Aside from reducing greenhouse gas emissions, funding is a key issue at the annual United Nations climate negotiations. Money from developed nations given to developing nations is vital to fund mitigation and adaptation efforts; that is, to lessen the impacts of climate change and to protect against its future effects.

In 2009, developed nations promised developing nations $100 billion per year for five years starting in 2020 but only followed through on a fraction of it. Funding, or climate reparations, is an equity issue given that developing nations have contributed the least to climate change but have been disproportionately suffering climate change impacts. For example, Pacific islands, according to the Intergovernmental Panel on Climate Change (IPCC) have contributed a mere .03 percent to global CO2 emissions versus China’s 28 percent and the US’s 15 percent.

COP26 kicked off with a focus on funding. On the first day of COP26, Lia Nicholson, lead negotiator for Antigua and Barbados, which chairs the Alliance of Small Island States (AOSIS) this year, called for a phase-out of all fossil fuel subsidies by 2023. She also called for debt relief and demanded that all funds be made available immediately and that they be grant-based. 

Developing nations need about five to 10 times more than current levels of funding to assist with efforts to adapt to climate change, the United Nation’s Adaptation Report 2021, published on November 1, found. Adaptation refers to steps taken to respond to the impacts of climate change. These steps might include measures to address drought and the salinization of freshwater and of soil—ruining the often already limited potable water and challenging agriculture—and efforts to address sea level rise, such as managed retreat.

Worse, in 2019 an estimated 71 percent of the allocated funds were in the form of debt-creating loans, according to a report titled Climate Finance Provided By and Mobilized By Developed Countries, published by the Organization for Economic Cooperation and Development (OECD), an intergovernmental organization established in 1971 to foster economic progress and trade.

An article published in Nature last month, “Debt-for-Climate Swaps for Small Islands,” outlines how eliminating debt would allow Small Island Developing States (SIDS) to shift funds to address the effects of climate change. For example, in the Caribbean region, the report states, the total debt service payments in 2015 constituted 20 percent of total government revenue on average.

So developing nations are demanding four things: 

1. That developed nations pay up on the promised $100 billion per year for 2020–2025;

2. That developed nations increase their contributions given the climate debt or historical responsibility for creating the crisis and the intensifying climate change impacts;

3. That funds be outright monies and not debt-creating loans; and

4. That developing nations be freed of debts to developed nations, so that they do not need to consider whether they will pay off debt or address climate change impacts.

At a dinner on Thursday evening, John Kerry announced that developed nations will deliver the $100 billion starting next year.

The forgotten child

The Alliance of Small Island States also said that it has not forgotten “loss and damage,” referring to it as “the forgotten child.” Loss and damage refers to those effects of climate change that cannot be addressed by mitigation and adaptation. Loss and damage was formalized as part of the UN negotiations in 2013 as the “Warsaw International Mechanism for Loss and Damage Associated with Climate Change” at COP19 in Poland.

Loss and damage results from extreme weather events, such as hurricanes and floods, and other slower climate change effects, such as sea level rise and salinization of soils, which makes growing crops difficult and makes potable water undrinkable. They include permanent impacts on homes, on sources of livelihood, and on subsistence farmers and fishers. They also encompass effects that cannot be quantified in economic terms, including the loss of biodiversity, which would impact food and water, and of culture.

Vulnerable nations demand financing for loss and damage, separate from and in addition to the $100 billion. The funding under loss and damage, too, has been stalled these past eight years. So prior to COP26, over 300 organizations sent an open letter to COP26 president Alok Sharma demanding developed countries pay for climate damages.

“Women and girls, and their communities in the Global South, are hit hardest by the impacts of a crisis they did least to cause,” says Tetet Nera-Lauron, senior climate lead with ActionAid International. “As millions more families are forced to flee after losing everything to climate disasters, governments must put the issue of loss and damage finance on the table at COP26. Access to funding to enable vulnerable communities to survive and rebuild after climate disasters and slow onset events is beyond urgent.”

The signatories to the open letter include Indigenous rights organizations, trade unions, youth groups, and human rights and faith-based organizations, such as Climate Action Network, Amnesty International, Greenpeace, WWF, 350.org, International Trade Union Confederation, and the Panafrican Climate Justice Alliance.

"Loss and Damage Finance is neither a charity nor a development fund for vulnerable countries and communities," says Ineza Umuhoza Grace, co-founder and co-director of the Loss and Damage Youth Coalition. “It is a path to ensure that we have a future. It is already unfair that the Global South community [is] at the front line of climate change impacts—we did less in contribution and yet we have no tangible financial support to address loss and damage. History knows who broke the harmony of our planet, we are claiming and demanding climate justice for all.”

A report titled Designing a Fair and Feasible Loss and Damage Finance Mechanism, published by the Stockholm Environmental Institute (SEI) highlighted the disproportionate impacts. It also stated that “breaking this stalemate is a priority for developing countries and may be critical to the perceived legitimacy of the climate negotiations.” This issue of “the perceived legitimacy” has reared its head at COP26 as developing nations demand action. To address these demands, SEI’s report recommended: “At the Glasgow Climate Change Conference (COP26), countries can take a first step by pledging bilateral finance for loss and damage.”

Given the scope of the needs globally, the SEI report calls for a formal, long-term finance mechanism to be established. It also recommends that national-level systems be set up to assess the needs of countries and to ensure that finance needs to address them are made available. Arguments could also be made for getting the funds directly to people adversely affected to ensure that it is not siphoned off via corrupt governments.

Due to the sluggish pace at which funds are forthcoming, at COP26 on Sunday, Antigua and Barbuda together with Tuvalu took another tack: They established a commission with the UN through which they could claim damages from developed and highly polluting nations through judicial means. Hurricane Irma devastated Antigua and Barbuda in 2017. And Tuvalu is among the nations most at risk due to sea level rise. At a press briefing on Monday, the two nations stated that they will see if they can pursue action to claim damages from nations that have warmed and damaged the ocean.

The Climate Vulnerable Forum and 50-50 in climate finance

The Climate Vulnerable Forum (CVF) was established in 2009 at COP15 in Copenhagen by then–president of the Maldives Mohamed Nasheed and consists of 55 vulnerable nations. It has also been consistently demanding action on the promised annual $100 billion, the funding for loss and damage, and a balance in funding between adaptation and mitigation efforts.

Fekadu Beyene Aleka, commissioner for the environment, forest, and climate change for Ethiopia and previously chair of CVF (2016–2018), stated “a US$100 billion delivery plan for finance plan from developed nations is essential as well as an additional 50-50 balance in climate finance from 2020 to 2025 to fund adaptation and mitigation interventions in developing countries. Besides, more emitting countries need to pledge for new, more ambitious action in the targets to keep the 1.5° goal of the Paris Agreement within reach.”

The call for a 50-50 balance between mitigation and adaptation in climate finance is key. The 2015 Paris Agreement stipulates a balance in spending for mitigation and adaptation. But to date, 75 percent of the funding has gone for mitigation and 25 percent for adaptation. Mitigation efforts are ones that aim to reduce the effects of climate change, such as transitioning to renewable energy and installing solar panels and wind turbines.

Yet vulnerable nations are already disproportionately impacted, which means they need an equal amount of funding to address impacts, that is, adaptation. But these efforts, such as moving housing and infrastructure away from the coastline or pursuing managed retreat, receive fewer funds.

Bruce Bilimon, minister of health and human services for the Republic of Marshall Islands and previously chair of CVF (2018–2020), underscored the importance of balance in his comments too: “We need the world’s major emitters and G20 countries to step up climate financing commitments. We cannot underscore enough the importance of achieving balance between mitigation and adaptation financing. A 50-50 split is very critical for us. And mitigation still lags far behind adaptation.”

At a press briefing, Kathy Jetnil-Kijiner, CVF thematic ambassador for culture and climate envoy for the Republic of Marshall Islands, said, “It has been a fight every time to get loss and damage to become a standing item at COP. We (the CVF) need to continue to hold the big emitting countries accountable.”

More of Sierra magazine's coverage of COP26:

Methane's Big Moment

This Is the Decade to Cut Emissions

How the Plastics Boom Could Mess Up Glasgow's Climate Commitments

Is China Ready to Commit to a Green Energy Future?

COP26 Is a Make It or Break It Moment for the Climate