 'historic'. But the method chosen to implement this principle is probably not the best one, for several reasons. Firstly it will be extremely difficult, if not impossible, to objectively assess loss and damage by separating out what is due to climate change from what is due to the nature of the climate as it was before it changed. Secondly the loss and damage due to climate change is highly dependent on the policies implemented by the concerned countries under their own responsibility: poor countries have the right to ask for support from the international community for losses for which they are not responsible, and if the loss and damage cannot be reasonably assessed, their right is to ask for this support to adapt to climate change in order to mitigate the loss and damage that may result from it. Prevention is as important as compensation: relying on compensation creates a moral hazard that may affect the implementation of the resolution. Thirdly, linked to the previous one, is that as the amount of losses and damages will exceed by far the resources of the new fund, regulation will be based on the conditions that will be set for the payment of compensation: a strong, intrusive conditionality risks being the instrument of regulation, which is contrary to the very idea of compensation. What amount are we talking about at the moment? The announced contributions amount to $350 million, i.e. 0.35% of the ghostly $100 billion!

Don't countries vulnerable to climate change risk ending up with an international mechanism that is less favourable than the one they would have obtained if they had pushed for increased mobilisation to reach the $100 billion target (or a higher target) and their priority allocation to adaptation, which would then be distributed among countries according to their physical (i.e. exogenous), vulnerability to climate change?

Of course, the creation of a fund to compensate for damage has a strong symbolic value, although in this case the value is weakened by the absence of the principle of contribution according to emissions, and by the fact that China is not party to the resolution. But the symbol will only play its role in restoring trust between North and South when the principles and criteria on which resources will be mobilised, and even more so those on which they will be allocated between countries, have been clearly established.

The fears expressed above may yet be allayed, thanks to the still vague nature of the resolution, if the resources mobilised through this fund can be used not only ex post and conditionally, but also, and more importantly, ex ante for the prevention of loss and damage, that is for a genuine policy of adaptation to climate change conducted under the responsibility of the countries themselves.

The announcement, made almost simultaneously by the French President that he would convene a summit in 2023 for the financing of vulnerable countries could be an opportunity to pragmatically steer the Sharm El-Sheikh initiative in a direction that is truly useful to countries threatened by climate change.