Climate disaster aid scheme ‘Global Shield’ launched at COP27

The concept is being spearheaded by the G7 and intends to swiftly offer insurance and protection cash following catastrophic catastrophes.

At the United Nations COP27 meeting, the Group of Seven (G7) unveiled a proposal to offer financial aid to nations hit by climate disasters. The concept is called Global Shield, but its efficacy has been questioned.

Launched on Monday, the initiative was coordinated by Germany, the current president of the Group of Seven, and the Vulnerable Twenty (V20), a group of nations most vulnerable to the effects of climate change.

In the next months, the Global Shield will create support to be deployed in countries like Pakistan, Ghana, Fiji, and Senegal, with money from donors like Germany (170 million euros; $175m) and other nations like Denmark and Ireland (40 million euros; $41m).

Some nations and activists were wary of the proposal for fear that it would undermine negotiations for a fair settlement of compensation for "loss and damage," the UN term for the irreversible effects of climate change.

Svenja Schulze, the German minister for development, emphasized that the Global Shield was not meant to replace existing efforts to reduce loss and harm.

Schulze clarified that this was not an attempt to sidestep the need for an open dialogue on how to allocate the costs of any losses that may occur. "There are other ways to deal with loss and damage besides using Global Shield. Unquestionably not. Multiple approaches are required.

"Loss and damage" due to climate change might cost vulnerable countries as much as $580 billion annually by 2030, according to some estimates.

Global Shield's formation was deemed "far overdue" by V20 group head and Ghana's finance minister Ken Ofori-Atta.

In prepared remarks, he stated, "It has never been a matter of who pays for loss and damage because we are paying for it." This was expressed during the summit in the Egyptian tourist town of Sharm el-Sheikh.

Companies and communities suffer losses in productivity and human lives are sacrificed.

However, certain low-emitting, low-contributing countries have questioned the scheme's emphasis on insurance, as insurance costs add yet additional financial burden to an already difficult situation.

Avinash Persaud, special adviser on climate financing to Barbados Prime Minister Mia Mottley, told Reuters, "We are not yet persuaded, especially of the insurance components."

Loss and damage financing, he said, should be based on grants, whereas insurance is a system in which the sufferer pays, although in installments at first.

The percentage of grant money in the Global Shield budget that has been announced so far was not immediately known.

Alliance of Small Island States negotiator Michai Robertson said this week that even subsidized insurance premiums could allow insurance companies in wealthy countries to profit off the suffering of poor and vulnerable nations. This group is leading calls for a new United Nations loss and damage fund in the ongoing talks.

He argued that it was unfair that they were making money off of our misfortune.

Longer-term climatic consequences, such as rising sea levels and dangers to cultural assets, would likely be covered by a structured loss and damage financing stream.

Since 2000, the V20 group of poor countries has projected that their collective economy has lost almost $525 billion due to climate change.

Nearly 1.5 billion individuals in V20 nations do not have any form of financial security, the report found.

Rachel Cleetus, head economist at the Union of Concerned Scientists' climate programme, told the AFP news agency, "We're talking about individuals living below the poverty line; they're not going to be buying insurance."

She said that "insurance can help you up to a point," but that sea level rise, desertification, and the mass relocation of communities are "beyond the confines of what's insurable" due to climate change.

ActionAid International's Teresa Anderson said the program was a "distraction" from discussions on a dedicated finance mechanism for climate damages, but that it demonstrated that the international community recognized the need to act on loss and damage.

By their very nature, insurance firms are hesitant to either give coverage or pay out, she added.

It's a question of life and death if there's a lot of damage or loss.

SOURCE:NEWS AGENCIES