Who will decide the structure of the Loss and Damage Fund?
A Transitional Committee (TC) was established at COP27 to make recommendations for consideration and adoption by Parties (negotiating countries) at COP28, to operationalize the new Loss and Damage Fund. Parties will then negotiate and — hopefully — agree to proceed with operationalizing the Loss and Damage Fund.
The committee is made up of 24 members representing countries most affected by climate change as well as developed nations. The TC’s main task is to make proposals for the establishment and management of the Fund in preparation for COP28, which is scheduled to take place in Dubai, United Arab Emirates in November-December 2023. The TC will propose which countries should receive financial support and identify contributors to the fund, to be agreed upon by Parties at COP28.
With several meetings scheduled this year leading up to COP28, the TC and has several important tasks ahead, including:
Determining the threshold for damage and loss and defining what constitutes an “unavoidable risk” of climate change.
Deciding which countries will be responsible for financing the fund. Developed countries are expected to shoulder the funding burden, but agreeing on a specific threshold for determining their responsibility is critical for effective implementation.
Defining the financing mechanism. This includes deciding whether to include innovative financing instruments like windfall taxes on fossil companies, international taxes, and debt loss and damage swaps.
Defining the roles of non-state actors, such as private financial institutions and development banks, in the financing mechanism.
