What could a Loss and Damage Mechanism look like for climate change?

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The next big negotiation topic under the Paris Agreement is Loss and DamageThe topic of climate change has gained much greater exposure in the minds of the public at large over the past decade, which is great for a topic that governments have been working to addressed for nearly 30 years. For example, many global citizens will not be able to explain what the Kyoto Protocol (2008-2012) was, but more than likely they will recognize the Paris Agreement (from 2015 to now). Many will even be able to explain what climate change is with some detail, as well as the possible effects on their lives in the future. It is their future that the Paris Agreement focuses on, mainly by addressing the two big elements of greenhouse gas (GHG) mitigation and adaptation to climate change. There is however, one other element that has received less attention until now, and this is Loss and Damage, the subject of this opinion article.
For those not familiar with detailed climate change and UNFCCC jargon then I apologies in advance!
What is Loss and Damage?To keep it short, Loss and Damage is enshrined as Article 8 of the Paris Agreement and is recognizes specifically with the Warsaw Loss and Damage Mechanism. The basics are quite simple, in the future the climate will change and there will be Loss and Damage (both economic and non- economic) suffered by our global population and the environment. Article 8 was included to allow for actions to avert, minimize, and addressing Loss and Damage. With the idea that these actions should be addressed through cooperation and support in eight pre-defined areas, with the clear context that this support needs to be paid for and distributed under the principles of equity.
What is the current debate on Loss and Damage?The definition for the mechanism and financing for Loss and Damage has been under formal discussion (and I would argue debate) since the 2014 establishment of the Warsaw Loss and Damage Mechanism. This formal discussion is continuing right now at the Bonn Climate Change Conference (June 2022) but is still stuck in semantics. However, there are three key areas that the current discussion revolves around, and I offer an opinion for possible solutions to kick the discussions into a more operational phase. These key areas are culpability, financing, and equity.
How can we determine culpability within Loss and Damage?There is little debate of where the majority of past GHG emissions have originated (e.g. developed countries), but there is very much a debate on where GHG emissions will come from the future. It can be argued that future loss and damage from climate change will be caused by the combination of both past and future GHG emissions, and thus culpability can be measured in this context. On one side we have the historic large emitters of the US, EU-27 + UK, and Japan who are currently lowering their national GHG emissions, while on the other side we have China and India who are currently increasing their national GHG emissions. This leads to the question of how to define and measure the level of culpability.
Culpability can be defined by the history of the UNFCCC process itself. Where the first global acknowledgment by governments of climate change and its risks was with the Rio Convention in 1992, and UNFCCC establishment in 1994. Another process determined that developed countries should report on their GHG emissions starting from 1990 and developing countries starting from 1994 onwards. This accounting for GHG emissions is based on the original 1996 guidelines established by the Intergovernmental Panel on Climate Change (IPCC), and now countries are using the 2006 guidelines. This process offers a time based and quantitative definition of culpability since countries ratified the UNFCCC and legally reported their GHG emissions under the UNFCCC, while doing so in a scientifically accepted manner.
Following the above argument means that culpability can be measured as the historic GHG emissions from the date of the first reported GHG inventory by each of the parties to the UNFCCC, and up to any specific date both now and in the future. We can refer to this as the “Culpable Emissions”. This means that the balance of current Culpable Emissions will definitely reside with US, EU-27 + UK, and Japan in the beginning, but likely shift towards China and India in the long term given current trends and NDC commitments. 
How do we finance Loss and Damage in a transparent way?The economic component in the Loss and Damage context of the Paris Agreement focuses on areas of enhanced understanding, actions, and support. In practice these areas have both a knowhow and financial cost that needs to be supported.
Financing can be done with a new pledge for providing additional funds. Similar to the Copenhagen Accorded pledge of developed countries to provide US$ 100 bn annually in climate finance, but instead the Loss and Damage funding can require all UNFCCC parties to contribute capital on an annual basis based on their share of measured global Culpable Emissions in that year. The annual capital need should of course be determined by a political process, and hopefully based on the support needs of countries quantified by the UNFCCC or other UN agency. This means that countries like Palau, Kiribati, and Nauru will pay close to nothing, but all large emitters will contribute to the vast majority of the capital. This creates an additional financial incentive for countries to reduce their Culpable Emissions over time.
Support for climate change is traditionally disturbed through the UN system / UNFCCC mechanisms (e.g. GEF and GCF), as well as through multilateral and bilateral support. There is a current debate to establish an individual loss and damage fund, but this an unnecessary waste of money and time. Each fund has a start up and operational administration cost which eats away at the money being distributed, and if the GCF is any indication it can take 5 to 10 years to see any real impactful results from a new fund. It is also noted that GEF, GCF, multilateral, and bilateral support are already funding projects that fit within the loss and damage areas. 
A solution for separating finance flows for loss and damage, from finance flows for mitigation and adaptions actions, is simply to piggyback on top of the existing work being done globally on climate tagging of public and multilateral funds. Then there is a real opportunity to report the support for loss and damage as a sperate category in the already establish Paris Agreement modalities, guidelines, and procedures and guideline for enhanced transparency (18/CMA.1 and 5/CMA.3).
How can equity be addressed within Loss and Damage?Equity is both a political and social & environmental justice topic that in the context of Loss and Damage under the Paris Agreement, it has three components of culpability, sources of capital, and disbursement of capital. The potential solution for culpability and sources of capital are previously discussed, but the equity of disbursement of capital is just as important.
It can be argued that developed countries do not need Loss and Damage support, as their economies have a much greater availability of capital and income to support Loss and Damage themselves. Support should go to developing countries and be delivered upon request to these countries (similar to existing mechanisms), but each country will have an allocated available share of the capital that can be measured by a per-capita climate vulnerability index. The index can be developed in a similar manner to risk indexes that are commonly used in the insurance sector. This may be a little messy at first but will be strengthened over time as more transparent and accurate data becomes available in countries. 
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About the authorDoulgas Marett has spent close to two decades addressing climate change and sustainability actions for governments and companies at a global scale, and is the CEO of GH Sustainability and Managing Director of @enablesus

Douglas Marett
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Negotiations on Loss and Damage came to no real conclusion at the end of climate negotiations in Bonn this week. https://www.theguardian.com/environment/2022/jun/17/un-climate-talks-stalemate-hypocrisy-allegation-european?CMP=Share_AndroidApp_Other
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Douglas Marett
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Some more insights into the current financing of Loss and Damage from WRI: https://www.wri.org/insights/current-state-play-financing-loss-and-damage?utm_campaign=wriclimate&utm_source=climatedigest-2022-06-05&utm_medium=email&utm_content=title
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Sarah Chabane
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A very interesting article on a key topic for a fair climate transition
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Marine Stephan
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very interesting, thank you for sharing
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What could a Loss and Damage Mechanism look like for climate change?

The next big negotiation topic under the Paris Agreement is Loss and Damage

What is Loss and Damage?

What is the current debate on Loss and Damage?

How can we determine culpability within Loss and Damage?

How do we finance Loss and Damage in a transparent way?

How can equity be addressed within Loss and Damage?

About the author

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