SHARM El-SHEIKH, Egypt—A new COP27 agreement that establishes a funding mechanism to compensate developing countries for losses and damages caused by global warming may be the biggest breakthrough in global climate policy since the 2015 Paris Agreement. 

The deal was reached as two weeks of nail-biting negotiations here went into overtime with little to show for all the talk. Many negotiators arrived at the conference halls Saturday morning with their suitcases packed for the trip home while facing the prospect of being called out for failing to make progress on one of the key promises of the United Nation’s effort to address increasingly severe climate change impacts like floods, droughts and deadly heat waves.

Along with finding ways to stop the buildup of greenhouse gases in the atmosphere to slow global warming, the United Nations Framework Convention on Climate Change was established in 1992 to address the fundamental inequalities of climate change impacts. Developed countries in the Global North are responsible for about 79 percent of cumulative greenhouse gas emissions, but less developed countries in the Global South have taken the biggest hit from climate change and don’t have the financial and technical resources to recover from them.

That disparity is at the heart of global climate justice and the 1992 United Nations climate framework committed all the parties to take “into account their common but differentiated responsibilities,” with developed countries committing to assist developing countries “that are particularly vulnerable to the adverse effects of climate change in meeting costs of adaptation to those adverse effects … by providing new and additional financial resources.”

The 2015 Paris Agreement added more detail by recognizing “the importance of averting, minimizing and addressing loss and damage associated with the adverse effects of climate change, including extreme weather events and slow onset events” like sea level rise.

“The issue of climate justice has been at the heart of the climate negotiations from its inception over three decades ago,” said Lavanya Rajamani, an international law expert who advised African nations at COP27. “Yet it is only now that its crucial importance in addressing climate change is being realized. The U.N. climate regime needs to place as much emphasis on adaptation, loss and damage and support as it has on target-setting for mitigation, in fairness to vulnerable nations, and in light of the increasing incidence of devastating impacts as mitigation efforts fall short.”

On Saturday at COP27, 30 years after those first promises were made, developed countries finally agreed to “establish new funding arrangements for assisting developing countries in responding to loss and damage, including a focus on addressing loss and damage by providing and assisting in mobilizing new and additional resources.”

The 11th hour deal was sealed Saturday afternoon when the United States reversed its earlier opposition and agreed to the creation of a specific loss and damage fund, surprising climate activists who just hours earlier had been excoriating the U.S. for its decades of obstruction.

This response to the long-standing demand by developing countries was overdue, said Harjeet Singh, who leads global political strategy for Climate Action Network International, an umbrella organization representing 190 civil society groups in 130 countries.

Intensifying global warming impacts require a systemic response, not just piecemeal post-disaster relief efforts, he said.

“Humanitarian aid is welcome, but was never sufficient to help people recover from these impacts,” he said, “We wanted the U.N. climate change system to come in and actually create a mechanism that can help people at scale.”

Under the framework U.N. climate treaty, “Countries with the greatest historical responsibility for emissions, and the greatest capacity to act, have committed to bear the costs of climate change,” said Brian O’Callaghan, lead researcher with Oxford University’s economic recovery project. “Rich countries should act with speed or otherwise increase their future liability.”

The complex negotiations on loss and damage featured shifting alliances among various groups of countries that, at different times in the process, put competing proposals on the table. Ahead of COP27, United States climate envoy John Kerry was careful not to commit to a specific loss and damage mechanism, promising only that the U.S. was open to talking about the issue in the coming years.

Singh said that before COP27 started, the United States appeared to be opposed to the creation of a specific loss and damage fund, preferring to talk about potentially restructuring existing climate finance mechanisms to address those climate impacts that go beyond countries’ capacities to adapt.

The collective push from developing countries and resistance from a large part of the developed world led some attendees to fear a repeat of COP15 in Copenhagen, Denmark in 2009, where a similar rift between the wealthy nations most responsible for climate change and poorer ones that are enduring its worst impacts led to an impasse.

At the end of the two-week talks in Copenhagen, world leaders dropped many of their goals for the negotiations and significantly lowered their targets. The parties agreed to recognize the scientific evidence for keeping global temperature rise below 2 degrees Celsius, but made no tangible commitments to reduce emissions in order to achieve that goal.

But this year, civil society groups applied relentless pressure during the talks, and Singh credited activists with keeping negotiators and the public focused on the topic of loss and damage. At the same time, developing countries maintained a unified front in the talks, “which actually made a huge difference in getting this over the line,” he said. Ultimately, it was the United States taking the step and backing the loss and damage funding mechanism that made the difference, he added.

The fact that the agreement came during a climate summit on a continent enduring some of the world’s most severe climate impacts gave it particular relevance. During the two-week conference, 14 flood alerts were issued for Africa, according to the International Federation of Red Cross and Red Crescent Societies.

“After 30 years a loss and damage fund is coming home and it’s coming home on African soil,” said Mohamed Adow, director of energy and climate change for Power Shift Africa on Saturday afternoon during a press conference by Climate Action Network International. 

As written, the loss and damage agreement includes views from all countries, but discussions about “some of the thorny issues around who will pay and where it (the funding mechanism) is going to be located have been moved to next year,” Singh said. “In fact, that’s exactly what we as civil society … were also demanding, because the most important thing to be done here was to establish the fund. You cannot do everything in two weeks.”

Yet to be determined is how the fund will be administered, who will pay into it, and which countries will receive money.

He said there is still a long road ahead before it actually starts helping people hurt by climate impacts, “but the important thing is we now can send a message of hope to people who are suffering right now.”

Zoha Tunio’s reporting for this story was produced as part of the 2022 Climate Change Media Partnership, a journalism fellowship organized by Internews’ Earth Journalism Network and the Stanley Center for Peace and Security.