"Developing country" China? Now Beijing is also supposed to pay for climate damage

UN Secretary-General António Guterres was already seeing the world “on the highway to climate hell, foot on the accelerator” when Frans Timmermans suddenly jerked the steering wheel. At the last minute, the Vice President of the European Union prevented the complete failure of the 27th United Nations World Climate Conference in the Egyptian seaside resort of Sharm al-Sheikh with his intervention on Friday. And with a proposal that is likely to cause some unrest in the climate negotiations of the United Nations.

As always at the UN climate conferences, in the end it was all about money. The developing countries had demanded a third financial pot from the industrialized countries in order to support them in the fight against the consequences of global warming. So far, the donor countries had only promised to help reduce greenhouse gas emissions.

There is also support for adaptation to climate change. Now a third financial instrument should be created, with which the rich countries should pay for the currently occurring "losses and damages" in the poorest countries. In Sharm al-Sheikh, the developing countries organized in the “Group of 77 and China” succeeded for the first time in officially putting this point – “loss and damage” – on the agenda.

It was talked about, but no progress was made during the two-week gathering of around 33,000 politicians, scientists and climate activists in the Sinai Peninsula. The industrialized countries, above all the USA, showed little interest in entering into new payment obligations. The fear of being presented with a bill for the damage caused by every tropical storm or every local drought is too great. After all, the recent flood disaster in Pakistan showed that the amounts of damage that could be claimed are huge.

However, the industrialized countries could no longer hope for the understanding of the developing countries. After all, the wealthy nations had already pledged in 2009 to mobilize 100 billion dollars in climate aid annually from 2020 - but they did not keep the promise. Without a presentable result from the "Loss and Damage Fund" not only the Egyptian conference threatened to fail, but the entire UN climate process. UN Secretary General Guterres spoke in Egypt of a "collapse of trust between industrialized and developing countries".

Then came Timmermans. After long late-night talks on Friday morning, the EU vice-president abandoned the West's previously united defensive position and suddenly offered the developing countries the prospect of setting up the hoped-for fund. The EU deputy made two conditions: Only the group of “most vulnerable states” should benefit from this money, such as the threatened islands in the Pacific. Second, the “base of donor countries must be expanded”. The last condition in particular has it all. Because it contains the requirement that "in the future, the major emitters also participate in climate finance". Not mentioned, but meant: China.

Although the giant empire is the second largest economic power in the world, China still appears at climate conferences as a "developing country". The classification made in 1992 in the UN Framework Convention on Climate Change guarantees the world power the status of a "recipient country" to this day. This comfortable position, so far tenaciously defended by Beijing, is now being criticized.

At the Glasgow climate conference last year, the poorer countries had already insisted that annual transfers of 100 billion dollars would soon no longer be enough and that climate change would shift the financial needs of developing countries to completely different dimensions. "From billions to trillions" was the catchphrase: billions in transfers would have to become trillions.

Amounts that even the rich countries can no longer pay - or want to. If it is not possible to limit global warming to 1.5 degrees Celsius, "no money in the world would be able to pay for the losses that then arise," explained Federal Foreign Minister Annalena Baerbock. A kind of revelation on Mount Sinai. The industrialized countries have already taken responsibility for global warming over the past 40 years, stressed Baerbock, and today's largest emitters must also be held accountable for the next 40 years.

A new financial fund to compensate for climate damage should “only benefit those who need it most, and not those who are only developing countries on paper”. A clear tip against China, but also other "developing countries" that have long since become rich and are not on the so-called Annex 1 list of donor countries, such as Saudi Arabia or the Emirates. When it comes to the question of who pays for damages, "what was determined 30 years ago" cannot be decisive.

The breaking up of the structure of donor and recipient states laid down in 1992 could yet prove to be the most resounding result of the conference. Out of frustration and annoyance at the Egyptian conference leadership and a threatening softening of the 1.5-degree target set by Paris in the draft of the final document, the European Union had threatened to withdraw on Saturday.

A world climate conference is considered to have failed without a general decision, known as a “cover decision”, made in plenary session. But by late Saturday afternoon, it looked like the conference could at least agree on some vague wording to prepare for a "loss and damage" fund.

For developing countries, the attempt by the EU and Germany to drag China into the donor camp on this occasion could prove to be a double-edged sword. On the one hand, the poorest countries would benefit from the broader base of climate protection financing.

On the other hand, they have always had the advantage of Beijing's negotiating power and have been able to put political demands on the agenda with China's weight on their side. A fund for "loss and damage" could still prove to be an ominous gift on the condition of a Chinese change of sides.

How exactly “losses and damage” from climate change are defined and differentiated from pure weather effects remains just as open as the question of who ultimately decides how the money is distributed and who is entitled to receive it. It is also unclear how the two largest CO₂ emitters and economic powerhouses, China and the USA, will react to the push for emergency aid funds.

A quick verdict from their side is not to be expected: US climate ambassador John Kerry had spoken to China's chief negotiator Xie Zhenhua in Egypt for a long time. Then on Saturday Kerry reported being infected with Covid. The future of the "Loss and Damage" fund will only be clarified at the 28th World Climate Conference, which will take place in the United Arab Emirates in 2023.