Wealthy nations risk undermining the loss and damage fund’s plan to deliver $250 million in aid next year to climate-vulnerable countries hit by extreme weather, board members from developing nations said this week.

While rich nations have pledged $789 million, they have only transferred $348 million so far to the Fund for Responding to Loss and Damage (FRLD), which all governments agreed to set up two years ago under the UN climate talks and is now in its start-up phase.

Speaking on behalf of developing-country board members, Honduras’s representative Elena Cristina Pereira Colindres expressed “concern” during a press briefing, adding that “transparency and predictability” on when the money would be paid is lacking.

Pereira did not name individual countries, but Italy, the European Union and Luxembourg are the three donors that have promised money but not said when it will be given.

Other nations – like the United Arab Emirates, Australia and Sweden – are drip-feeding their promised pledges, only giving a part of them each year.

Pereira said that these “multi-year disbursement schedules” severely limit the ability of the fund’s board to determine how much money they can spend and reduces “overall confidence in our partners’ commitments to long-term capitalisation of the fund”.

“Lemonade-stand money”

While the fund’s board has agreed to spend $250 million next year, Pereira said this “must not be used or considered as an indication of the future scale of the fund” because the needs are in the “hundreds of billions”.

A 2024 study in Nature found that climate change is causing $395 billion of loss and damage each year. Developing countries have called for developed nations to provide $100 billion in loss and damage finance per year by 2030.

On Wednesday, Daniel Lund, Fiji’s representative to the fund, told the FRLD board meeting in the Philippines that the amount the fund currently has is just “lemonade-stand money”, adding that is about a quarter of what it costs to build a coal-fired power plant.

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The fund’s board is drawing up a plan to get more money – known as a resource mobilisation strategy – due to be ready by the end of 2025. “It is of crucial importance to the constituency that this fund that was established for all developing countries serves their collective needs at the scale that is needed,” Pereira said.

In April, the fund approved a strategy for the initial $250 million start-up phase, in which it agreed to give out grants of between $5 million and $20 million to project proposals submitted by developing countries.

Priority for private finance?

With funds scarce, the secretariat which runs the FRLD has proposed that projects that bring in extra sources like private-sector finance should be judged favourably by the board.

But some developing-country board members and climate campaigners pushed back at the board meeting against adding this practice, known as leveraging, into the mix.

Egypt’s representative Mohamed Nasr said he had “a very strong concern” about the idea. “This should not be part of any criteria when we deal with loss and