Why Cop28 barely scratches the surface on the cost of climate change

When panic-buying hit the UK in March 2020, it was a rare moment: a curious knock-on effect of the emerging Covid pandemic.
For residents of small-island states, however, the growing terror that hurricane season brings means that panic buying is now part of life. Climate change means more regular and more violent storms, leading to unmanageable economic losses for residents of islands that are typically developing countries.
“I dread hurricane season each year because of how much disposable income we – and particularly poorer people – have to spend on supplies in case the storm is bad,” said Michai Robertson, from the Caribbean island nation of Antigua and Barbuda, in an interview with The Independent. “The situation is worsening as the storms are getting noticeably worse, and more intense. The rains now are crazy; It is very different to how it was when I was a child.”
Robertson is at the Cop28 climate conference in Dubai in his role as lead negotiator for “Loss and Damage” – compensation payments for climate change costs related to extreme weather – for the Alliance of Small Island States (AOSIS), which is a UN group of 39 low-lying coastal and small island countries.
Recent history shows us that the fear that Robertson describes is not ungrounded: The 2017 category 5 storm Hurricane Irma (which mostly hit the news in the UK for its impact on the US) destroyed 90 per cent of the buildings on Barbuda – a smaller island to the north of Antigua – and the entire population was evacuated to Antigua.
“Every year we approach summer with trepidation. From June to November, we have witnessed devastation to schools, hospitals and homes, and we wonder when will this possibly come to an end,” said Molwyn Joseph, Antigua and Barbuda’s Minister for Environment, at a press conference at Cop28 to marking the launch of a new coalition aiming to phase out fossil fuel subsidies (which hit $7 trillion globally in 2022, according to the IMF).
The anecdote of panic-buying reflects just one tiny fraction of a massive global bill that must be addressed by “climate finance”. This is an umbrella term that refers to the cost of mitigating climate change (achieved by rolling out renewables and phasing out of fossil fuels), adapting to climate change (which would allow residents of Antigua and Barbuda to better cope with climate impacts), and the costs of climate loss and damage (which Robertson is negotiating for).
Over two weeks of climate negotiations at Cop28, some major policy announcements, backed by some big numbers, have given the impression of some sizeable progress on climate finance.
Press releases shared by the UAE – the hosts of the conference – boasted of $83bn mobilised in new financial commitments, as well as major new pledges from more than 100 countries to boost renewables and protect food systems, which are set to mobilise yet more climate finance over the coming year.
Cop28 did see one undeniable breakthrough moment in climate finance discussions with the establishment of a “Loss and Damage Fund” – something that was unthinkable just a few years ago – which is set to compensate developing countries for their climate-related losses. So far, some $792m has been promised to the fund.
But despite some tentative steps in the right direction, a separate report released in the opening days of the climate conference revealed just how great the gap is between what has been promised, and what is actually required.
The second report of the Independent High-Level Expert Group (IHLEG) on climate finance, published in partnership with The London School of Economics, found that between now and 2030, the world requires a five-times increase in concessional climate finance (which is more generous than the market rate, and often backed by rich governments), a three-times increase in multilateral development bank climate finance (such as from the World Bank), and a 15-times increase in private climate finance (from ordinary banks) for emerging market and developing economies to meet the requirements of limiting global warming to 1.5C.
The report contains a lot of financial jargon, but it basically puts some figures behind a fact that most people in the climate space already know: the current climate finance gap is to the tune of trillions of dollars, and the global financial system must be totally transformed if we are to have any hope of meeting our climate goals.
“Our analysis shows that emerging market and developing countries, other than China, are being left behind,” said Vera Songwe, one of the lead authors of the report.
Nicholas Stern, her co-author, called for a “substantial increase in investment in zero-emissions and climate-resilient technologies and infrastructure” that will “not only enable the world to deliver on the Paris Agreement’s goals, but will also drive sustainable, inclusive and resilient economic development and growth”.
“The $83bn announced at Cop might sound like a lot in isolation, but in the grand scheme of the trillions of dollars in the global economy, it’s obviously nowhere near enough,” said Robertson, when presented with the Cop28 figures being shared by the UAE.
On the $753m loss and damage fund specifically, Robertson believes that it is “a good signal” that the world can reach a consensus on a vital financial question, but that it is “clearly not enough money to cover the costs of extreme weather”.
“The fund was designed to be as accessible as possible for anyone wanting to put money in it – and frankly I am shocked that none of the big philanthropies, many of which [like the Rockefeller Foundation and Carnegie Corporation] are built on oil money, have not come forward to put any money in,” he said. “It is also seriously concerning that the World Bank – an organisation that has repeatedly failed to support effective sustainable development – is hosting the fund.”
A fund for loss and damage, says Robertson, is also only required because the world is continually failing to provide finance for mitigation and adaptation. “It gives me no pride that I sit down and negotiate for a Loss and Damage Fund: I am only doing so because the world has failed on everything else,” he said.
Adaptation is a particular point of concern at the moment: Funding actually decreased in the latest year for which the OECD, an organisation that tracks climate finance in developing countries, has data. The $24.6bn of adaptation mobilised in 2021 needs to increase more than eight times over to meet the $215 to $387bn per year that is actually required in developing this decade.
Nowhere is the urgency of climate adaptation felt more keenly than on the island of nation of Tuvalu, which is a coral atoll in the middle of the Pacific Ocean where the highest point is just two metres above sea level, and the surrounding seas are rising at a rate 1.5-times the global average.
“We need financing now, not tomorrow,” said Seve Paeniu, finance minister for Tuvalu, in an interview with The Independent. “Our islands are literally disappearing under water; our crops and plantations are being infiltrated with sea water; and our homes are being destroyed.”
The country has an adaptation plan that involves dredging up the seabed and artificially expanding the landmass. It is a process that has already been carried out in the fellow island nation the Maldives, as well as in the UAE. But there is a more difficult business case for the process to be carried out in Tuvalu, which is an incredibly remote country lying halfway between Australia and Hawaii, with a GDP of just $63m.
“We urgently need to mobilise money for our adaptation plan, and we need the UN processes here at Cop to really deliver on what they are supposed to do,” said Paeniu. “Otherwise our people are going to have to leave our beautiful country.”
Speaking to representatives from small islands is like speaking to few others at Cop28. For them, climate change is an immediate, personal crisis and not an abstract future problem.
“When I was a child, we would go out to enjoy a sandy beach with pristine waters, surrounded by vegetation that was green and lively. There were so many fish, and beautiful coral,” said Paeniu. “Now, 40 or 50 years later, that entire beachfront has been washed away. The water is grey, and the coral is bleached and dying.
“We also have a severe water scarcity problem, because nearly all of our water comes from rainwater that we collect, but the rains are becoming less frequent,” he said.
It is not that the world is failing to deliver any progress at all to address challenges, such as Paeniu describes. The past year has seen multilateral development banks like the World Bank signalling new ways to boost climate-aligned financing, while climate philanthropies are launching new initiatives to mobilise financing, for example through innovative new ways of selling carbon offsets.
The aforementioned IHLEG climate finance report launched at Cop28 also details how the amount of global climate finance committed has more than tripled over the last decade, reaching $1.27 trillion in 2021-22, or around 1 per cent of global GDP. But, say the authors, such growth is “still too low compared” to what is needed to “achieve the low-carbon transition and build resilience to climate change”.
The deficiency in funding feels particularly acute when it is compared to significantly higher volumes of capital that continues to be directed towards forces that are destroying the environment – a reality that Michai Robertson describes as our “net negative” climate finance.
An example of this can be seen in the $953bn invested in new fossil fuels versus the $499bn invested in renewables in 2022, according to data tracked by think tank the Climate Policy Initiative. A separate report released by the UN Environment Programme during Cop28 showed that finance into nature destruction in 2022 were 30 times larger than in nature-based climate solutions.
Despite major progress on phasing out fossil fuels and boosting renewable energy at Cop28, the process of aligning the global financial system away from climate destruction remains a hard battle. But it is one the likes of Robertson and Paeniu are determined to keep fighting: It is all they can do to hedge against the destruction of their homelands.
“We have contingency plans, but the overwhelming majority of people in Tuvalu would not want to leave our islands,” said Paeniu. “So we will keep fighting to protect and save Tuvalu.”