US turns to climate payments in potential breakthrough at summit

SHARM EL-SHEIKH, Egypt — The fight to reach a new global climate change deal has taken a major turn as the United States has shown openness to making payments to nations irreversibly damaged by global warming, negotiators told POLITICO at the UN summit here.

The US has helped draft a proposal calling for such payments to be made to developing countries, British and European officials said late on Friday as the text of a potential deal was circulated to reporters in this Red Sea city. Negotiations at the nearly two-week summit resume Saturday, a day after the original deadline.

Many details of the plan still need to be worked out, including the exact mix of public and private funding that could go into a pool of money meant to help countries deal with losses caused by climate change.

The proposal may not yet satisfy critics from developing countries who say the US continues to shirk its responsibility for all the greenhouse gases it has pumped into the atmosphere since the 19th century. Another potential sticking point is the US’s insistence that China – now the world’s top carbon polluter – must be among the countries that open their wallets.

But the idea that the US would even consider supporting the creation of a climate disaster fund is a potentially seismic shift in their thinking after 30 years of opposing the idea. It could also draw fierce criticism at home, where Republicans hostile to President Joe Biden’s agenda are set to take control of the House in January.

A State Department spokesman said late Friday that representatives at the summit were continuing negotiations, but would not confirm that the draft text was a US proposal.

But a British official told POLITICO that officials from the US, Canada, New Zealand and Australia wrote the text together after being convened by Alok Sharma, the British member of parliament who ran last year’s UN climate talks in Glasgow, Scotland.

The circulating draft, which has not yet been formally proposed to the Egyptian presidency of the summit, would expand the sources and methods of financing disaster-affected communities. It calls for a two-year process that would result in the establishment of “a fund that will be effective and attract contributions from a wide variety of parties and sources, including both public and private.”

The document also says a task force should be set up to design the fund and tasked with “expanding funding sources,” in a nod to US concerns about China’s payment.

The US, which is the world’s largest contributor to climate change historically, has raised concerns that a fund would open it up to legal action for damages caused by fossil fuel emissions dating back to the start of the Industrial Revolution. The text includes an express clause exempting donor countries from “responsibility and compensation”.

Many of the provisions of the proposal respond to the concerns of the US. on relying exclusively on public money to fill the fund. Special US climate envoy John Kerry – who has been conducting phone talks from isolation since the Covid-19 collapse – said getting that funding through Congress would be politically difficult.

The draft calls for “Strengthening the response” of bilateral, multilateral and international financial institutions, which refers to development banks such as the World Bank, where the US is the largest shareholder. It also calls on the World Bank and the International Monetary Fund to “contribute to financing arrangements … responding to losses and damages.”

Kerry argued that multilateral development banks should put more money behind renewable energy and efforts to adapt to drought, rising seas and other impacts of climate change in the developing world. He called on them this week to have a plan to review their climate strategy by April.

The document also calls for the use of “debt moratorium” by multilateral lenders in the wake of climate disasters hitting heavily indebted nations, an idea advocated earlier at the two-week conference by Barbados Prime Minister Mia Mottley and seconded by French President Emmanuel Macron. .

The draft falls short of a request made on Tuesday by a bloc of 134 developing countries, including China, that the fund be created at the talks in Egypt rather than at a later date. This fund would be designed by a working group in which the balance of power would be held by the poorest recipient countries. The EU has criticized this proposal to protect China from paying into it.

The EU then made a counter-proposal for the immediate creation of a new fund, but with only “the most vulnerable countries” as beneficiaries. It also secured the fund with global greenhouse gas emissions peaking before 2025 and would expand its donor base beyond the wealthiest industrialized nations — both issues that challenge long-standing red lines for China.

A climate activist at the talks, Harjeet Singh of Climate Action Network International, derided the text leaked on Friday as “a further watered-down version of what the European Union presented earlier”.

“Instead of creating a new fund at COP27, as developing countries are demanding, it only offers a vague process to postpone the decision,” said Singh, the group’s head of global political strategy. “Such a proposal undermines the urgency of action needed to meet the needs of people facing a climate emergency.”

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