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TWN Info Service on Climate Change
8 November 2023
Third World Network


Loss and Damage Fund outcome adopted by Transitional Committee despite US attempts to veto consensus

Kathmandu, 8 Nov (Prerna Bomzan): The two-day 5th meeting of the UNFCCC’s Transitional Committee (TC5) eventually succeeded in adopting its year’s work on the operationalisation of the new funding arrangements and the Fund to address loss and damage, at the late hours of 4 Nov in Abu Dhabi, UAE, despite attempts by the United States (US) to veto consensus of the TC members.

It was a dramatic night which was nail-biting, with TC members and observers wondering if an agreement was at all possible.

The TC adopted the three-part package of the Co-chairs’ proposal comprising (i) the cover decision to operationalise the Fund and the funding arrangements (ii) the Governing Instrument for the Fund (Annex I) and (iii) the draft recommendations of the TC in relation to the funding arrangements (Annex II).

The package outcome was presented as a “take it or leave it” text by the TC Co-Chairs, following intense wrangling among TC members, and as a last effort to seek compromise.

Other developed countries as well as developing countries defended the package outcome, leaving the US visibly isolated, and hence, the sole obstructionist in the process.

The US was not happy with the outcome, especially in relation to the sources of funding to the Fund and continued to raise concerns, but did not expressly object to the adoption of the outcome immediately prior to the gaveling of the package by the Co-Chairs.

However, following the closure of the meeting, the US said that it is unable to join consensus. (See details below on what transpired).

The package outcome will be taken to Dubai, UAE, for consideration and final adoption by the UNFCCC’s 28th meeting of the Conference of Parties (COP28) and the 5th meeting of the Parties to the Paris Agreement (CMA5) to be held from 30 Nov to 12 Dec.

Given the US stance on the matter, what exactly will be finally adopted at the COP/CMA remains a matter of concern. The drama has not ended

This accomplishment of work by the TC, albeit falling short of demands by developing countries for a stand-alone Fund, was still seen as a successful delivery of the TC’s mandate, given its failure at its last meeting in October in Aswan, Egypt, where the deal was supposed to have been sealed. (See TWN Update)

Around 8pm,  when  the plenary session convened on Saturday, 4 Nov, the “take-it-or-leave-it package” proposal by the Co-Chairs (TC5/2023/4/Rev.2) Richard Sherman (South Africa) and Outi Honkatukia (Finland), was presented to the TC members. The proposed outcome was Co-Chairs’ final attempt to consolidate consensus among TC members with the lingering sticky issue being on sources or “financial inputs” to the Fund.

The US took its typical hardline exceptionalism stance of rejecting any reference to “developed countries” in the text in relation to their provision of resources, maintaining the position that it had no mandatory obligation to contribute to the Fund, and that other developing countries too should contribute.

This stance was viewed by developing country TC members as violating the obligations of developed countries under the Convention and the Paris Agreement (PA), as well as an attempt to kill the UNFCCC’s foundational principles of equity and common but differentiated responsibilities and respective capabilities (CBDR&RC) between developed and developing countries, which is based on the former’s historical responsibility for the emissions since pre-industrial times.

When introducing the text, Co-Chair Honkatukia (Finland) said that the Co-Chairs are still “hopeful” to “get the balance right on the package” that would go to COP28. She said that they would give “half an hour” to members to “digest” the text and if there is “no consensus”, then there would only be a “procedural report” going to the COP/CMA, without the cover decision, the proposed Governing Instrument for the Fund and the recommendations on the funding arrangements. She said further that the “clean text” proposal was “one last attempt to try to get an agreement” and informed that in a number of cases, they had gone back to the morning version of the text (TC5/2023/4/Rev.1), but also tried to address the concerns of both developed and developing countries, and asked if TC members could “live with the text as it stands”.

Honkatukia next invited the incoming COP28 Presidency, Ambassador Adnan Amin to hear from him “what is exactly at stake”. Amin urged the TC to deliver on the outcome and pave the way forward as an agreement reached would establish the Fund and the funding arrangements. He also highlighted that the incoming COP 20 UAE Presidency needs a positive signal coming out of TC5 and looked forward to the TC’s positive contribution.

Diann Black-Layne (Antigua and Barbuda) speaking for the Alliance of Small Island States (AOSIS) said that “we will accept this text as it is”.

The plenary session was then suspended for the TC to digest the text including for constituency consultations and eventually got resumed after one and a half hours around 9.40 pm, longer than the “half hour” time originally intended by the Co-Chairs.

At the outset, in relation to the very controversial paragraph 12 in the text on who is to contribute to the Fund, Co-Chair Honkatukia (Finland) highlighted placement of “two commas” as an “error of punctuation” in the text which she said was missed while “revising” the document and read out the correct version of the paragraph of the cover decision as follows: “Urge developed country Parties to continue to provide support and encourage other Parties to provide, or continue to provide support, on a voluntary basis, for activities to address loss and damage;”. She apologised for not having noticed it in the “earlier version” of the text and that “working with track changes at 2.30 am in the morning” leads to such “things”.

(The original Paragraph 12 of TC5/2023/4/Rev.2 has the “commas” in different places and reads, “Urge developed country Parties, to continue to provide support, and encourage other Parties to provide, or continue to provide support on a voluntary basis for activities to address loss and damage;”).

(It is to be noted that the final document “TC5/2023/4/Rev.2” that was gavelled and adopted is with the understanding of the inclusion of the correct version of paragraph 12 of the cover decision as read out by Co-Chair Honkatukia).

After Honkatukia read out the correct version of paragraph 12 of the cover decision and checked whether there was “agreement” on the text, Christina Chan (US) intervened saying she would like to propose some changes to the said paragraph, given the discussions.

She said that the “the intent on a voluntary basis is meant to cover the entire paragraph”, and proposed to reflect in a footnote that “these urgings and encouragements are all on a voluntary basis.”

Further, she commented on the next paragraph 13 of the cover decision and questioned where the language “continuing to take the lead” came from.  Paragraph 13 reads, “Invite financial contributions with developed country Parties continuing to take the lead to provide financial resources for commencing the operationalization of the Fund;”.

Chan (US) said that she would agree to the language if it said “developed country Parties to take the lead to provide financial resources for commencing the operationalisation of the Fund”.

The US intervention triggered a number of TC members raising their flags to speak, and Honkatukia underlined that she would take very brief interventions with the intention to close the session by 10 pm..

Several speakers took the floor that included Tulio Andrade (Brazil), Ali Waqak Malik (Pakistan), Mohamed Nasr (Egypt), Adao Soares Barbosa (Timor-Leste), Khadeeja Naseem (Maldives), Sonam Phuntsho Wangdi (Bhutan), Angela Rivera Galvis (Colombia), all of whom made clear that they too had a “long list of concerns” with the text which is “not perfect” and that they “do not agree” with it. However, their understanding of the text being “take-it-or-leave-it” one and in the “spirit of compromise”, they were willing to “move forward with the text as it is”.

Nasr (Egypt) also stressed that if the text is opened even for “minor edits as you have put forward” then others would be able to open it and the session would not end soon. He said that there is always an opportunity to accept with “reservations” and make sure one’s “comments are captured”, which is the “procedural process” and further, with the “understanding” that the recommendations by the TC is for the COP to “consider” so there is “another space” at the COP.

Co-Chair Honkatukia (Finland) responded that even the Co-Chairs had their flights in a couple of hours and that they intend to close by 10 pm, underscoring again that the text was take-it-or-leave-it except with the edits of the “two commas” that were “accidentally” deleted in the earlier version, and that members could read in their reservations and that the Co-Chairs would want to ensure that all the “hard work” of the year would go forward to the COP.

Chan (US) came back asking “what is the process to say we cannot agree to the text” given the “objection” to her proposed footnote to clarify that “the paragraph [12] is voluntary for everyone”.

Co-Chair Honkatukia (Finland) responded and stressed that “all funding to the Fund is voluntary – that there are no mandatory financial obligations to the Fund that we are setting up”, adding further that that the issue of financial inputs has been part of the main “challenge” in the process. She added that “certainly our reading of the text that is drafted with the punctuation on voluntary basis leaves that flexibility for interpretation also in this regard”.

Honkatukia then asked Chan whether she was “objecting to the text” which would mean that they would then have to see whether to agree to the text in the Governing Instrument and in the funding arrangements section, while the decision text would have to be negotiated at the COP. However, Honkatukia added that given it was a take-it-or-leave-it text and a package, the “fear” is that there would be “no agreement reached” and that after working hard for a year the only thing that go to the COP and the CMA would be “procedural report without any of the substance”.

She further underlined that even in the “small group or huddle” setting the previous day, it was not possible to make “progress” on “sources” which is “understandably a difficult issue”. “What we have put on the table is our best effort to land this”, she stressed, also stating that if the text is not agreeable as a package then the Co-Chairs would have to revert to a procedural report which would be a “great pity”.

Gayane Gabrielyan (Armenia) took the floor saying that a “compromise” is needed and that in any case the “final” decision would be made at the COP by the leaders.

Heike Henn (Germany) said she would like to see the changes made by Chan, further lamenting that the “four asks by the G77” made in the morning were “delivered” while they are left with a take-it-or-leave-it text (which was not the case). However, she stated that “in the spirit of compromise”, adding “also, to inspire all of us to work as hard and in the same spirit of compromise for more ambition on mitigation at COP28 – in this spirit, I’m willing to accept the text”.

(Responding to the morning version of the text TC5/2023/4/Rev1 which was a highly imbalanced, much diluted iteration of the 1 Nov draft negotiation text TC5/2023/4 with principles of equity, CBDR and historical responsibility dropped as option, developing countries had demanded for (i) a footnote that this process and what is agreed is not prejudicial to what is happening in other areas of climate finance (under paragraph 53 of the Governing Instrument as well as reflected in the cover decision text); (ii) acknowledgement in the Governing Instrument that developing countries are spending in excess of USD 100 billion per year in dealing with loss and damage and the point of the Fund was to support them to address it; (iii) recognition of scale; (iv) acceptance of paragraph 40 of Decision 1/CP.26 of the Glasgow Climate Pact in the Governing Instrument in relation to financial inputs as the last resort by developing countries since it is agreed language).

(However, contrary to what Henn claimed, only the first point was addressed in the next text-it-or-leave-it text TC5/2023/4/Rev.2, in the form of footnotes 5 and 6.)

Co-Chair Honkatukia (Finland) then took the floor asking for the “last time” whether there was “agreement” to forward the TC’s recommendations to the COP to which Chan (US) came back saying that what she had said earlier “doesn’t change”, further seeking clarification whether the “option” mentioned earlier by Honkatukia of only forwarding the Governing Instrument and recommendations to the funding arrangements was now off the table.

Honkakutia responded that if TC members “accept” then the Co-Chairs would “put forward” the Governing Instrument and recommendations to the funding arrangements, while for the decision text which “admittedly, we started to work much later”, they would propose to “summarise or include the content of the draft decision text in a Co-Chairs note that would be annexed to the report” of the TC, “so it would have a different status”, but again stressing that the “working modality” was to adopt the entire document as a “package”.

Jens Fugl (Denmark) said that it was difficult to understand why the change proposed by Chan (US) was not discussed, but made clear that for his seat, it was a “package” and “breaking up the package does not work for us”.

Nasr (Egypt) also took the floor saying that his “understanding” was that the text was a package and now he was hearing that on a “selective basis that some (changes) would be included” and thus sought clarity from Co-Chair Honkakutia that its “all three documents presented together as proposed or agreed” and then Parties can provide their concerns and reservations which would be “reflected” in the report.

Co-Chair Honkatukia (Finland) confirmed that Nasr’s understanding was “correct” and asked the US “one more time” if it was “joining consensus”.

Chan (US) came back asking whether Honkatukia could “bracket [not agreed]” the paragraphs on the “sources” in the decision text and after not hearing in the affirmative, Chan then said “no”.   Honkatukia responded that “once we start bracketing then it does not stop” as well, as the Co-Chairs’ proposal was to adopt the package as is. She again checked by asking the question, “Can the US not object to consensus?” to which there was no response by Chan.

Atsushi Kato (Japan) then took the floor saying that “the current package as it is, has particular difficulty at least for one delegation and sending such a package to COP28 cannot necessarily be helpful to the success of COP28”. He added that Chan’s proposal for including “brackets” and also the “footnote” could be an “idea” since he did not see any “substantial changes” by doing so. Furthermore, he concluded that in order to make a “helpful” recommendation to COP28, “we should accommodate by one way or another the suggestion by the US member”.

Co-Chair Honkatukia (Finland) again came back saying that it is a “take-it-or-leave-it package as it stands” and that “we have quorum in the room”, (as the US had stepped out then). So I would then propose that we note that we have reached agreement on the package as it stands”.

Honkatukia further added, “So we propose that the TC adopt this document as its recommendation to be forwarded to the COP and the CMA in line with our mandate. We note that the version we are proposing for adoption in advance is an unedited version and the document will be edited in line with the UNFCCC’s standards and circulated to the TC again once edited”.

She added further that the outcome document would be appended to the procedural report and gaveled the adoption of the report by stating, “hearing no objection, the document TC5/2023/4/Rev2 is hereby adopted and will be forwarded to the COP at its 28th session and the CMA at its 5th session in line with the mandate of the TC”.

(According to sources, the US was in the room when the gavel went down.)

Nasr (Egypt) took the floor to highlight that although the document has been “accepted” and “endorsed” as TC members, it “falls short” of what developing countries have asked for, “starting with the scale of the Fund, the sources of the Fund, and many other elements that were considered key asks from our constituency”. He underscored that while he accepted the document for “going forward” as a TC member and as a “recommendation” to the COP, he will have to take back the document to his constituency and once at the COP there will be “discussions around the document”. He said that they had several “reservations” which he hoped would be reflected in the report. He concluded by pointing out that “our understanding” of any mention of the Fund as an operating entity of the Financial Mechanism is according to “Article 11” (of the Convention).

(Reference to Article 11 of the Convention was there in a previous version of the draft text, but it was deleted in the version presented for adoption by the TC.)

Chan (US) came back saying that she could not agree to the text a couple of times, so “if this is consensus based”, then why was there a decision of the Co-Chairs to send the package as “agreed”.

In response, Co-Chair Sherman (South Africa) explained that “what is not written in the rules of procedure is working practice which is, we do not veto consensus. If we have objections, we do not stand in the way of consensus; we abstain from any decision”. He stressed that that “Outi had asked you several times to see whether you had any flexibility, whether you were insisting on applying a veto and then essentially blocking the views of all the other members who equally had concerns, who equally had additions”. Sherman made clear that it was not only the US that wanted to have comments to the text, but also his constituency members. He further responded to Chan saying, “Outi had asked you three times. We maintain there was a quorum in the room. We asked again and there were no objections and it was gaveled. So, in our view, this is what it is. We gave you the opportunity to express your views. We are happy in our report to reflect that there was an objection from one member and for that reason to capture your issues there, that we have no problem and it can be in our report. But in our view it was put again to the Committee and there was no objection. I hope that explains”.

The meeting was then officially closed by Co-Chair Honkatukia.

Following the closure of the meeting, as the members began to pack up, Chan raised her flag to say, “We are not joining consensus. This is not a consensus document”.

Sherman responded saying, “In your view, this is not a consensus document and we will reflect that (in the report of the meeting)”. Chan responded, adding, “No; this is not a consensus document. Without my consent, as a member of the TC, it is not a consensus document.”

Sherman said the Co-Chairs would appropriately reflect their understanding of what happened.

Thus, after a highly dramatic resistance by the US, coupled with attempts to veto consensus, the TC5 outcome package although not perfect, and not all that the developing countries had demanded for, managed to survive only due to their solid show of unity to save the process to operationalise the much-needed Loss and Damage Fund in a few weeks at the upcoming COP 28 in Dubai.

Most of the developing country TC members that TWN spoke to, were very upset with the US, given that the two contentious paragraphs 12 and 13 were already a weak compromised language. Some said that the US is not delivering on climate finance anyway; so its ask for a “voluntary” language as opposed to “obligatory’ per the UNFCCC and its PA, did not make any sense.

On the substance of the outcome, weighing the pros and cons of the outcome, the top high-level gains for the developing countries are:

– a new, separate Loss and Damage Fund as an operating entity of the Financial Mechanism (thus ensuring principles and provisions of the UNFCCC and accountability to the COP), although not stand-alone yet but subject to favourable conditions to be met by the World Bank;

-a new, dedicated and independent secretariat of the Fund;

-the legal personality and capacity of the Board of the Fund for its roles and functions, especially, to negotiate, conclude and enter into a hosting arrangement with the World Bank as interim trustee and host of the Fund’s independent secretariat; and

-given the crucial big fight on sources and financial inputs of the Fund whereby the US almost derailed the entire outcome and process, the reference to developed countries in the cover decision text along with the footnotes 5 and 6 ensures safeguarding the principles of equity and CBDR for the provision of resources to the Loss and Damage Fund.

(Details on the substance of the outcome will follow.)

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