Government ministers and negotiators from close to 200 nations eventually reached an agreement on Sunday to establish a new fund to reimburse underdeveloped countries for the “loss and destruction” caused by extreme weather made worse by climate change.

The decision, made in the wee hours of Sunday morning, also reiterated efforts to keep the increase in global temperature to the critical level of 1.5 degrees Celsius above pre-industrial levels.
In the midst of escalating geopolitical tensions, more frequent extreme weather conditions, and a worsening energy crisis, the two-week-long COP27 climate summit was held in Egypt’s Red Sea tourist town of Sharm el-Sheikh.

Even though a rush of U.N. reports released prior to the meeting demonstrated how near the planet is to irreversible climate breakdown, delegates struggled to reach consensus on a variety of problems.

The degree of disagreement among climate envoys caused discussions to continue over the deadline on Friday, and activists have accused the United States of playing a “very obstructive” role by obstructing the demands of developing nations.

Battles over whether to name all fossil fuels or just coal in the decision language and whether to establish the “loss and damage” fund for nations affected by climate-related disasters were two of the major sticking issues.

Many believed that the success of the conference depended on persuading wealthier nations to agree to establish a new fund because the bitterly contentious and emotionally charged topic of loss and damage dominated the U.N.-mediated talks.
As the first time that loss and damage money was formally added to the COP27 agenda, the conference created history. Climate-vulnerable nations first brought up the subject 30 years ago.

The European Union announced late on Thursday that it would be willing to support the demand of the G-77 group of 134 developing nations to establish a new reparations fund, raising hopes of a breakthrough on loss and damage afterwards.

Some countries in the Global South applauded the proposal, but activists criticised it as a “poison pill” because the bloc claimed it would only help “the most vulnerable countries.”

The establishment of a fund to remedy loss and damage has long been opposed by wealthy nations, and many policymakers worry that acknowledging responsibility might spark a wave of legal actions from nations at the forefront of the climate disaster.
The deal was announced at around 4 a.m. local time after tense negotiations that lasted all night. Many delegates were exhausted by this point.

There has been some dissatisfaction over the lack of emphasis on increasing targets to reduce emissions, and there are still a lot of details to be worked out regarding the loss and damage fund, including the difficult question of which countries will contribute to the fund.