Should China and India be compensated for climate damage or pay for it?

China and India are among the world’s largest emitters of greenhouse gases, with China ranking first and India ranking third.

Both countries also have large economies.

Why then is there disagreement over whether they should contribute to a fund aimed at reducing global losses and damage from climate change?

The issue will be discussed at COP28, this year’s United Nations conference on climate change in Dubai, United Arab Emirates.

What is the Loss and Damage Fund?

Developing countries will need more than US$300 billion (R$1.4 trillion at current prices) annually until 2030 to adapt to climate change, according to a 2022 UN report.

After years of disagreements between developed and developing countries, it was agreed to establish a fund for losses and damages during the United Nations Climate Change Conference (COP27) in Egypt last year.

The Fund aims to provide financial assistance to poor countries to deal with the negative impacts of climate change – for example, in rebuilding after forest fires and resettling communities displaced by rising sea levels.

But without money in the fund and without any details about its work and who will finance it, many questions remain unanswered.

Who should pay for this?

The United States, a developed country and the world’s second-largest emitter of greenhouse gases, and other developed countries say China and India should join them not only in cutting emissions but also in financing the bottom.

But China and India disagree, claiming that the high emissions levels in the two countries are recent compared to the emissions history of countries such as the United States and the United Kingdom.

Both countries also state that they are still developing countries, as stipulated in the United Nations Framework Convention on Climate Change, signed in 1992, and therefore, they should receive – not spend on – the Loss and Damage Fund.

Since COP27, the parties have engaged in heated discussions on the work of the Fund and finally, in October 2023, reached a set of recommendations.

Now, it will need to be approved at COP28. The recommendations “urge” developed countries to support the Loss and Damage Fund and “encourage” others to support it voluntarily.

The recommendations also clarify that all developing countries are eligible to apply for funding.

But negotiators say the recommendations have not ended tensions between developed countries and major developing economies such as China and India over who should pay into the fund and who should get it.

A negotiator from a Western country, who requested anonymity, said: “Funding sources remain a major unresolved contentious issue at the present time.”

Who should get it?

China surpassed the United States as the largest emitter of carbon dioxide in 2006.

But both China and India claim the climate crisis was caused by emissions from developed countries in the 1850s, when the industrial period began.

The two Asian giants also point to the principle of “common but differentiated responsibilities” stipulated in the United Nations Framework Convention on Climate Change.

This principle basically means that all countries have a responsibility to reduce greenhouse gas emissions, but their participation and responsibility depend on their development needs.

Many civil society organizations and environmental activists have supported this argument.

“The massive losses and damage we are now seeing are the result of 30 years of developed countries being too slow to cut their emissions faster and provide climate finance to developing countries,” says Liane Schalatek, associate director at the Heinrich Böll Foundation. Stiftung USA, which is closely following the negotiations.

She adds: “Requiring developing countries to contribute to the new fund on an equal basis with developed countries is morally wrong and dishonest.”

However, there are countries that consider the “developed countries” classification to be outdated and need to be revised.

Countries were classified as developed or developing in 1992. Critics say much has changed since then, especially in countries like China and India, which are now large economies and among the biggest emitters.

The unnamed negotiator added: “We hope that not only China and India, but also the United Arab Emirates and Saudi Arabia – developing countries according to the 1992 list – will see themselves as contributors to the fund more than beneficiaries.”

‘Moral responsibility’

Some small island States also defend this position.

Mishai Robertson is the lead negotiator on loss and damage financing for AOSIS.

He believes that there is a “moral responsibility to deal with the Fund” that major economies such as China and India must fulfill.

“Having the phrase ‘encouraging other parties to provide financing’ in the recommendation is an acknowledgment by the whole committee that we need developed countries to be involved as well and other parties to be involved as well.”

But this is not the first time that the climate fund has taken a long time to be resolved.

Ross Fitzpatrick of Christian Aid compares the debate over the Loss and Damage Fund to previous climate finance pledges that have yet to materialize.

“It is not surprising that many developing countries see this as a delaying tactic, given the decade-long mistrust that is at the core of the UN climate negotiations,” he says.

“The best example of this lack of trust is the failure of rich countries to deliver on their previous pledge of $10 billion in annual climate finance starting in 2020.”

The commitment Fitzpatrick refers to was made by developed countries in Copenhagen in 2009.

As long as this earlier promise is not fulfilled, developing countries will always have an excuse to delay finalizing the details of the Loss and Damage Fund, says Arati Khosla, director of Climate Trends, an India-based organization.

“It is not easy for China and India to contribute to the fund without the developed world first fulfilling its earlier promise,” says Khosla.