New global climate agreement signed at conference in Egypt

Climate reparations, or “loss and damage” finance, is a highly divisive and emotional issue that is viewed as a fundamental issue of climate justice.

Sean Gallup | News from Getty Images | Getty Images

Government ministers and negotiators from nearly 200 countries finally reached agreement on Sunday to set up a new fund to compensate poor nations for the “losses and damages” they are suffering as a result of extreme weather, made worse by climate change.

The agreement, reached in the early hours of Sunday morning, also reinforced efforts to limit global temperature rise to the crucial temperature threshold of 1.5 degrees Celsius above pre-industrial levels.

The two-week COP27 climate summit took place in Egypt’s Red Sea resort of Sharm el-Sheikh against a backdrop of increasing extreme weather events, geopolitical conflicts and a deepening energy crisis.

Delegates struggled to build consensus on a range of issues, even as a spate of UN reports released ahead of the conference highlighted just how close the planet is to irreversible climate collapse.

The level of division between climate officials meant talks stretched beyond Friday’s deadline, with activists accusing the US of playing a “deeply obstructive” role by blocking developing world demands.

Among the biggest points of contention were fights over whether all fossil fuels or just coal should be included in the decision text and whether the Loss and Damage Fund should be set up for countries hit by climate-related disasters.

The highly contentious and emotional issue of loss and damage dominated the UN-brokered talks, and many felt the conference’s success depended on getting wealthy countries to agree to the creation of a new fund.

The summit made history when it saw for the first time that the issue of loss and damage financing was officially included on the COP27 agenda. The issue was first raised by climate-vulnerable countries 30 years ago.

The European Union, raising hopes for a breakthrough on casualties and damage thereafter, said late Thursday it was ready to support the G-77 group of 134 developing countries’ call for a new reparations fund to be created.

The proposal has been welcomed by some countries in the Global South, although activists have condemned the offer as a “poison pill” as the bloc said it was only prepared to provide aid “to the most vulnerable countries”.

Rich countries have long opposed setting up a fund to deal with losses and damages, and many policymakers fear accepting liability could trigger a spate of lawsuits from countries on the front lines of the climate emergency.

The final agreement was reached after tense negotiations throughout the night, with many delegates exhausted when the deal was announced around 4am. local time.

There has been some disappointment at the lack of emphasis on raising emissions containment targets, and there are many details surrounding the Losses and Damages Fund that have yet to be worked out, including the thorny issue of which countries in the fund will pay in .