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Dubai, United Arab Emirates

Awaiting Realization of Climate Change Impact Finance

Extreme weather and climate-related crises are increasingly worrying. Developed countries that once exploited nature are now accelerating climate change by being encouraged to provide climate finance to developing countries, especially in island countries. However, there are concerns that the demand will not be maximally realized in the near future.

Since 2015, almost all countries in the world, members of the United Nations (UN), agreed to reduce the threshold of climate temperature increase of 1.5 degrees Celsius, which was recorded in the pre-industrial period 1850-1900, until 2027. However, in 2023, UN Environment Program data notes that 86 countries have high temperatures exceeding that threshold, an average increase of 1.8 degrees Celsius.

This phenomenon certainly adds to environmental impacts, from environmental damage to natural disasters, which can have a temporary to permanent impact. Ironically, for more than three decades, the issue of loss and damage has always come up in the UN climate change negotiations.

The momentum in 2015, marked by the emergence of the Paris Agreement, agreed on the importance of finance that prioritizes the principles of justice and responsibility to achieve the world's climate goals. Then, it was not until 2022 that countries in the 27th Conference of the Parties to the Convention (COP) in Egypt discussed funding mechanisms to help vulnerable countries for the first time.

In early November 2023, the 24-member UN committee tasked with drafting the fund is meeting. The activity was aimed at avoiding a deadlock at COP 28 which will soon be held in Dubai, United Arab Emirates, starting November 30, 2023.

However, quoted from Reuters, Wednesday (29/11/2023), the meeting actually opened up difficult new questions about who will fund and how quickly the funds will be paid. The meeting was also still stalled on an agreement, the World Bank became a temporary home for the loss and damage to the loss of funds.

The EU is arguably the group of countries ready to commit to providing a large source of climate finance and investing the largest amount of clean energy into poor countries. Climate envoy to Germany, Jennifer Morgan, for example, said in a post on social media X that it was working on making its contribution.

Meanwhile, other developed countries, such as the United States, have a tendency to avoid such funding as an obligation.

However, COP 28, which opens tomorrow, is still expected to provide a breakthrough on the monumental agreement that has been made before.

an elderly woman seated with a plate of food
Kristina Lolon (80) consumes leye in Hoelea Village, Omesuri District, Lembata Regency, East Nusa Tenggara, Sunday (13/8/2023). Leye is a type of sorghum food. The seeds are roasted and then flattened. It tastes tasteless. Leye is becoming a food reserve amid declining rice and corn production due to climate change / Credit: Agus Susanto for Kompas. 

COP 27 President and Egyptian Foreign Minister Sameh Shoukry said that at the previous COP in Sharm el-Sheikh, the leaders discussed several initiatives to help all participating countries achieve this goal, as well as help developing countries adjust their economies.

"It is important that we continue to seek climate justice and help developing countries, which contribute the least, but bear the cruelest impacts of climate change, to not only survive but also transition to a more sustainable economy through a just transition pathway," he said in a release on Tuesday. 

This issue is also important for Indonesia, which suffers from the effects of climate change while contributing significantly to emitting greenhouse gases that cause climate change. Minister of Environment and Forestry Siti Nurbaya Bakar, while briefing the preparation of the delegation of the Republic of Indonesia in the COP 28 Dubai negotiations, last August, said Indonesia is targeting ambitious results on loss and damage, as well as funding related to these aspects.

This hope is also expressed by social organizations in the country who are also waiting for this development. Nadia Hadad, executive director of Yayasan Madani Sustainable, said the funding mechanism, including the criteria for countries that need assistance, must be specifically agreed to stop various kinds of damage and loss.

"We hope that Indonesia will participate in encouraging this loss and damage funding, in addition to other funds. This is important especially for adaptation," she said.

"As for mitigation, there are already many circulating to be obtained. Adaptation funds are important to accelerate forest recovery, monitor ecosystem conditions, recognize Indigenous and local peoples, and so on," he added. 

a person walking near a path in a forested area
Members of the Nagasaribu Indigenous People, Onan Harbangan, cleared land in customary forests that they managed to return to in Pohan Jae Village, Siborongborong District, North Tapanuli Regency, North Sumatra, Friday (17/11/2023). They regained 1,586 hectares of customary forest that had been the source of indigenous people's livelihood for generations after it had become an industrial plantation concession of PT Toba Pulp Lestari / Credit: Nikson Sinaga for Kompas.

The new study says the world needs $10 trillion annually between 2030 and 2050 to avoid the devastating effects of climate change. The Intergovernmental Panel on Climate Change (IPCC) says global funds are sufficient to close this investment gap. However, there are still barriers to directing that capital to climate action.

This means that the challenge now is not just to raise additional funds for climate change mitigation and adaptation, but how to align shared commitments to climate action. The brighter latest commitments are highly anticipated at COP 28.


This story was produced as part of the Climate Change Media Partnership 2023, a journalism fellowship organized by Earth Journalism Network Internews and the Stanley Center for Peace and Security. It was first published in Bahasa Indonesia in Kompas on 29 November 2023. It has been translated to English and lightly edited for length and clarity. 

Banner image: Protesters from the Indonesian Forum for the Environment (Walhi) took action in front of the Japanese Embassy, Jakarta, Thursday (4/5/2023). They were protesting against an increase in investment and construction of gas projects across the region that reached 350 billion US dollars / Credit: Riza Fathoni for Kompas.