A global financial mechanism to compensate for losses and damage caused by climate change could be activated, after years of fruitless negotiations. Denmark is the first country to contribute financially to countries in difficulty, allocating $13 to the mechanism. The term loss and damage has been adopted to refer to a financial system in which developed countries pay their vulnerable counterparts for damage and losses due to climate change and greenhouse gas emissions. This instrument implies the responsibility of developed countries for historical emissions, which constitutes a delicate but nevertheless important subject in global negotiations on climate solutions.
Denmark has become the first country on the list of historic large emitters or polluters to commit to providing funds to developing countries for losses and damage caused by climate change. The Nordic country will allocate $13 million via a financial instrument to help the most vulnerable regions and countries.
The financial mechanism called loss and damage is used to finance the most affected countries to adapt and mitigate the effects of climate change.
This project reflects the question of the historical responsibility of the countries which have committed the greatest climate damage and caused the accumulation of greenhouse gases. The global debate among world leaders raises the question of financial compensation for losses and damages due to climate change.
Most developed countries have long resisted special funding for loss and damage caused by climate change
The most developed countries have long resisted the implementation of the financial mechanism. But the Danish government decided to allocate funds and become the country that launches the global project.
At the last United Nations Climate Change Conference (COP26), participants failed to reach an agreement. Loss and damage are on the agenda for COP27, scheduled for November in Sharm el-Sheikh, Egypt.
How to determine loss and damage
Loss and damage refers to the consequences of climate change that go beyond what people can adapt and mitigate. Or when adjustment options exist, but the community does not have access to and cannot use the necessary resources.
Loss and damage refers to the consequences of climate change that go beyond what people can adapt to.
Loss and damage is the impact of extreme weather events such as hurricanes, droughts and heat waves. It is also the result of slower changes, such as sea level rise, desertification, land degradation, ocean acidification and melting glaciers.
Loss and damage is the impact of extreme weather events such as hurricanes, droughts and heat waves.
Poor and developing countries are pushing for serious global discussions to support their recovery and prepare for the future.
Denmark donates funds to several beneficiaries
The Danish Foreign Ministry revealed that of the $13 million for aid to vulnerable countries, $5 million would go to the Frankfurt-based organization InsuResilience, which subsidizes climate insurance in affected countries .
An additional $4 million is being dedicated to a strategic partnership between the Danish government and civil society organizations addressing climate-related loss and damage, focused on the Sahel region of North Africa.
Three million dollars is being allocated for strategic loss and damage efforts around the COP27 summit, and the remaining $1 million is for civil society in developing countries, the firm said.
Danish officials expressed hope that their decision would also affect people on the ground who are already facing the consequences of climate change and help advance negotiations.
Pivotal moment for global negotiations
At the last climate summit in Glasgow, the Group of 77, a bloc of more than 130 developing countries, attempted to create a fund to support victims of climate disasters. But such an initiative was blocked by the European Union and the United States. Denmark’s decision could now mark a turning point in the negotiations.
The creation of a financial instrument to support victims of climate disasters has been blocked by the EU and the United States.
Under the Paris Agreement, all countries agreed to address “loss and damage related to the impacts of climate change.” But rich countries were fiercely reluctant to provide special funding because they did not want to take responsibility, thereby risking international prosecution.
Historical broadcasts and global debates
Although they represent only 12% of the world’s population, the most developed countries, including the United States, Canada, Japan and much of Western Europe, are responsible for 50% of all greenhouse gas emissions emitted by the combustion of fossil fuels and by industry over the past 170 years.
While Western officials insist countries like India, Indonesia and South Africa must accelerate the phase-out of coal, developing countries insist they lack financial resources and do not benefit from adequate support from the richest countries.
Following recent devastating floods in Pakistan, the United Nations has launched an urgent appeal to raise $160 million in aid. This would be enough for first aid and to feed those affected by the disaster. However, the damage caused by flooding caused by climate change and melting glaciers on the country’s Himalayan ridge is estimated at tens of billions of dollars.
Pakistan’s Minister for Climate Change, Sherry Rehman, highlighted in an article in the Guardian that her country is not only exposed to high climate vulnerability and low preparedness for climate disasters. Much of the Global South is already affected by adverse climate impacts, supply chain disruptions and high social costs.
Threatened countries require resource transfer and robust financial mechanisms to implement urgent adaptation, Rehman said.
She noted that in a non-disaster year, Pakistan typically loses 9.1% of its gross domestic product due to the cumulative impact of climate stress. This figure is estimated to almost double due to medium-term losses from recent flooding.
Financial resources came mainly from loans and credits, not donations.
In 2009, the world’s largest economies pledged to mobilize $100 billion a year to finance climate change mitigation and adaptation in the most vulnerable countries by 2020, but have lagged behind by in relation to these objectives. Financial resources mainly took the form of loans and credits, and in no case grants or financial reparations.
The Danish decision, although modest, can be seen as the launch of a new model for establishing climate accountability.
On the eve of the COP27 Global Climate Summit, the Danish decision, although modest, can be seen as the launch of a new model for establishing climate accountability.
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