Climate Finance: Tackling Loss and Damage

(Limited Text - Ministerial Extracts only)

Tuesday 5th September 2023 Westminster Hall

[The Parliamentary Under-Secretary of State for Foreign, Commonwealth and Development Affairs (Leo Docherty)]

It is a great pleasure to be here, Mr Betts. I am responding on behalf of the Minister for Development and Africa, my right hon. Friend the Member for Sutton Coldfield (Mr Mitchell). He would have taken this debate, but he is currently in Kenya attending the Africa climate summit, appropriately enough. It is my pleasure to respond in his place.

We are all grateful to the hon. Member for Dundee West (Chris Law) for securing this important debate. I pay tribute to him for to his ongoing work on the International Development Committee. We have heard a series of powerful, interesting and passionate speeches this morning, and I am grateful for all of them.

As the debate has highlighted, floods, heat, storms and droughts triggered by climate change are increasingly threatening lives, homes and livelihoods. Poor, vulnerable and marginalised communities around the world, and women, girls and disabled people in particular, are disproportionately affected. The loss and damage are immense. As we discussed, last year’s devastating floods in Pakistan claimed 1,700 lives, put a third of the country underwater and left more than 20 million people in need of humanitarian assistance. That is why, at COP27, the UK and international partners agreed to set up a new funding arrangement for loss and damage, including a new dedicated fund, in response to concerted calls, especially from our colleagues in the small island developing nation states and least developed countries, for greater global action.

There is now widespread recognition of the scale of the need arising from climate impacts, and that new ways of working and new solutions are needed. This debate is very timely: we are only three months away from COP28, where the transitional committee on loss and damage established at COP27 will report its conclusions. As a member of the committee, the UK has been actively and closely engaged in this process, alongside colleagues from developing and developed countries. The third meeting of the committee, in the Dominican Republic, has just wrapped up, and there is one more to go before parties meet in Dubai.

Within and beyond the COP process, the UK has played a leading role in tackling climate change, recognising the absolute necessity of reducing emissions to avert loss and damage. We have decarbonised faster than any other G7 country and signed net zero by 2050 into law. We are supporting international efforts and ambition to decarbonise through key initiatives, including the just energy transition partnerships, and we are funding a broad range of activities that avert, minimise and address loss and damage.

At COP27, the Prime Minister reaffirmed the UK’s £11.6 billion climate finance pledge to vulnerable countries across the world and announced that the UK will triple climate adaptation funding to £1.5 billion in 2025, alongside the £1.5 billion we are investing in protecting the world’s forests and £3 billion to protect and restore nature. This funding will help countries as they build their resilience, prevent biodiversity loss and reduce emissions, all of which are vital as we attempt to prevent and address loss and damage.

[Sarah Champion]

I am grateful to the Minister for outlining all the pledges that have been made, but is he able to say how much of the money has delivered, and whether it is new money or coming out of the existing ODA budget?

[Leo Docherty]

It is of course part of the ODA spend.

The UK invested £2.4 billion worth of international climate finance between 2016 and 2020 into adaptation, including investments in areas relevant to loss and damage—the subject of this debate. That included about £196 million on financial protection and risk management, £303 million on humanitarian assistance, and £396 million on social protection. To give a specific example, I mentioned the dreadful floods in Pakistan last year, and the UK offered significant support in the aftermath of that disaster. This included support for water, sanitation and hygiene, to prevent waterborne diseases, nutrition support, and shelter and protection for women and girls. In total, the UK provided £36 million in support following the flooding, on top of the £55 million we had already pledged for climate resilience and adaptation in Pakistan.

The UK is doing what it can to help avert, minimise and address loss and damage from climate change, but given the scale of the challenge, we know we have to be more creative in the ways we support countries to manage the impacts, and that includes developing new financial mechanisms to provide support. An example of this is the Taskforce on Access to Climate Finance, launched by the UK in partnership with Fiji. The taskforce is working to make it easier for the most vulnerable countries to take advantage of the climate finance that already exists.

The taskforce was launched following the UK-hosted climate and development ministerial in 2021. I am pleased to see that there will be a third climate and development ministerial held this year, with the UK, UAE, Vanuatu and Malawi co-hosting an event on how better development and climate actors can work together, which will build on the success of the first two.

On top of that, at the summit for a new global financing pact in Paris in June, the Minister of State, Foreign, Commonwealth and Development Office, my right hon. Friend the Member for Sutton Coldfield (Mr Mitchell), announced that UK Export Finance had started discussions with 12 partner countries in Africa and the Caribbean to add climate resilient debt clauses to new and existing loan agreements. That builds on the announcement at COP27 that UKEF would be the first credit export agency to offer those clauses, which allow Governments to delay their debt repayments and free up resources to fund disaster response and recovery.

[Chris Law]

I am listening to an exhaustive list of the things that the Government claim they are doing, but I have not once heard that there is any new additional money for loss and damage outwith the budgets already in existence through ODA. After all, that is what the debate is about. Will the Minister tell us whether there is new finance? Or will he follow the suggestion made by several Members regarding the polluter pays principle, and consider financing it out of the more than half a trillion a year of subsidies and excess profits for fossil fuel companies?

--- Later in debate ---

[Leo Docherty]

I grateful for that question and it is, of course, too early for the UK to say whether or how much we might commit to any dedicated loss and damage fund, because the work of the transitional committee has not yet concluded. We will assess the value of the contribution once the modalities of the fund are set. It is too early to say, and I am sure the hon. Gentleman appreciates that.

The UK also provides significant support to disaster risk finance—prearranged finance that is disbursed automatically to Governments and first responders such as the UN and NGOs if an event exceeds a pre-agreed magnitude. Through disaster risk financing programmes, we have provided over £200 million since 2014. With partners including Germany, the UK has set up regional insurance schemes in Africa, the Caribbean, south-east Asia and the Pacific that help countries get reduced premiums by buying insurance as a group. Those schemes often pay out significant sums that help countries get back on their feet following a disaster. That is just some of the work the UK is doing to avert, minimise and address loss and damage, providing official development assistance and delivering reforms that help countries cope with climate change. The work of the transitional committee and the new loss and damage fund will build on the steps taken so far, and I look forward to their recommendations to parties at COP28.

In conclusion, the UK recognises that the impacts of climate change are leading to loss and damage, and that is likely to get worse. More needs to be done at global, regional and local levels to help countries and communities avert, minimise and address these catastrophes. We are playing our part, with our £11.6 billion ICF commitment, the fastest emissions reduction in the G7 and support for countries across the world as they reduce their emissions and build resilience.

When loss and damage occurs, the UK is regularly one of the first nations stepping up to provide support, enabling countries to bounce back quickly. COP27 was a major milestone for loss and damage. The UK is working with countries across the world to make sure that the new funding arrangements deliver for the most vulnerable, and we look forward to making further progress on that at COP28.