COP27 debate on who must pay for climate loss reopens old wounds

- EU wants emerging economies to contribute to a proposed new fund

- Reducing fossil fuels to meet 1.5C goal pushed as part of deal

- Rich countries accused of hypocrisy on finance, fossil fuels

SHARM EL-SHEIKH, Egypt - Rich nations at the COP27 climate change summit are attempting to weaken the unity of 134 developing countries that have teamed up to try to push through an agreement on a new fund to tackle worsening "loss and damage", observers of the talks said.

The European Union put out a surprise proposal on Thursday night, saying it would support the creation of a loss and damage response fund - a reversal from its stance in previous years.

But, as a condition, it wants to expand the base of donors to the fund beyond the usual group of wealthy industrialised countries to include other big emerging economies like China, and to channel money through it from a variety of public and private sources.

Germany's Development Minister Svenja Schulze said on Friday that China should contribute to "dealing with the damage" caused by climate change because it is now responsible for 28% of global greenhouse gas emissions.

China overtook the United States as the world's biggest emitter of carbon dioxide pollution in 2006, analysts say, although the United States remains the largest historical contributor to emissions driving climate change.

China - part of the developing-country group that tabled a proposal this week for a new facility to handle loss and damage payments - has not responded to the EU proposal directly.

But last week its officials said it would be willing to support a loss and damage facility, although not by contributing cash.

Money channeled through such a loss and damage facility would aim to help hard-hit developing countries recover from the impacts of extreme weather and rising seas.

"The fund shouldn’t be used as a poison pill to fix old divisions around expanding the donor base - as much as that might be needed," said Mohamed Adow, director of Nairobi-based think-tank Power Shift Africa.

"A fund that doesn't specify the requirement for historic polluters to deliver finance and shifts the burden to undefined 'other sources' won't meet the needs of vulnerable countries facing the adverse impacts of climate change," he added.

Under the U.N. Framework Convention on Climate Change, adopted in 1992, there is a clear division between developed and developing nations in terms of allocating responsibility for climate action and providing finance, as industrialised nations have historically emitted the most planet-heating gases.

But the 2015 Paris Agreement widened that definition by encouraging other countries to provide voluntary support.

Brandon Wu, director of policy at ActionAid USA, said expanding the donor base for loss and damage would be an "abdication of responsibility" because rich nations have already failed to meet a 2020 goal of mobilising $100 billion in climate finance a year for poorer, vulnerable countries.

The various regional groupings of developing nations, such as small island states and least developed countries, have yet to make their position clear on the EU proposal.

Their negotiators are also working on a separate draft text on loss and damage finance that includes three options, with the talks set to run into at least an additional day Saturday.

One option would set up a fund at COP27, while the second would aim for that at next year's COP.

The third - favoured by the United States, Japan and Switzerland - vetoes a dedicated fund entirely, agreeing only to establish "new and enhanced funding arrangements".

Yeb Sano, the head of Greenpeace Southeast Asia - who as a negotiator for the Philippines was instrumental in winning a broader mechanism to address loss and damage at the 2013 Warsaw COP after his country was battered by a super-storm - said COP27 would be "a resounding moral failure" if ends without a fund.

"For rich, historically polluting countries to show leadership on loss and damage, we need to have a fund right here," he told journalists. "We live in an era where the limits to adaptation have been realised. We are on a knife edge."

Fear for the future

Nakeeyat Dramani Sam, a 10-year-old girl from Ghana, told COP27 delegates that last month in the capital Accra, where she lives, the rains were so heavy a dam burst on the River Densu.

"Cars were under water, people were paddling canoes where there had been streets. Thousands fled their houses. It was very scary for us. If it is going to get much worse, we fear how much our future is on the line," she said in a speech on Friday that won a standing ovation from negotiators.

"Decide now... if you are rich or powerful, to provide funds to help the ones who suffer most the costs of climate disaster not caused by us," she urged.

Climate policy experts welcomed language in the draft text that said new loss and damage finance would "assist developing countries that are particularly vulnerable to the adverse effects of climate change" - a definition that would include many nations now experiencing climate-linked loss and damage.

Cassie Flynn, a strategic advisor on climate change with the United Nations Development Programme (UNDP), said the money also should be allowed to flow to low-income countries struggling with crippling levels of debt, due to financial stress from the COVID-19 pandemic and high energy prices, among other pressures.

In October, UNDP released research showing that 54 developing economies, accounting for more than half of the world’s poorest people, need urgent debt relief as a result of cascading global crises.

"When you are a country that is highly indebted, and a huge flood happens, wildfires, drought - then you go into increasing debt to be able to address those and then it's this cycle of devastation that you can't get yourself out of," Flynn said in an interview.

Fossil fuel fight

"Equity" questions are also arising in negotiations over how to curb the use of coal and other fossil fuels, something scientists say is crucial to avoiding increasingly dangerous climate impacts.

India, the EU, the United States, Colombia and small island states, among others, want negotiators in Egypt to agree to phase down all "unabated" fossil fuels instead of just coal, as in the COP26 Glasgow Climate Pact.

"Unabated" fuels are those whose emissions are not captured in some way to prevent them entering the atmosphere and adding to climate change.

That broader wording - phasing down all fossil fuels - is not in the current draft, but the EU wants it inserted as a condition of agreeing to set up a loss and damage fund.

Its climate policy chief Frans Timmermans said on Thursday that addressing loss and damage and cutting emissions to limit global warming to 1.5 degrees Celsius "are two sides of the same coin" as every incremental rise in temperature worsens impacts.

Tuvalu's minister of finance told journalists on Friday it wanted to see even stronger language, on banning the expansion of new extraction and production of fossil fuels.

"To really be serious about keeping the 1.5 target alive, we need to include those objectives," he said.

However, some countries that rely heavily on fossil fuels for income, such as Iran and Saudi Arabia, as well as African states that hope to exploit their oil and gas reserves, do not want to make that commitment at COP27.

Climate campaigners have criticised the United States for supporting a phase down of fossil fuels at COP27 while expanding production at home, as the Ukraine war disrupts oil and gas supplies and drives up prices.

Jean Su, director of the Center for Biological Diversity’s energy justice programme, said that just this week the United States green-lighted a new liquefied natural gas export facility on its Gulf coast.

This year, it ranks as the top country for approving new fossil fuel projects, she added.

"The United States is hypocritical if they are to claim any type of leadership on reaching a 1.5C degree (warming) goal," she said.

(Reporting by Megan Rowling; editing by Laurie Goering.)