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Financing for Loss & Damage at COP 27 and Beyond�

Liane Schalatek

Heinrich Böll Stiftung Washington, DC

Liane.schalatek@us.boell.org

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Global Greens

COP27 Webinar Series

October 4, 2022

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Typhoon Haiyan, Philippines, 2013

Heinrich Böll Stiftung Washington, DC

1638 R Street, NW, Suite 120 Washington, DC 20009, USA

us.boell.org

The Green Political Foundation

Liane Schalatek, Associate Director

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What is Loss and Damage?

  • defined as impacts of climate change, which are not avoided by mitigation, adaptation and other measures such as disaster risk management (“beyond adaptation”)
  • Both economic and non-economic costs resulting from extreme weather events (attribution challenge) as well as slow onset climatic processes (sea-level rise, salinization)
  • The economic cost of L&D in developing countries alone is projected to be between 290 billion and 580 billion USD by 2030.
  • To meet the needs on the ground for climate action for those already affected trillions need to be mobilized.
  • Loss and Damage (uppercase) refers to spectrum of policies while loss and damage (lowercase) refers to the impacts of climate change (IPCC)

Issue of climate justice, compensation (reparation)

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Most recent IPCC AR6, WGII Report (2/2022):

“Human induced climate change, including more frequent and intense extreme events, has caused widespread adverse impacts and related losses and damage to nature and people, beyond natural climate variability…. Across sectors and regions the most vulnerable people and systems are observed to be disproportionally affected, The rise in weather and climate regimes has lead to some irreversible impacts as natural and human systems are pushed beyond their ability to adapt (high confidence).”

The Green Political Foundation

Liane Schalatek, Associate Director

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A brief history of Loss and Damage (in UNFCCC)

1991: Vanuatu, on behalf of AOSIS, proposes global mechanism for compensating Small Island Developing States (SIDS) for the impacts of sea level rise

1992: UNFCCC established with reference to “insurance” but not to L&D

2007: The term “loss and damage” seen for the first time in the Bali Action Plan at COP 13

2010: A work program on L&D established under the Cancun Adaptation Framework at COP 16

2013: Warsaw International Mechanism established at COP 19

2015: Separate article on L&D in the Paris Agreement with a clause is added in the accompanying decision to de-link Article 8 with any liability or compensation; PA recognizes the importance of averting, minimizing and addressing loss and damage, but “addressing” part remains step-child.

2019: Santiago Network on Loss and Damage (SNLD) established at COP 25

2021: Process for operationalizing the SNLD laid out and the Glasgow Dialogues established at COP 26; developing countries’ call for the Glasgow Facility on L&D unsuccessful, but narrative changed

2022: increased efforts (developing countries and non-state actors) to operationalize SNLD; to put L&D finance on the agenda and push for decision on L&D Finance Facility at COP 27 in Egypt; several pilot activities on L&D finance outside of the UNFCCC

The Green Political Foundation

Liane Schalatek, Associate Director

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What does it mean to address Loss and Damage?

  • Assessing risks with active involvement of communities and using future scientific L&D projections as a precursor to developing and implementing measures to address L&D at all levels ( with regular needs assessments, including on finance, f.ex. an “L&D finance Gap Report”.

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  • Developing comprehensive risk management frameworks (beyond insurance) that meet the needs and are tailored for the contexts

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  • Building, strengthening and funding robust social security and protection systems

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  • Supporting migrants, displaced households, communities and developing policies/frameworks for planned relocation
    • Ensuring access to housing and basic services
    • Respecting and promoting the human rights of migrants and displaced households and communities
    • Addressing non-economic impacts associated with human mobility

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  • Building back better and quickly
    • Reconstruction of homes and infrastructure to increase resilience to future impacts
    • Ensuring the rehabilitation or diversification of livelihoods to ensure that households have viable economic opportunities

The Green Political Foundation

Liane Schalatek, Associate Director

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Illustrating the Funding Gap for Loss and Damage

Source: Spotlighting the finance gap. https://us.boell.org/sites/default/files/2021-05/Spotlighting%20the%20Finance%20Gap%20-%20Loss%20and%20Damage%20brief%203.pdf

The Green Political Foundation

Liane Schalatek, Associate Director

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Illustrating the Limits of ODA, Risk Insurance, Humanitarian Assistance to Address Loss & Damage

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  • Currently households are bearing the brunt of the cost of addressing L&D while national governments in vulnerable developing countries are channeling funds from national budgets, which has opportunity costs
  • Support is urgently needed to address the full scope of the needs at the local, sub-national and national levels on all fronts
  • This includes strengthening the capacity at the national level to develop assessments of L&D to inform planning and programming and meeting the needs on the ground particularly for households and communities on the frontlines of climate change

Source, 2018 hbs Washington, DC report “Not a Silver Bullet”, https://us.boell.org/sites/default/files/not_a_silver_bullet_1.pdf

The Green Political Foundation

Liane Schalatek, Associate Director

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Key COP 27 Issues on Loss and Damage Finance

Operationalizing the Santiago Network on Loss and Damage (SNLD):

  • Functions of the SNLD were established at COP 26 (what it will do).
  • Process for defining the modalities (how it will do it) and structure to be established by COP 27
  • Critical to ensure modalities are aligned with the needs on the ground and the secretariat/coordinating body is resourced to provide adequate targeted technical assistance.

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Glasgow Dialogue on L&D finance:

  • The Glasgow Dialogue (a three year process) was established at COP 26 as a compromise after a failure to establish the finance facility developing countries called for (no modalities set).
  • First round of Glasgow Dialogues at SB in June 2022 disappointing
  • Ensure it is not another “talk shop”: Dialogue must lead to a finance facility by 2024.

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Finance for Addressing Loss and Damage:

  • Formal agenda item on financing for Loss & Damage at COP 27 – Goal: decision to establish a Loss & Damage Finance Facility at COP27
  • Inclusion/relevance for ongoing COP/CMA processes:
    • New Collective Quantified Goal (NCQG) on climate finance post-2025
    • Global Stocktake (GST)

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The Green Political Foundation

Liane Schalatek, Associate Director

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CSO Proposal for Loss & Damage Finance Facility

Location: Under the UNFCCC, as an operating entity of its Financial Mechanism (rather than a funding window or outside UNFCCC)

Core guiding principles:

    • based on solidarity/intl. cooperation (CBDR-RC/climate justice)
    • New and additional funding
    • Needs-based, adequate, predictable and precautionary
    • Locally driven with subsidiarity –people/human rights-centered, with gender responsiveness & equitable representation
    • Public and grant-based
    • Balanced and comprehensive

Operational modalities:

  • Eligibility: all developing country Parties to UNFCCC and PA
  • Decision-making: Board with equitable representation, including community stakeholders
  • Own Secretariat with technical, financial expert staff
  • Coordinating and financing mechanism, ensuring transparency and accountability
  • Simplified access to funding: parametric triggers, based on country ownership and relying on country systems
  • Comprehensive coverage (ELD/NELD), with funding windows for 1) rapid onset after climate disasters; 2) slow onset and L&D planning, policy frameworks and transformative programming

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Proposal presented May 2022 by CAN Intl./hbf Washington/Stamp Out Poverty/Christian Aid/Practical Action

The Green Political Foundation

Liane Schalatek, Associate Director

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Important L&D financing dynamics/pilots outside UNFCCC

  • De-tabooing and increased attention to Loss & Damage finance (media reporting, developing country, CSO advocacy efforts) post COP26 and in 2022 (in light of extreme climate catastrophes)
  • Scottish finance pledge at COP26 🡪 GBP 2 mio for Loss & Damage from Scottish Climate Justice Fund 🡪 partially implemented as quick start funding for affected communities through philanthropic Climate Justice Resilience Fund (ongoing); also EUR 1 million support from Wallonia
  • G7/Germany initiated Global Climate Risk Shield (to be presented at COP27) 🡪 Building on existing InsuResilience Global Partnership (primarily risk insurance focused, including planned premium and social system support) – CRITIQUE: private sector focused; limited/too narrow approach
  • V20 “loss and damage financing facility” under CVF & V20 Joint Multi-Donor Trust Fund 🡪 to be implemented building on GEF Small-Grants Programme to support V20 most affected local communities – CRITIQUE: limited to CVF/V20 members and their communities (leaves a number of SIDS/LDCs out)
  • Denmark pledging DKK 100 million “new and additional” L&D funding September 2022
  • Ongoing efforts to integrate L&D in existing climate-relevant ODA (multilateral/bilateral)

CORE CONCERN:

  • Could serve as distraction; such pilots/efforts can only be a supplement to, not substitute for adequate and comprehensive multilateral approach within the UNFCCC, with LDFF in a coordinating role

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The Green Political Foundation

Liane Schalatek, Associate Director

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Further Information:

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Heinrich Böll Stiftung Washington, DC -- Climate Policy and Finance: http://us.boell.org/categories/climate-policy-finance

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Hbs L&D Finance Dossier: https://us.boell.org/en/unpacking-finance-loss-and-damage

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L&D Assessment of COP 26 Outcomes: https://us.boell.org/en/2021/12/16/deferred-not-defeated-outcome-loss-and-damage-finance-cop26-and-next-steps

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CSO Proposal for L&D Finance Facility under the UNFCCC: https://us.boell.org/en/2022/05/31/loss-and-damage-finance-facility-why-and-how

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Comprehensive L&D Resources by the Loss and Damage Collaboration:

https://www.lossanddamagecollaboration.org/

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“This is Loss and Damage” – Explainer Video: https://www.youtube.com/watch?v=96wtZnglTCQ

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THANK YOU!!!

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The Green Political Foundation

Liane Schalatek, Associate Director