US climate envoy pushes to weaken developed countries’ legal obligation to contribute to loss and damage fund

The United States has committed to put “several millions of dollars” into the global fund to help climate-vulnerable nations, but maintains that contributions should be voluntary and have “nothing to do with compensation and liability”.

US Climate Envoy John Kerry
Ahead of COP28 in Dubai, United States climate envoy John Kerry, who made a visit to Singapore after climate talks with his Chinese counterpart, is pushing for a consensus that wealthy nations should come under no legal obligation to contribute to the loss and damage fund. Image: Bloomberg

United States climate envoy John Kerry has reiterated the country’s stance that contributions to a loss and damage fund to help vulnerable countries adapt to climate change should be voluntary and have “nothing to do with compensation and liability.”

This has been a point of contention for the 24 members from developed and developing countries that make up the transitional committee tasked with working out the details of the fund, including how it will operate, who will pay, who will benefit and where it will be hosted. 

In a draft deal that was struck earlier this month, the committee members agreed to put the World Bank in charge of managing the fund for a four-year period. But an attempt by the US to include a line clarifying that contributions to the fund would be voluntary was reportedly rebuffed by the committee chair.

Countries reached a major breakthrough in agreeing to create a loss and damage fund at the COP27 climate talks in Egypt last year. But conflicts have arisen between rich and poor nations over how to provide financial assistance to countries that have experienced the worst effects of climate disasters.

Speaking at the Bloomberg New Economic Forum on Friday, Kerry noted that the US is “very pleased” with the fundamental outlines that the committee has drawn up and is set to put “several millions of dollars into the fund” at the upcoming COP28 climate conference.

“I hope we’re going to avoid an implosion [at COP28] in Dubai because we now have agreed – all of us in the Global North and Global South – on the way in which we can manage this fund,” he said.

In a statement to the committee after the recent meeting, Sultan al-Jaber, COP28 president for the United Arab Emirates has praised it for breaking “deadlocks” and finding “common ground to deliver clear recommendations.”

“Parties must seal the deal in Dubai and fulfil our obligations on the loss and damage fund,” he said. “Billions of people, lives and livelihoods who are vulnerable to the effects of climate change depend upon the adoption of this recommended approach at COP28.”

But there are signs that old disagreements around the loss and damage fund will resurface at the climate summit later this month.

One sticking point has been whether the World Bank is the most appropriate host of the fund. Developing countries have raised concerns about the World Bank’s high hosting fees, weak climate record and independence from the US, given that the bank’s head is appointed by the US government.

David Archer, head of programmes of United Kingdom-based charity Action Aid who is also a board committee of a World Bank-hosted fund, wrote that the bank now charges fund secretariats an administrative fee of 24 per cent, which by some estimates, could account for up to 2 per cent of total funds.

Kerry said that the members have yet to come to an agreement on exactly what the rules are, how the money will be held, whom it will be held by and for how long.

He assured the audience that the World Bank is just an “entry level” host and not a permanent home for the fund, but ruled out creating an entirely new institution to house the fund permanently. 

“The right idea is to make sure it’s in a place that can move fast, has credibility and is safe,” said Kerry, who noted that people might not have confidence in the fund if it is hosted in a completely new entity. 

Kerry, who met with his Chinese counterpart Xie Zhenhua for climate talks ahead of COP28 this week, said that he has not heard anything from China – which shares a seat on the transitional committee with South Korea and Pakistan – about its potential involvement in the loss and damage fund.

“We’re not lobbying [the loss and damage fund], we’re working on getting other things lined up for COP28,” said Kerry, who added that China is “serious” and that “solid understandings and agreements” came out of his meeting with Xie, though he declined to provide specific details at this point.

He shared that the US reached “some agreements with respect to reducing emissions” with China, which has continued to invest in new coal-fired power plants alongside its massive push for renewables.

At COP27 last year, small island nations joined calls for a windfall tax on big oil companies, who have historically profited from knowingly contributing to climate change, to be a source of funding for loss and damage. 

“The oil and gas industry continues to earn almost US$3 billion daily in profits,” said prime minister of Antigua Gaston Browne, speaking on behalf of the Alliance of Small Island States.

“It is about time that these companies are made to pay a global carbon tax on their profits as a source of funding for loss and damage,” he said. “While they are profiting, the planet is burning.”

Oil giants like BP, Shell and Exxon have quietly walked back their climate pledges to cut emissions over the past year as they raked in record profits.

Shell, whose share performance has lagged behind its peers, has come under increasing investor pressure to scale back investments in renewables and its other low-carbon ventures to boost profits. The Anglodutch company has also recently come under fire for “seeking to silence legitimate demands for climate justice” through its lawsuit against nonprofit Greenpeace over a peaceful protest on one of its oil platforms. 

Under the leadership of its new chief executive Wael Sawan, the company has exited offshore wind projects in Ireland and France, shelved its plans to produce biofuels in Singapore and cut at least 15 per cent of staff in its low-carbon solutions division.

This pressure for more shareholder returns is one of the biggest barriers to collaboration on climate action, said Kerry. “Some of the oil and gas companies were pressured by [asset owners and managers] because they weren’t doing as well as the ones that weren’t doing stuff on climate.”

In response to a question on whether he expects a compromised agreement on fossil fuel reductions at the COP28, given that its chief Al Jaber also heads up the UAE’s national oil company, Kerry said: “I hope and I pray not.”

He added that he is currently in talks with some of the biggest oil and gas companies, like Equinor, TotalEnergies, Shell and BP, to get them to commit to curbing their emissions. “Some of them are probably going to come on board, but less than you and I would want and I don’t feel great about it.”

“But I’d rather have them on board and begin to realise what we’ve got to do and try to marshal them, than having them totally ignoring the issue, not caring and being obstructionist,” he said.

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