Time is Running Out For Poor Countries Struggling Without Assistance on "Loss and Damage"

Time is Running Out For Poor Countries Struggling Without Assistance on "Loss and Damage"

Unless rich countries offer financial assistance, 54 of the world’s poorest countries are approaching imminent bankruptcy, exacerbated by inflation, the energy crisis, and climate change. Of the countries crippled by debt, 28 rank among the top 50 most climate-vulnerable.

Bloomberg: Europe’s Energy Nightmare Has Only Just Begun, November 8, 2022.

NBC: Low Income Countries Bear Brunt Of Climate Change, September 23, 2022.

In a speech at COP27, the head of UN Global Development Programme, Achim Steiner, warned of potentially catastrophic consequences on both local and global levels. “The issue of debt has now become such a big problem for so many developing economies that dealing with the debt crisis becomes a precondition for actually accelerating climate action,” Steiner stated.  “We need to inject targeted liquidity into countries to be able to invest in energy transitions, and adaptation [to the impacts of extreme weather].”

CBS: Nations debate climate reparations at COP27, November 10, 2022.

CNBC: Why developing nations say it's time for rich countries to pay up, November 7, 2022.

FRANCE 24: COP27 | North-South, a growing divide, November 4, 2022.

Al Jazeera: Pakistan flood damage could cost the country about $40bn, October 7, 2022.

Why This Matters

At COP15, the world’s wealthiest countries pledged to provide an annual $100 billion in aid to the most vulnerable countries by the year 2020. That pledge was not honored by its deadline. Now, experts estimate that the cost of stopping climate change could be much higher. Limiting warming to 1.5 degrees Celsius, the threshold scientists warn we cannot cross if we are to avoid the worst of climate change, could cost up to $5.2 trillion per year by 2030, according to the World Resources Institute.

Not all countries, though, are contributing to climate financing equally. The US is the #1 provider of climate financing but is also more responsible for climate change than any other country. Based on its proportion of emissions, some studies show the US should pay $39.9 billion to less developed countries. In 2020, it gave only $8 billion. Now, President Biden has pledged to contribute $11 billion per year by 2024, but this money is contingent on Congressional approval.

New York Times, November 12, 2021.

Source: Global Carbon Project·

Note: The rich, developed countries group is based on the United Nations’ Annex II definition. International transport is not counted as part of either group’s total emissions. The data reflects territory-based carbon dioxide emissions from fossil fuels and cement, but does not include land-use and forestry. The graphic shows emissions from countries and territories.

Source: CNN, November 3, 2021.

The Newsmakers: Are rich nations responsible for Pakistan’s Floods?, September 5, 2022.

DW: This is just how unfair climate change is, May 21, 2021.

Grantham Imperial: Dr Friederike Otto speaks to CNN's Connect the World about the extreme heat, 18 July 2022, July 19, 2022.

Too Little, But Not Too Late

Calls to create an official “loss and damage” fund, which would allow rich, high-emitting countries to compensate the less developed countries facing the consequences, are earning support from activists and government officials alike at COP27. Not every country, though, is ready to agree to climate compensation.

What’s the hold-up? Despite its rapid economic growth, China is still classified as a developing country according to the UN’s current framework. This means that they would not need to contribute to climate financing, despite emitting more annually than all other developed countries combined and refusing to improve its NDC. On Friday, Jennifer Morgan, Special Climate Envoy of Germany, implied that China, too, should help foot the bill. “We would expect that…the rules here and who pays would also adjust to the fact that there is…much more wealth in a number of emerging economies,” Morgan said.

Sky News: Climate Change | What is loss and damage?, November 8, 2022.

Robin Hood: The Global Story of Climate Change Loss and Damage | Who Should Pay For It, May 3, 2022.

WION: COP27 Summit Day 4 | China to contribute to 'loss & damage' fund?, November 9, 2022.

Bloomberg Live: COP27 | Tubiana on Climate Loss & Damage, November 9, 2022.

More efficient routes for funding, though, may be available. After oil companies’ record profits this year, some politicians including UN Secretary-General António Gutteres are calling for a windfall tax on the industry, the profits of which could be redistributed to the vulnerable countries facing bankruptcy

Source: The Guardian, October 27, 2022.

Financial lenders provide another route to long-term solution. Though the World Bank has a spotty record on climate change and greenwashing, the major lender stated that they hope to drastically scale up the number of loans and grants they provide to countries in the developing world. Axel van Trotensburg, the bank’s managing director of operations, told Reuters that wealthy member countries will also need to step up their contributions to facilitate the change: "People would like that the international community, including the MDBs (multilateral development banks), are stepping up. We agree. So what my challenge to them is: define the ambition, and how much do you want to put on the table?"

Guardian: 'Polluters must pay’ | UN secretary general calls for global windfall tax on energy companies, September 20, 2022.

New York Times Events: World Bank, IMF and Bahamian Leaders Talk About Climate Finance, September 20, 2022.

Guardian: Pakistan floods affect 33 million people as national emergency declared, August 26, 2022.

Al Jazeera: Pakistan flood damage could cost the country about $40bn, October 7, 2022.

CBS: Climate change could displace 200 million in 20 years, disaster relief organization warns, June 1, 2022.

Bertelsmann Foundation: A Global Security Threat | Climate Change, February 28, 2022.

TED: Fossil fuel companies know how to stop global warming. Why don't they? | Myles Allen, December 4, 2020.