Countries are deadlocked over how to design a fund to help countries recover and rebuild from climate change-driven damage, with just over 30 days left before crucial United Nations climate negotiations kick off in Dubai.
Two dozen countries involved in a committee tasked with designing a "loss and damage" fund wrapped up the last meeting in the early hours of Saturday in Aswan, Egypt, with developing and developed countries at odds over central questions: which entity should oversee the fund, who should pay and which countries would be eligible to receive funding.
The committee was expected to draft a list of recommendations for implementing the fund, which was agreed in a breakthrough last year at COP27 in Sharm el-Sheikh, Egypt, and would be the first UN fund dedicated to addressing irreparable climate-driven damage from drought, floods and rising sea levels.
Instead, the group agreed to meet one more time in Abu Dhabi on Nov 3 before the COP28 UN summit begins in Dubai on Nov. 30 to try to bridge divisions, which could set the tone for the two-week climate negotiations.
"The entire COP28 negotiations could get derailed if developing countries’ priorities on funding for loss and damage are not adequately addressed," said Preety Bhandari, a senior adviser on finance at the World Resources Institute.
Among the most contentious issues last week was whether the World Bank should host the fund - a position pushed by the US and developed countries - or whether the UN create a new body to run the fund, as developing countries have urged.
Housing a fund at the World Bank, whose presidents are appointed by the United States, would give donor countries outsized influence over the fund and result in high fees for recipient countries, developing countries argue.
"Its operational culture, the way in which the World Bank has been assisting countries in their development policies, I think it's not fit for purpose in relation to what we're looking for from this new climate facility," said Cuba's UN Ambassador Pedro Pedroso Cuesta, chair of the G77 (developing countries) and China.
He said the creation of a "new independent entity" to run the fund is the core of its position.
In response to these criticisms, a spokesperson for the World Bank told Reuters: "We are supporting the process and are committed to working with countries once they agree on how to structure the loss and damage fund."
The United States, the European Union and others want a more targeted fund. The EU wants a fund dedicated to the most "vulnerable" while the US has said the fund should focus on areas like slow-onset climate impacts such as sea-level rise.
Countries are also split over who should pay.
Brandon Wu, director of policy & campaigns for NGO ActionAid USA called on the United States to back off its insistence that the World Bank house the fund.
US negotiator Christina Chan, a senior adviser to Special Envoy on Climate John Kerry, pushed back on criticism that the US is obstructing progress on loss and damage.
"We have been working diligently at every turn to address concerns, problem-solve, and find landing zones," she said.