The G7-led “Global Shield” plan to provide funding to countries suffering from climate disasters was unveiled on Monday at the United Nations COP27 summit, though some questioned its effectiveness.
It aims to quickly provide pre-arranged insurance and disaster protection funding after events such as floods, droughts, and hurricanes strike, and is coordinated by Group of 7 president Germany and the V20 group of climate-vulnerable countries.
The Global Shield will develop support to be deployed in countries such as Pakistan, Ghana, Fiji, and Senegal in the coming months, backed by 170 million euros ($175.17 million) in funding from Germany and 40 million euros from other donors such as Denmark and Ireland.
However, some countries and campaigners were concerned that it would jeopardize efforts to reach a substantive agreement on financial assistance for so-called “loss and damage” – the United Nations jargon for irreparable damage caused by global warming.
Svenja Schulze, Germany’s development minister, stated that the Global Shield aimed to supplement, rather than replace, progress on loss and damage.
“It is not a strategy to avoid formal negotiation on loss and damage funding arrangements here,” Schulze explained. “Global Shield is not the only answer to loss and damage. Definitely not. We require a diverse set of solutions.”
According to some research, vulnerable countries could face $580 billion in climate-related “loss and damage” per year by 2030.
Ghana’s finance minister, Ken Ofori-Atta, who chairs the V20 group of vulnerable countries, said the Global Shield’s creation was “long overdue.”
However, some vulnerable countries questioned the scheme’s emphasis on insurance, arguing that insurance premiums add another cost to cash-strapped countries with low carbon emissions and contributed the least to climate change causes.
“We are still not convinced, particularly on the insurance front,” Avinash Persaud, Special Envoy on Climate Finance to Barbados Prime Minister Mia Mottley, told Reuters.
“Using insurance is a method in which the victim pays, but only in installments at first,” he explained, adding that loss and damage financing should be grant-based.
It was unclear how much of the Global Shield funding announced thus far was in the form of grants.
According to Michai Robertson, a negotiator for the Alliance of Small Island States, which is championing calls for a new United Nations loss and damage fund in the talks this week, even subsidized insurance premiums could allow insurance companies in wealthy countries to profit from the suffering of poor and vulnerable nations.
“There’s an inherent injustice in them profiting from our loss and damage,” he explained.