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Opinion

Asia can play its part on climate justice

Asia’s wealthiest countries will benefit from supporting “loss and damage”

4 minute read

Gavin Thompson

Vice Chairman, Energy – Europe, Middle East & Africa

Gavin oversees our Europe, Middle East and Africa research.

View Gavin Thompson's full profile

COP27 may have disappointed on material progress on tackling emissions, but reducing carbon wasn’t the only agenda item in Sharm El-Sheik. With the UN and others conceding that a pathway to a 1.5 °C world looks increasingly difficult, COP27 negotiations widened to include climate justice.

A key focus of climate justice is the disproportionate impact of climate change on developing countries. To address the immediate impact of this, arguably the most significant outcome of COP27 was a hard-won agreement to set up a ‘loss and damage’ facility for developing countries, to be funded primarily by those western nations that contributed the most to historical emissions.

Africa was at the centre of the COP27 climate justice debate. This made obvious sense given Africa has contributed the least to historical emissions but is suffering some of the most negative consequences, and of course the COP’s locus. But Africa isn’t alone. Parts of Asia are similarly experiencing extreme environmental events, with Pakistan’s recent devastating floods the latest example. Hence many in Asia are also calling for western nations to fund loss and damage across the region.

But in contrast to Africa, Asia is home to some of the world’s major industrial economies. While contributing far less to historical emissions, China and India are today the number one and three emitters of carbon respectively. Japan and South Korea also make the top ten. And across most of the region, emissions are continuing to rise.

Given its rising levels of wealth, emissions, and impact on climate change, can Asia continue to pass the buck for funding loss and damage onto others?

How we moved from mitigation to adaptation to loss and damage

As a concept, climate justice calls for a just and equitable distribution of the economic benefits and costs of climate change. The UN Intergovernmental Panel on Climate Change now expects that almost half the world’s population will face major risks from climate change by 2030, increasing the need to finance adaptation to climate change alongside efforts to mitigate emissions.

Rich countries pledged a collective US$100 billion of climate finance per year way back in 2009 to help developing economies both reduce emissions and to adapt to the effects of climate change. While actual levels have fallen short – climate financing provided by developed economies reached US$83 billion in 2020 - most has historically gone towards mitigation. Only around a third has been directed to adaptation.

But with extreme weather events becoming more frequent, the developing world is increasing demands not only for adaptation financing, but also for urgent compensation for loss and damage.

How is financing for climate-related loss and damage progressing?

The devil is in the detail. Both the EU and the US have now agreed that they will provide funds to a future loss and damage financial facility, but not without strings attached. The most vulnerable countries will be prioritised, and donors still want to see voluntary contributions from more countries – including some still classed as developing – to reflect high and growing levels of emissions from these countries.

What about in Asia? Japan is Asia’s the most vocal supporter of a common financial facility to support climate-related loss and damage. At COP27, Japanese Environment Minister Nishimura Akihiro confirmed Japan’s commitment to financial support, as well as technical assistance, for those worst affected. Other wealthy Asian countries, such as Singapore, have welcomed the fund as a positive move, but indicated their involvement as something for future negotiation.

But for most countries in Asia, funding loss and damage is still primarily the responsibility of western industrial nations to address. As the world’s largest emitter, China is the elephant in the room. China's Special Envoy for Climate Change, Xie Zhenhua, signalled Beijing’s support for the concept of a loss and damages fund but rejected the idea that it should be required to contribute. China calls this the ‘principle of common but differentiated responsibilities’ – when it comes to loss and damage payments, China still sees itself as a developing country.

How long can wealthy Asian economies stay on the side lines?

Japan’s support for loss and damage financing is a positive step for Asia. And while not in any way diverting attention from developed western nations to step up their pledges, it is likely other wealthy – and carbon-intensive - Asian counties will follow.

Asian support also doesn’t just have to be about pledging capital. At COP27, the UN Economic and Social Commission for Asia and the Pacific discussed innovative ways for countries in the region to bolster climate justice. A good example are calls for greater levels of low-cost finance and debt relief measures which acknowledge the link between rising debt levels and impact of climate change. Such moves may well encourage key countries like China and India to play a more active role in climate justice without deflecting pressure away from western nations.

Asia can be a part of the solution

Progress on climate finance is essential to build more trust between developed and developing countries. But while pledges will likely be increased above levels committed at COP26, this still won’t be enough. The cost of adaptation alone, according to some studies, could be well above US$400 billion per year.

Both adaptation finance and funding for loss and damage is clearly at risk from recession across Europe and North America. Asia can play a leadership role here, both in holding western nations to account and by supporting climate justice through responsible financing. Asia may not have created much of the problem, but the region’s economic development can allow it to be a part of the solution.

APAC Energy Buzz is a weekly blog by Wood Mackenzie Asia Pacific Vice Chair, Gavin Thompson. In his blog, Gavin shares the sights and sounds of what’s trending in the region and what’s weighing on business leaders’ minds.