Bonn climate talks: What the debate around Loss and Damage is about (and why it is so heated)

While 196 countries attempt to negotiate a road map to implementing the Paris Agreement on limiting climate change at the Bonn climate summit, some of the effects of the accumulated greenhouse gas emissions in the atmosphere are already playing out in various parts of the world.

These include both extreme weather events such as hurricanes, floods and heat waves as well as harmful slow-onset events such as salination of freshwater water as seawater creeps inland and increasing droughts. While some countries have the resources to adapt to these changes, others have been struggling to cope with are unable to cope. India with a large coastline and a complex monsoon system has been hit quite hard by these phenomena.

In 2013, all countries agreed that climate change negotiations must address Loss and Damage as a separate pillar of response to the crisis. To this end, the Warsaw International Mechanism on Loss and Damage was established.

In 2015, the US forced the rest of the world to include clauses in the Paris Agreement barring countries from being able to claim compensation for damages from others that continue to emit greenhouse gases at unacceptable levels. Despite this, a separate section on finding solutions to address Loss and Damage did find a place in agreement, which goes into effect from 2020.

With the word compensation being banned from the talks since 2015, developing countries have been pushing the developed world to find new means to finance the damages they suffer from climate change. Some developed countries see this also as a business opportunity for their insurance industries. However, developing countries warn that insurance cannot address the needs of the most vulnerable.

Harjeet Singh, global lead on climate change for the international non-governmental agency ActionAid International, explained the debates about Loss and Damage to Scroll.in as they spark heated debates at the Bonn climate change summit.

In Paris, the developed world forced of the rest to say that countries cannot impose liability or seek compensation against loss and damage caused by climate change. But Loss and Damage as an issue is now one of the main pillars of the Paris Agreement. What is the developing countries’ priorities on Loss and Damage?
Developed countries were totally against inclusion of the word compensation in the Paris agreement as it amounts to unlimited liability. After pushing hard for years, developing countries agreed to pull back by getting it replaced by “action and support” which does include finance, technology and capacity building. Another reason for softening the position was to make progress on knowledge generation and coordination with other bodies on the pressing issues of displacement, slow onset events such as sea level rise, ocean acidification and so on.

Finance remains the most important as well as the contentious issue at the table since the Warsaw International Mechanism for Loss and Damage was established.

Developed countries have been ignoring the issue while developing countries have been putting a lot of emphasis on this. Loss and damage finance is needed because lives of people are already getting affected in developing countries due to increasing number of disasters and other climate impacts and they don’t have the resources to deal with them. This has been a very sticky issue and not much progress has been made apart from just repeating the decisions that was taken at the last meeting in Marrakech – that is to prepare a technical paper on loss and damage by June 2019. So, the concern we have is that the Executive Committee [to the Warsaw International Mechanism] has not developed a full-blown work plan of what we need to do between now and then, which means for the next two years, apart from a technical paper we don’t see much on the agenda. Developing countries are demanding that an expert group must be created to implement the work-stream on action and support, which includes finance. That’s the main issue here in Bonn.

What has happened on it so far and what is happening in Bonn?
In 2013, Warsaw International Mechanism on Loss and Damages was established. To operationalise the mechanism an executive committee was formed, which has 20 members – 10 from developing countries and 10 from developed, and they meet two-three times a year. But, for the last two years, they have met only twice a year. This year the last meeting was in October. They mainly looked into the issue of developing a comprehensive risk management system against loss and damage, drafted a five-year work rolling plan and reviewed work on displacement besides several other issues. The finance component is under the five-year rolling work plan and is extremely weak as mentioned earlier. Also, under pressure from developed countries, the committee prioritised focusing on the insurance aspect which is problematic. This is the reason, now developing countries are asking for a permanent agenda item at the climate summit and also at the inter-sessional meetings so that they can elevate key issues at the political level with larger number of countries. Another demand they are putting forth is to get sufficient resources for the WIM to perform its functions meaningfully.

Why is it important from India’s point of view to push for the loss and damages finances to be on the agenda?
From India’s point of view, if you go by the numbers provided by the Indian government on overall climate action, which makes a part of the Nationally Determined Contributions [targets under the Paris Agreement], they make a mention of a number of two trillion dollars, and this number includes cost of reducing emissions, adaptation and dealing with loss and damage. That’s quite a significant shift for India. It has begun talking about loss and damage recently. As you know, traditionally India has focused much more on primarily technology and finance for emission reduction that is the mitigation. They also held a consultation on loss and damage at this session.

We know that many disasters are taking place in India and extreme weather events are getting bigger and worse. We’ve seen devastating extreme weather events like floods in Kashmir, Uttarakhand, Odisha, Tamil Nadu and Andhra Pradesh in the last few years. So, we’ve seen how the intensity and frequency of the extreme weather events is going up. When we talk about loss and damage, we talk about what happens when people get impacted by these events. India needs to raise this point more and make its position clear to all.

Could you explain the debate over financing Loss and Damage and what are your concerns about insurance being the main route to providing this finance?
The major issue is developed countries are not doing substantive discussion on the range of financial instruments that will be required to tackle various types of climate impacts. Whenever they talk about loss and damage finance, they always bring insurance at the forefront. Now we do recognise insurance has some role to play, for example, if people lose their homes or a life is lost, your family members are able to get some money if person’s life is insured. This also applies to property, so when you lose it, you get some money so you recover faster. But we also need to understand, that insurance works on probability. So if there is a 100% probability that somebody is going to get affected, then insurance doesn’t work. And that 100% probability lies in case of sea-level rise or ocean acidification or increasing pace of desertification or increasing salinity negatively affecting your crop productivity. So for such impacts there are no financial instruments available or being discussed by this body to say okay we have got a range of instruments, let’s start looking at how they can help the people getting affected. The challenge therefore is that developed countries don’t even want to discuss openly about all these kinds of financial instruments, which is beneficial for them also as disaster are hitting them as well.

We hear of the clearing-house for risk transfer against Loss and Damage being inaugurated at this Bonn summit. What is this, could you go behind the jargon for us?
It is about insurance, so when they say “risk transfer”, it is mainly about insurance.

The clearing house on risk transfer is nothing more than a ‘matchmaking’ website for multi-national insurance companies to find prospective clients - be it public or private sector companies from developing countries.

So there, again it’s an irony that the scarce climate finance is being spent on creating a website that too for the filthy rich insurance sector. Let me give you a bit of background: the penetration of insurance is very low in developing countries compared to the developed ones. And majority of insurance or re-insurance companies investing in developing countries come from the West. The insurance companies - be it public or private - that insure us, also get insured by paying part of the premium to the re-insurance companies or entering into a contract with them. This clearly means, that if the insurance sector is going to grow, then premiums are going to be increasing for the insurance companies as well as their re-insurers . So, it’s in their business interest to promote insurance as a product.

A revealing fact to share: 22 out of 25 biggest insurance companies of the world are from the developed countries.

That’s why developed countries are always interested to promote insurance in developing countries as a way to reduce risk. They keep saying reduce risk but it doesn’t reduce your risk, it only covers your risk to some extent post disaster.

Germany spent around 200,000 euros on this website which will essentially serve private sector’s interest. Now what we’re saying is, if we’re here to connect private sector with developing countries, then that job could have been done by the private sector itself. Why has this body spent so much time and effort in creating just a platform, which is going to be launched with a lot of fanfare on November 14. And the fear we have is that’s the only big outcome Fiji would see happening on addressing Loss and Damage. Whereas insurance does not cover the entire gamut of climate impacts that we are facing and especially the small island nations are going to face.

Coming to adaptation fund, what are the key areas of concern. And where do you see that agenda moving in this Bonn Conference of Parties 23?
So, it was decided last year that the decision on Adaptation Fund’s serving the Paris Agreement will be taken in the next annual meet, which means Conference of Parties 24 in 2018. Now, officially, that’s when discussions are going to be concluded, but developing countries want to hear intention of developed countries on what’s going to happen. As you know, Adaptation Fund is part of the Kyoto Protocol. So, the concern being raised is that if Kyoto Protocol will not be there, then how adaptation fund is going to survive. The challenge for us is that a body has been created which has been functioning really well, it has approved projects in over 70 countries and allocated close to $500 million. We have a system that’s working. On the contrary, Green Climate Fund has just begun approving adaptation projects. So why do you want to kill an institution that has been developed with a lot of pain and investment. Yes, it’s a legal challenge because the Kyoto Protocol is not going to be around, and we know the umbilical cord between the Kyoto Protocol and the adaptation fund, but these legal challenges can be tackled positively. Conference of Parties is a supreme body to decide. Developed countries must make their intention clear that adaptation fund will serve the Paris Agreement and legal challenges will be sorted by the next climate summit. The issue is the developed countries say that because there are legal challenges, we cannot pre-judge whether adaptation fund is going to stay or not. That’s where the whole intention part comes into play and developing countries are going to push harder this time to get some decision on the fate of adaptation fund in Bonn.

In the Bonn talks, many developing countries have told us that there is a lot of push towards reducing emissions but less conversation on adapting to inevitable climate change. What do you think?
Yes, I absolutely agree. I think this is where the Fijian Presidency has to be courageous and shoulder the responsibility of making sure that the outcome is balanced. Fiji in particular, being a small island state, and one of the most vulnerable developing countries, has a responsibility to represent the interest of all developing and vulnerable countries. It’s extremely important because now in the Paris agreement, we have separate articles for mitigation, adaptation and loss and damage. Clearly, these are the 3 pillars of climate action and we have to have balanced progress across all these issues.

That’s the point I was trying to make earlier, just because you have Warsaw international mechanism for loss and damage as a body outside, that does not mean that we don’t have substantive discussions about the issue at the COP. COP is the supreme body which has to take account of everything and ensure that we should get a balance outcome across all three issues.