Why is it in the news?
- On the first day of COP-28 climate conference in Dubai, member countries agreed to operationalize a Loss and Damage (L&D) fund to compensate nations dealing with climate change.
- The fund will be based at the World Bank but managed by an independent secretariat.
- Loss and damage from climate change cost about $1.5 trillion in 2022, with developing countries and the poorest experiencing an average loss of about 8.3% of GDP.
More about the news
- Financial commitments totalling at least $450 million have been made, with the United Arab Emirates contributing $100 million, Germany $100 million, the United States $17 million, the United Kingdom $50.6 million, Japan $10 million, and the European Union committing $145 million.
- The World Bank will be the interim host for four years, operating in accordance with United Nations Framework Convention on Climate Change (UNFCCC) and the Paris Agreement principles.
- Payments to the fund are voluntary, and a percentage is designated for Least Developed Countries and Small Island Developing States.
- The fund’s current structure does not specify how often it will be replenished, raising concerns about its long-term sustainability.
About Loss and Damage Fund
- The L&D fund was first announced at COP-27 in Sharm El-Sheikh, Egypt, and its operationalization took five separate meetings through transitional committees to achieve unanimous agreement.
- The ‘Loss and Damage’ (L&D) fund is a financial mechanism designed to address the irreversible consequences of climate change that cannot be avoided or mitigated through adaptation efforts.
- This fund recognizes and aims to compensate for the real losses incurred by communities, countries, and ecosystems due to the impacts of climate change. These losses extend beyond monetary value and cut to the core of human rights, well-being, and environmental sustainability.
- Recognizes the responsibility of industrialized nations for global warming and resultant climate crises.
- Loss and damage encompass both economic and non-economic impacts.
- Economic losses involve tangible, monetizable impacts (e.g., infrastructure damage, loss of revenue from agriculture).
- Non-economic losses are intangible and challenging to quantify (e.g., trauma, loss of community, biodiversity loss). Top of Form
|Loss and Damage
|Actions to limit climate change, often involving reducing emissions.
|Proactive measures to cope with changes induced by climate change.
|Irreversible consequences of climate change, not mitigated by adaptation.
|Cutting greenhouse gas emissions.
|Great Green Wall Initiative in the Sahel and West Africa.
|Floods in Pakistan, risk of submergence of Maldives due to rising sea levels.
|Reduction of greenhouse gas concentrations in the atmosphere.
|Building resilience and reducing vulnerability to climate change.
|Providing support and compensation for impacts that cannot be avoided or mitigated.
|Long-term, addressing root causes of climate change.
|Short to long-term, addressing current and future impacts.
|Immediate and long-term, dealing with the aftermath of severe climate events.
· Offered to host COP-33 in India in 2028. India previously hosted COP-8 in 2002.
· Stressed developed nations should “vacate the carbon space” before 2050.
· Urged global cooperation on India’s “Green Credit initiative” for creating a carbon sink.
· Highlighted the global consequences of nature exploitation by a few. Emphasized the cost borne by humanity, especially in the Global South.
· Global Green Credit Scheme: Aims to generate credits for plantations on waste or degraded lands and river-catchment areas. Focuses on rejuvenating and reviving natural ecosystems.
· India’s COP-26 Commitments: Reiterated India’s commitments from COP-26, including a 45% reduction in emissions intensity and 50% non-fossil fuel share by 2030. Pledged to achieve net zero by 2070.
· Climate Investment Fund and New Collective Quantified Goal (NCQG):
· Welcomed the $30 billion Climate Investment Fund announced by the UAE at COP-28.
· Called for finalizing a new target on climate finance (New Collective Quantified Goal) to accelerate the transition away from fossil fuels.
· Stressed that new financial targets should not overshadow commitments to the Green Climate Fund (GCF) and the Adaptation Fund.
· Encouraged multilateral development banks to provide affordable finance to developing countries.
· Urged developed countries to eliminate their carbon footprint before 2050.
Green Credits Scheme:
- Launched by the Environment Ministry in October.
- Aims to establish a market-based incentive for various environment-positive actions, beyond carbon emission reductions.
- Similar to the existing market system for carbon credits.
- Companies or nations earn carbon credits for reducing their carbon footprint, tradable for money.
- Green Credits replicates the carbon credit model for actions like water conservation and soil improvements.
- Unlike carbon markets primarily benefiting industries, green credit programs extend benefits to individuals and communities.
- Methodologies and standards for measurement and verification are under development.