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The annual United Nations climate change conference COP27 in Sharm El-Sheikh, Egypt, came to a close on Nov. 20.
Countries agreed to establish a "loss and damage" fund, a breakthrough in a decades-long dispute about compensation for developing countries.
What is 'loss and damage'?
"Loss and damage" refers to the costs of impacts caused by human-induced climate change.
These include climate disasters like hurricanes, extreme weather events, rising sea levels and rising temperatures.
As early as 1992, developing countries have been campaigning for reparations from developed countries, arguing that developed countries are historically responsible for climate change.
Money will only go to most vulnerable countries
At the COP27 summit, the European Union (EU) and the United States put up stiff resistance against the idea, fearing that it would open them up to possible legal liabilities.
On the final day of the conference, the EU proposed that it would only contribute to the fund if "the donor base was broadened", reported The Guardian.
The EU pushed to exclude wealthier countries from the recipient list while listing them as potential contributors.
China, the current highest emitter in the world, would be one such country, including Russia and Singapore, despite their label as a "developing" country based on the 1992 Paris agreement.
In a turnaround, a coalition of developed countries, including the U.S., Canada, Australia and Japan, agreed to this compromise.
In the final draft of the agreement, countries agreed that the fund will target countries "particularly vulnerable" to the impacts of climate change.
It also called for funds to come from a variety of existing sources, including financial institutions, and developing countries can make voluntary contributions, reported Reuters.
The countries or climate disasters that qualify for compensation will be finalised in next year's COP. Meanwhile, a transitional committee will work out the details of how the fund should work.
A blow to 1.5°C
The deal was welcomed as a victory by many developing countries.
Pakistan's climate minister, Sherry Rehman, said that the deal was a "first positive milestone" in the past 30 years of campaigning, reported Nikkei Asia.
“This is a down payment on investment in our futures, and in climate justice,” said Rehman.
The country has faced catastrophic floods in recent months, impacting 33 million people and bringing about losses and damages of over US$30 billion.
Chair of the Alliance of Small Island States Sir Molwyn Joseph said: “Today, the international community has restored global faith in this critical process that is dedicated to ensuring no one is left behind. The agreements made at COP27 are a win for our entire world."
However, to reach the loss and damage deal, some felt that the COP27 agreement had compromised on tougher commitments to limit global warming to 1.5°C.
This was "probably" the case, Mexico's chief climate negotiator Camila Zepeda told Reuters, adding: "You take a win when you can."
Norway's climate minister Espen Barth Eide said that the deal did not raise any ambitions from the previous COP.
President for COP26, Alok Sharma, pointed out several key mitigation measures that were still missing in the agreement.
"Emissions peaking before 2025 as the science tells us is necessary? Not in this text. Clear follow-through on the phase down of coal? Not in this text. A clear commitment to phase out all fossil fuels? Not in this text."
Singapore's response to 'loss and damage' fund
Minister for Sustainability and the Environment Grace Fu told reporters on Nov. 20 that the possibility of Singapore contributing to the "loss and damage" fund still has to be negotiated.
Fu said Singapore will participate in “the right spirit of cooperation and collaboration”, reported CNA.
She noted Singapore's contributions to the Southeast Asia Disaster Risk Insurance facility, which aids Asean member states in climate and disaster risk financing.
Fu added that as stipulated in the Paris Agreement, five per cent of the sale of carbon credits will go towards adaptation funding, according to The Straits Times.
“So, in a way, we are contributing already, but whether it’ll be as an Annex 1 (developed) country, we have to consider in the greater context what it means for our status (as a developing country),” she added.
On the 1.5°C goal, Fu said: “The negotiation process may not be moving as quickly, or as much as we'd like to see.”
However, she said she remains optimistic due to the momentum of the cause outside the negotiation process as more like-minded countries are coming together to find solutions.
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Top image via UN Climate Change/Facebook.