The COP28 delegates have given the green light for the operationalisation of the long-debated Loss and Damage Fund. The announcement is the result of years of negotiations.

The establishment of the Loss and Damage Fund has been a challenging point in climate talks with disagreements over its structure, funding sources, and management. However, the tentative welcome from many delegates suggests an official approval at the close of the conference.

The United Arab Emirates (UAE) pledged $100 million to kickstart the Loss and Damage Fund. Several nations have committed to contributing to the fund, with pledges from Germany amounting to $100 million, Britain committing up to 60 million pounds ($75.89 million), the United States offering $17.5 million, Japan contributing $10 million, and the European Union (which includes Germany) committing at least EUR 225 million ($245.6 million).

Early reactions to the news highlight the fund as a lifeline for those affected by climate breakdown. It will play a crucial role in rebuilding homes, supporting farmers, and relocating communities displaced by rising seas.

The success of the fund depends on the speed and scale of disbursement to those in need. Delegates call on world leaders to announce substantial contributions at COP28 to cover start-up costs and fill the fund. Vulnerable countries are projected to face up to $580 billion in climate-related damages in 2030, with the number expected to rise.

Rich countries advocate for the World Bank to host the fund for a rapid response. Simultaneously, they attempt to strike balance between fulfilling financial obligations and resisting defining a clear finance mobilisation scale.

Calls for a balanced and equitable approach in managing the fund and addressing climate-related challenges resonated during the conference. Transparency and accountability in fund utilisation have been highlighted as crucial to ensuring effective and fair support for vulnerable communities.

Meanwhile, the United States has drawn criticism for its relatively small contribution to the loss and damage fund. The country is considered the largest polluter in addition to being one of the wealthiest countries in the world.

Power Shift Africa Director Mohamed Adow said that the initial funding pledged by the US is inadequate and embarrassing for President Biden and John Kerry.

Concerns are also raised on the lack of hard deadlines, targets, and mandatory payments into the fund, despite its crucial purpose of supporting vulnerable communities affected by climate impacts. The agreement to have the World Bank host the fund is met with caution, with conditions for transparent and accessible operations.