Should the richest nations compensate the developing world for climate change?

That's up for debate at this month's climate conference.
A compensation fund has been agreed to at the UN climate summit

The 27th global climate conference started this week in Egypt.

Climate conferences have often focused on setting targets to reduce emissions.

This time, in the wake of more frequent natural disasters, there’s also heightened focus on a different question: as the consequences of climate change arrive, do the world’s wealthiest countries owe the developing world compensation?

Here’s the background.

Where we stand

Since the conference in Paris in 2015, most of the world has been committed to keeping warming “well below” 2ºC – aiming for 1.5ºC.

The latest research suggests the consequences of 2ºC are much worse than 1.5ºC, but that there will be significant consequences at either level. The world is not currently on track to reach either goal.

Extreme weather events are already occurring more frequently, putting a sharper focus on the need to adapt as well as prevent.

The developing world

Developing countries are often strong in calling for urgent action on climate change. Many are already seeing the effect of extreme weather on farming and food security. For small island nations in the Pacific and the Caribbean, rising sea levels threaten to wipe them out altogether.

Representatives from these countries often emphasise that wealthier countries, which developed industrial capacity first, have contributed the most to the problem, and argue they should lead the way in fixing it.

One example of this argument was a speech earlier this week by the Prime Minister of Barbados, a small Caribbean island nation. Mia Mottley said it was “fundamentally unfair” that the same countries once colonised by industrial powers, whose “blood, sweat and tears financed the industrial revolution”, should now also have to “pay the cost”.

Barbados has a population smaller than Canberra’s, and its contribution to global emissions is very small. However, a similar argument is also made by China, which believes it should not be expected to take the lead because it industrialised relatively recently.

China’s emissions

This has bigger implications because China is the biggest overall emitter by a very long way. In 2020 it accounted for about 31% of global emissions. Every high-income country combined, including the U.S. and Australia, accounted for 34%.

However, much of this is due to its large population. Measured in per person terms, the worst emitters include Saudi Arabia, Kazakhstan, Australia, the U.S. and Canada.

Measured in terms of all-time emissions, the U.S. is the highest and China is second. Wealthy countries account for more than half the historical total.

Splitting the bill?

Exactly how these different figures should be used to assign ‘responsibility’ for reducing climate change has been a continual sticking point at climate conferences.

At the 15th conference in Copenhagen in 2009, wealthier countries agreed to annually contribute a collective $US100 billion to fund emissions reductions in developing countries. However, OECD monitoring indicates the goal of $100 billion a year has never been met.


This time, the focus will be on money for adaptation: there are calls for a separate fund to support developing countries when they are hit by climate-induced extreme weather events.

The idea of a “loss and damage fund” has been resisted by wealthier countries in the past. However, it has been added to the agenda this week after calls from countries like Pakistan, which has been hit by major flooding and extreme heatwaves in the same year. The conference is not expected to finalise a fund, but may agree on some general principles to support further work.

In opening remarks at the conference, United Nations Secretary-General António Guterres said the cost of “loss and damage can not be swept under the rug”.

“It is a moral imperative. It is a fundamental question of international solidarity – and climate justice. Those who contributed least to the climate crisis are reaping the whirlwind sown by others.”

He emphasised that both the U.S. and China had a “particular responsibility” to lead efforts as the world’s two largest economies. “This is our only hope of meeting our climate goals… it is either a Climate Solidarity Pact – or a Collective Suicide Pact,” Guterres said.

In the first days of discussions, several European leaders have supported the idea of loss and damage compensation. Governments from Scotland, Ireland, Austria, Belgium, Denmark, and Germany have all promised to contribute small amounts of funding.

The U.S. hasn’t made any specific commitments, but a Government spokesperson expressed a desire “to see the loss and damage issue dealt with upfront and in a real way”.

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