SNA (Sydney) — In the global environmental conference COP27, which is set to conclude today, much of the debate has been focused on whether or not wealthier countries should pay climate reparations to more vulnerable nations.

Climate reparations, officially termed “Loss and Damage,” refer to financial aid provided from higher-income nations to poorer nations which find it difficult to contend with the impacts of climate change. Such reparations are not meant to represent charity, but rather a recognition that developed countries have historically been the largest contributors to greenhouse gas emissions, which in turn affects the poorest regions most severely.

Many developing countries have argued that climate reparations should be paid through a new fund, separate and distinct from COP15’s annual target of US$100 billion, which was never met in any case.

According to a recent UN-backed report published by the Grantham Research Institute on Climate Change and the Environment, poorer countries will need over US$1 trillion per year in external financing to implement effective climate action by the end of this decade.

Some experts warn that current funding models and methods are woefully inadequate to accommodate such needs.

Michai Robertson, the lead finance negotiator for the Alliance of Small Island States, explained that investment criteria, access, results management, and governance are elements that existing funding arrangements for climate reparations do not address in sufficient detail.

Oxford University’s Benito Muller has also warned that “mitigation and adaptation are part of the toolkit to reduce Loss and Damage from future impacts, but they cannot be used in responding to Loss and Damage that has already been incurred.” According to his view, arguments favoring climate reparations should not focus on historical climate impacts and instead aim to prepare for future challenges.

Negotiations at COP27 are grappling with similar concerns.

A compromise agreement over Loss and Damage was eventually reached. Rather than wealthier nations working to assist and fund poorer nations in the form of “liability and compensation,” climate reparations will revolve around “cooperation and facilitation.” In other words, there will be no attempt to assign specific responsibility for the climate crisis and the “reparations” framework will be diluted.

Despite European Commission President Ursula von der Leyen’s insistence that “at last COP, we made the pledges. This is about implementation,” COP27 has followed a path which Greenpeace has denounced as “climate delay.”

According to Egypt Foreign Minister Sameh Shoukry, delegates aim to reach an agreement on climate reparations by “no later than 2024.”

Some poorer countries have emphasized the vital need for prompt action.

Pakistan, which is a prominent advocate for reparations, contributes less than 1% of global carbon emissions, but ranks as the eighth most affected country to long-term climate risks, according to the Global Climate Risk Index.

Rukia Ahmed, a Kenyan climate activist, has also called for reparations, stating that “my community is right now suffering the impacts of climate change while rich country leaders go around in circles about Loss and Damage.”

She added, “my community is pastoralist, and we are living in extreme poverty due to climate change. Children are dying from malnutrition. Schools are closing due to floods. Livestock lost to extreme droughts. My community is killing each other over limited resources. This is the reality of Loss and Damage, and the Global North is responsible.”

The compensation debate at COP27 is also faced by the ambiguous cases of middle-income nations, especially China.

In this context, European Commission Executive Vice President Frans Timmermans warned against relying too heavily on categories such as “developed” and “developing” nations when planning and implementing reparations. He noted that “China is one of the biggest economies on the planet with a lot of financial strength. Why should they not be made co-responsible for funding Loss and Damage?”

Chinese climate envoy Xie Zhenhua gave a mixed response: “We strongly support the claims from developing countries, especially the most vulnerable countries, for claiming Loss and Damage compensation, because China is also a developing country, and we also suffered a lot from extreme weather events.” But he also emphasized that participation in these discussions is “not the obligation of China.”

There remain questions over how reparations or “facilitation” should be delivered.

Germany and the so-called V20 (Vulnerable 20 Group of Ministers of Finance of the Climate Vulnerable Forum) are advocating for an insurance-style scheme called “Global Shield,” which could include a pooled international fund which would be used by developing nations suffering climate-related damage.

Another model being considered is climate-related humanitarian aid. This would be a reactive method for reparations ignoring the core issue of accountability.

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