Government negotiators have finally agreed on a tentative plan to compensate poor countries for the unavoidable impacts of climate change through a loss and damage fund, to be initially hosted by the World Bank.

Earlier this month, after a year of talks, a transnational committee in Abu Dhabi “broke deadlocks and found common ground to deliver clear recommendations” for the fund agreed upon at COP 27 talks in Egypt last year, said COP 28 president Sultan Al Jaber. Parties must seal the deal at this year’s COP 28 session in Dubai, as “billions of people, lives, and livelihoods who are vulnerable to the effects of climate change depend upon the adoption of this recommended approach.”

The agreement was deemed “a win and a warning” by New York Times reporter David Gelles. Though necessary and long overdue, its US$500-million initial target size is far short of the trillions needed to pay for climate disasters, and the deal’s “tortuous process” indicates tensions that will shape climate negotiations this December.

“If we failed, it would have broken the COP,” said Avinash Persaud, the climate adviser to Barbados Prime Minister Mia Mottley who represented Caribbean nations in the talks. “It would not have been at all tenable to say we are going to push developing countries to do mitigation, we’re going to push developing countries to be investing more in adaptation, but we don’t really care too much about loss and damages.”

Loss and damage funding has been delayed for more than a decade, after wealthy nations in 2009 initially committed to mobilizing US$100 billion per year by 2021.

After governments finally agreed to set up the fund last year, countries assigned a 24-member committee to figure out the details and report back to COP 28, where global leaders could ratify the plan. Recent negotiations took place over five meetings, the fund was at risk as recently as late October, and many countries are reportedly unhappy with the outcome.

“I don’t think anybody got everything they wanted,” Persaud said.

Developing countries are pushing for more concrete commitments and specific language, but richer countries are trying to weaken their commitments and include other countries—like Singapore, Qatar, and Saudi Arabia, which are all wealthier but considered developing—among those paying into the fund. As a compromise, the agreement “urges” developed countries “to continue to provide support” but only “encourage[s]” other countries to do so.

The United States tried to insert language that would make contributions voluntary.

“We regret that the text does not reflect consensus concerning the need for clarity on the voluntary nature of contributions; any contributions to funding arrangements, including to a fund, are on a purely voluntary basis,” the U.S. State Department said.

U.S. negotiator Christina Chan’s last-minute bid to weaken the responsibility of developed countries to pay into the fund was rejected by the committee’s co-chairs, who said it was a “take it or leave it” text as there was no time left to negotiate, reports Climate Home News.

Countries also disagreed over who should be able to receive money from the fund, which the COP 27 agreement said should be restricted to countries that are “particularly vulnerable.” All developing countries say they are particularly vulnerable, but developed countries wanted to restrict funding to small island developing states (SIDS) and the world’s least developed countries (LDCs).

As a compromise, the deal did not provide an agreed definition of vulnerability.

There was also skepticism around housing the fund at the World Bank, which is considered to be strongly influenced by wealthy countries—especially the bank’s largest shareholder, the U.S.

While the transitional committee recommended the fund’s governing board include a majority of developing country members, hosting the fund within the World Bank will still give donor countries a disproportionate influence, University College London professor Lisa Vanhala writes in the Conversation.

As it stands, the board will included representatives of 12 developed and 14 developing countries, Climate Home News says.