Climate Finance: Tackling Loss and Damage

Debate between Chris Law and Deidre Brock

Tuesday 5th September 2023 Westminster Hall

[Chris Law]

I thank the right hon. Member for a really valuable intervention. She reminds me of the startling numbers that I was given in 2017, at the first COP I attended, by a climate scientist called Dirk Messner. He described how, if we continue on the trajectory that we are on now, by 2050 1 billion people will be on the move because of displacement by climate change. A current figure is that more than one third of people on the move right now are on the move as a result, directly or indirectly, of climate change. Therefore the right hon. Member makes a very valuable point.

Not only has the UK made a massive contribution to the destructive impacts of climate change through its emissions, but it has benefited from the competitive advantage that its early adoption of fossil fuels and industrialisation brought and it continues to profit from the extraction of oil and gas from the North sea. The UK therefore has a moral obligation to recognise this historical responsibility and lead by example in addressing loss and damage. That cannot be denied or ignored. As we prepare to embark on the critical climate conference that will be COP28 in Dubai, it is paramount that the UK takes a bold and principled stance in addressing the devastating impacts of climate change, and encourage similar action from others as we collectively tackle the biggest global challenge facing the planet today.

[Deidre Brock (Edinburgh North and Leith) (SNP)]

I congratulate my hon. Friend on managing to get this debate on such an important issue. Does he agree that this Government’s credibility on climate finance will continue to be fundamentally undermined until the UK’s official development assistance budget is restored to at least 0.7% of GNI and the cuts are no longer threatening the many projects currently supporting vulnerable communities?

[Chris Law]

I thank my hon. Friend for a really valuable point. When I go out in the world today and speak to organisations and bodies in both Europe and the US, they are, frankly, disappointed at the UK’s position in recent years on the reduction in relation to GNI. It is a shame—it is our collective shame—and it needs to be altered radically. And for sure, money for loss and damage should not come from existing ODA budgets, which have already been shrunk.

To understand the imperative for loss and damage funding, we need to examine the profound, real-life and often irreversible impacts of climate change. At various COP meetings that I have attended, I have heard harrowing testimonies from citizens of small island states whose homes are disappearing underwater because of climate change. I recently watched devastating footage from the Solomon Islands, where sea level rise rates have been nearly three times the global average. Data shows that sea levels around the islands have risen at the alarming rate of between 7 mm and 10 mm a year—well above the global average of 3 mm a year. As a result, many coastal areas have been inundated, displacing communities and leading to the loss of arable land. Indeed, whole islands have tragically vanished beneath the rising waters.

The disappearance of islands such as Kale, Zollies and Kakatina is not only a stark statistic but a poignant testament to the reality of climate-induced loss and damage. I say this to the Minister: just imagine for a second that it was the United Kingdom that was facing disappearing—the entire nation disappearing under the waters that surround us. We would be acting very differently from how we are now. Those communities in the Solomon Islands have lost their homes, their ancestral lands and their way of life. The impact of climate change in the Solomon Islands extends beyond the numbers and statistics, reaching into the heart of the nation’s communities.

In east Africa, agriculture, reliant on timely and predictable rainfall, is a cornerstone of the economy; the region is highly vulnerable to climate shocks such as droughts and floods. Widespread crop failures and significant loss of livestock have led to vast economic losses that destroy livelihoods and deepen poverty and inequality. One person is likely to be dying every 28 seconds because of acute hunger and famine-like conditions as a result of climate change. This has been accelerated by an unprecedented series of failed rains, causing prolonged droughts, or places being hit by destructive flash floods, devastating people’s crops and livelihoods. Emergency humanitarian aid is simply not enough; the humanitarian system is not appropriate to address the increasing impacts of climate change. A loss and damage fund is needed, and needed now.

In Malawi, floods and droughts are on the increase. Events include Cyclone Ana, which in January 2022 affected almost 1 million people, of whom 190,000 were displaced, and Cyclone Freddy, which displaced more than half a million people, destroyed crops and livelihoods and caused almost 700 deaths. The World Bank estimates that climate change could reduce Malawi’s GDP by up to 9% by 2030, which is only seven years away. That means that, despite continued work and increasing resilience to climate-induced shocks in Malawi, the impacts of climate change continue to erode development gains, particularly for vulnerable populations.

I recently learned of the impact of initial loss and damage funding from the SNP Scottish Government to projects in Malawi to support safe housing construction and provide psychological support for victims. This is a small-scale community-led initiative that needs to go much further and be supported by a global fund. Funding the loss and damage fund is not a matter of charity; it is an act of justice.

The SNP Scottish Government have embedded the concept of climate justice in their international development framework, launching a climate justice fund in 2012, which is due to increase by £24 million over the next three years. That was the first of its kind in the world. Crucially, it paved the way for others when it again became the first in the world to commit funding to loss and damage at COP26 in Glasgow. The whole world was there to listen and the whole world wanted to see that movement forward.

The Scottish Government’s role in providing funding for loss and damage is characterised by deep commitment to climate justice, concrete financial contributions, active participation in global climate efforts and a dedication to innovative and collaborative solutions. Scotland’s global climate leadership credibility is reinforced by its domestic action. It is concerning that the UK’s reputation could be undermined by the current Government’s decision to grant hundreds of new oil and gas licences and, I am afraid, the Labour party’s weakness in watering down its £28 billion green prosperity plan.

Scotland is now seen as a trusted global partner when it comes to climate loss and damage. I hope the Minister will agree with me that the Scottish Government should be empowered to do more on the international stage, rather than be restricted or put back in their box, as some of his Foreign, Commonwealth and Development Office colleagues have suggested. Because where Scotland has led, others have followed: Denmark, Germany, Austria, Belgium, Ireland, New Zealand and Canada have all now pledged loss and damage funding.

The Scottish Government did not hang about and wait for others to act first. They did not create excuses to give themselves reason to delay making a commitment. They saw the urgent need for this funding and acted upon it. Although these funds are small, they are already making a difference, both in practical terms and in how they have prompted others to follow suit. I sincerely hope the UK Government will see the value in that and act without unnecessary delay.

Although Scotland has contributed to important progress, it is not happening fast enough globally. The UK and other Governments around the world have a responsibility to come together and ensure that the practicalities of the loss and damage fund are agreed at COP 28, and implemented as soon as possible thereafter. At present, there has been no agreement on what the financial size of any loss and damage fund should be and how it should operate through the Transitional Committee agreed at COP 27, which has been tasked with establishing the institutional arrangements and has been working over the past year.

Several areas of contention are still being debated and need to be resolved before the committee’s plan is considered at COP 28. One of those is whether the loss and damage fund should be housed within existing climate finance mechanisms, or operate as an independent entity. The Alliance of Small Island States has called for a

“fit-for-purpose multilateral fund designated as an operating entity of the UNFCCC Financial Mechanism”.

I stumbled across that fairly mighty quote. It has been echoed by other vulnerable states and civil society that wish to see a flagship dedicated fund. Let me make this point clear. This cannot be about relabelling existing money, a point the hon. Member for Brighton, Pavilion (Caroline Lucas) made earlier. Loss and damage funding needs to be new money going to new places—the places already experiencing the devastating effects of climate change—now.

Furthermore, if we are to embed the concept of climate justice properly in our approach, the voices of developing and vulnerable states must be listened to and acted upon, equalising power in this currently unequal relationship. Loss and damage funding should be tailored to their needs, rather than a top-down approach from those who do not share their experiences. It is also incumbent on developed countries to ensure that they do not divide consensus on the need for a loss and damage fund.

Existing climate finance arrangements are based on a 1998 list of 155 developing countries and 43 contributors. It has been suggested that not all developing countries should be eligible for support, as not all of them are particularly vulnerable and in need of urgent loss and damage funding. It has also been argued that countries such as China, India and countries in the middle east should be expected to contribute to the fund and that there should be a narrower definition, with recipients restricted to those countries with the least capacity to cope and adapt, alongside their susceptibility to harm and to be adversely affected.

While that does not seem overly unreasonable, many developed countries have not lived up to their climate finance obligations, and it is incumbent on them to ensure that these are met before expecting others to do so. This debate should not be used as a convenient excuse to stall progress on the establishment of the fund. Given that the UK is one of the 24 members of the Transitional Committee, it needs to be a champion for the dedicated fund, for firm commitments from developed countries and for transparent governance ahead of the committee presenting its plans at COP28. I look forward to hearing the Minister’s detailed statement of where he stands on this later in the debate.

Climate finance agreed under the United Nations framework convention on climate change was intended to provide new and additional resources for lower-income countries to tackle the additional challenges brought by climate change. Despite that, the UK has failed to provide climate finance in addition to its ODA budget. The current commitment of £11.6 billion in international climate finance from 2021 to 2026 is welcome. I would like to be absolutely assured that that will continue, but it is under pressure due to the UK Government’s reckless decision to cut their ODA budget from 0.7% to 0.5% of GNI at a time of escalating need—a point that has already been made.

There is concern that the UK will seek to delay climate finance commitments due to these significant aid cuts. Will the Minister confirm that that will not be the case? I am also eager to hear from the Labour Front Bench on this. Back in July, on reports that the commitment was being dropped, the Labour party refused to comment on whether it would commit to the £11.6 billion funding pledge, so I hope to hear whether the Labour party will obediently do as it is told by the Tories and follow every fiscal decision made by them, or will it recognise the severity of the climate crisis and ensure the pledge is met.

The UK Government must ensure that the money attributed to loss and damage is new and additional to existing climate finance commitments, and not diverted from existing ODA budgets. Climate change is a global crisis that requires a global response—one that should not come at the expense of other essential development initiatives. Current estimates place the cost of loss and damage in developing countries alone at approximately half a trillion dollars by 2030. Christian Aid has estimated that the UK’s fair contribution to this fund could be 3.5%, equivalent to between $10 billion and $20 billion. It would simply not be possible to absorb that in the current climate finance commitments or to cut other aid spending further to fund it.

To raise the necessary funds, we must explore innovative financing mechanisms, which must be based on the polluter pays principle, as touched on earlier. Those responsible for a significant share of emissions must bear a corresponding share of responsibility for the damage this is causing. It is not unreasonable to look to the fossil fuel industry to pay a proportionate share of those costs, particularly given the level of profit and excessive profits they are making and the subsidies they receive. The figures required to cover the costs of loss and damage are high, but they are dwarfed by the billions in subsidies that the fossil fuel industry receives and the profits it makes.

To understand that, the excess profits of the five largest oil and gas companies alone amounted to $134 billion last year, and the United Nations Development Programme estimates that global fossil fuel subsidies are now at a staggeringly $423 billion a year. If we put those figures together, we are into more than half a trillion dollars per year, showing that there is no shortage of money, rather it is concentrated in the wrong hands.

Analysis by Christian Aid has shown that £6.5 billion could be raised by a wealth tax to support loss and damage. New forms of wealth taxes that are broad based and that take into account different forms of wealth could help significantly in ensuring that money is available for loss and damage. If both the Conservative and Labour parties are serious about adequately tackling this global climate emergency, they need to take bold action, instead of being hand in hand in timidly ruling these options out.

Will the Minister commit to ensuring that loss and damage finance is provided in the form of grants, not loans? Vulnerable nations and communities should not be burdened with debt or struggle to recover from the ravages of climate change. The UK Government’s contribution to loss and damage funding should not be merely seen as a financial transaction; it should be a declaration of values, a commitment to climate justice and a recognition of the profound responsibility we bear in the face of this global crisis. We are truly in this together, and we cannot walk away now.

To conclude, I have made it clear that we have a moral and historical obligation, as well as an obligation in our own self-interest, to act in the face of this climate emergency. When we talk about loss and damage funding, we are talking about humanity’s response to one of the greatest challenges of our time. The urgency of this crisis demands swift and decisive action, and the financial commitments made by developed nations must reflect the severity of the situation.

It is our duty to ensure that those commitments are translated into tangible support for those vulnerable communities most affected by climate change. Without such support, we will see the climate crisis create resource scarcity and poverty, cause disease and displacement, and lead to conflict and, as we touched on earlier, mass migration. That will affect all of us in this Chamber. It will affect our children and our children’s children’s children to come. It is in our enlightened self-interest to ensure that loss and damage funding is there as an essential lifeline for those who find themselves on the frontlines of a crisis that they did not create.

It is our collective responsibility as good global citizens to ensure that we act boldly and decisively, in order to make sure that the most vulnerable receive the support they need to rebuild their lives and to make sure that by co-operating together we protect all of our futures.