After a year of heated deliberations, the loss and damage fund is now in full force: In a big scoop for developing countries who disproportionately bear the consequences of climate change, some 200 countries finally signed off on operationalizing the long-awaited loss and damage fund established a year ago at COP27, according to statement released on Thursday. The fund is set up to finance adaptation and mitigation efforts in climate vulnerable countries facing hurricanes, floods, droughts, and rising sea levels.

The UAE came in strong, and others (slowly) follow: The fund’s launch — which was announced at the COP28 opening plenary — came in parallel to the UAE pledging to contribute USD 100 mn into the fund, the statement said, despite some countries pushing for developed countries to shoulder the responsibility given its historical role in emission production. Germany, the UK, Japan, and the US also made initial contributions, standing at USD 100 mn, GBP 40 (c. USD 51 mn), USD 10 mn, and USD 17.5 mn, the statement disclosed. Since the fund’s launch on Thursday, Norway said it is putting in USD 25 mn, Spain EUR 20 mn (USD 21.78 mn), Portugal EUR 5 mn (c. USD 5.44 mn), and Canada USD 16 mn.

We’re still nowhere near enough the demanded funds: The pledges made so far are only a fraction of the USD 100 bn that a group of developed countries have identified as the minimum annual needs by 2030. One study estimated that the economic cost of loss and damage to be USD 400 bn a year by 2030, while another predicts a cost of USD 290 and 580 bn a year by 2030.

Next steps: The World Bank, the fund’s interim host, could start doling out funds in three months, Bloomberg said on Friday. Meanwhile, World Bank head Ajay Banga told the Financial Times that the bank will not hand out any financing before “a raft of technical analysis” is completed.

Background: The final text (pdf) of the operationalization of the loss and damage fund which was presented to governments at COP28 on Thursday, was approved last month during the fifth transitional committee (TC) meeting in Abu Dhabi. The text suggested that loans and ins. be provided by the fund despite concerns that this would increase the indebtedness of developing countries.

MOVING TOWARDS CLIMATE TARGETS-

Al Jaber calls for fossil fuel flexibility:COP28 President Sultan Al Jaber launched the two-week climate with his opening statement on Thursday, officially assuming the role of COP28 President in the formal passing of the gavel from his Egyptian predecessor, COP27 President Sameh Shoukry. In a 20-minute speech (watch, runtime: 20:00), Al Jaber said that, while steps oil and gas companies have taken in the green energy transition — such as committing to net-zero methane emissions by 2030 — are “not enough,” the sector can “lead the way” in the transition and should be included in climate talks.

Global consensus needed for COP28 global climate policy draft: The COP28 presidency’s preliminary draft of the Global Stocktake (GST) indicates that there is a lack of consensus on the global climate policy front, The National reports. The verdict — set to measure the achieved progress on implementing the Paris Agreement targets for the first time since 2015 — reportedly leaves out most areas of contention, including unblocking climate finance and resolutely phasing down fossil fuel-powered energy, signaling possible divergence in the imminent climate negotiations.

Where do we stand on progress towards climate targets set in Paris? Governments need to take action on 10 key areas to “take a meaningful step towards the goals of the 2015 Paris Agreement,” including setting 1.5°C-aligned 2030 emissions goals, achieving the USD 100 bn climate finance pledge, and others, according to a BloombergNEF report released on Thursday.

Some goals are making more headway than others: While BloombergNEF expects the world’s first global stocktake to fall short of expectations, the USD 100 bn climate finance target appears to be more feasible. The climate conference will likely see developed countries make good on their USD 100 bn pledge to finance climate vulnerable developing markets, BloombergNEF notes, adding that the USD 89.6 bn mobilized in 2021 is a promising indicator for realization of the commitment.

While not on the official agenda, COP28 President-Designate Sultan Al Jaber called on multilateral development banks to work through country platforms, revise climate finance targets for coming years, and lower the risk for the private sector at the summit. Participating countries at the UN summit are also expected to replenish the Green Climate Fund at the conference, with Gulf states being pressured to contribute.

IN CLIMATE FINANCE-

The UAE is launching a USD 30 bn “catalytic climate vehicle” — dubbed Alterra — to improve access to climate funding for the Global South, according to a statement released on Friday. The venture — backed by Chimera Investment-backed Lunate Capital — will have the USD 25 bn Alterra Acceleration program to direct institutional capital towards climate investments, as well as the USD 5 bn Alterra Transformation program to provide risk mitigation capital and incentivize investment flows into the Global South. The venture aims to mobilize USD 250 bn in green investments by 2030.

The initial commitment: Alterra — along with BlackRock, Brookfield, and TPG — have committed USD 6.5 bn to climate-dedicated funds, some of which are earmarked for 6 GW worth of renewables in India, 1.2 GW of which will start operation in 2025, the statement said.

DIFC boosts sustainable funding: The Dubai International Financial Centre (DIFC) rolled out its Sustainable Finance Catalyst, aimed to ramp up sustainable funding raised from Dubai to USD 100 bn by 2030. The catalyst is set to include the launch of the first AI-powered sustainability knowledge hub aimed at providing businesses with expedient and cost-efficient sustainable financing and investment data.

Top development banks set to pledge more funds: Ten of the world's top development banks — including the World Bank — will pledge to increase their climate finance efforts at COP28, Reuters reports, citing an exclusive statement that is yet to be released. The group of banks plan to set a common approach to tracking and reporting climate impact and to increase the use of analytics to help countries identify investment priorities while attracting more private capital by removing fossil fuel subsidies and developing pipelines of green projects. The World Bank will host a joint program aimed at supporting countries and organizations to develop their own decarbonization and climate resilience strategy in the long-term.

CLIMATE CHANGE + HEALTH POLICY GETS A NOD-

COP28’s maiden declaration on climate and health is a success: 124 countries signed the UAE Climate and Health Declaration launched by the World Health Organization, the Health Ministry, and the COP28 presidency, according to a statement. The declaration marks the first official recognition of the impacts of climate change on public health and aims to spur global policy intervention to address the health impacts of climate change and place protecting public and community health at the core of climate action.

Big funds pledged: A group of stakeholders — including signatory governments, financing institutions, and NGOs — have agreed to allocate USD 1 bn to tackle the ongoing climate-health crisis. The Global Fund has committed USD 300 mn to upgrade health systems and the Rockefeller Foundation has said it will invest USD 100 mn in climate-health solutions.