ENVIRONMENT: WEALTHY NATIONS UNDER PRESSURE FOR INCREASED CLIMATE FUNDING AT COP29

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At the UN COP29 summit this month, wealthy nations will face pressure to significantly boost the amount of funding they provide to developing nations for climate action.

However, there is a great deal of debate on what should be covered, who should pay, and how much is required; therefore, “climate finance” will be the main topic of discussion at COP29 in Baku.

There is no universally accepted definition of climate finance, despite the fact that it is the keyword of this year’s negotiations, which take place from November 11 to 22.

Broadly speaking, it refers to funding that is “consistent with a pathway towards low greenhouse gas emissions and climate resilient development,” as the Paris Agreement states.

This includes funding from the public or private sector for renewable energy sources like wind and solar, electric car technology, and sea level rise adaptation strategies like dykes.

For instance, might a subsidy for a brand-new hotel that uses less water qualify? The COP meetings haven’t specifically addressed it.

Climate finance has become a term used at the yearly United Nations meetings to describe the challenges the developing world faces in obtaining the funding necessary to prepare for global warming.

A 1992 United Nations agreement required a small group of wealthy nations that were primarily to blame for global warming to contribute funds.

A commitment to pay $100 billion annually by 2020 was made in 2009 by the US, the EU, Japan, Britain, Canada, Switzerland, Norway, Iceland, New Zealand, and Australia.

Only in 2022 did they accomplish this for the first time. The postponement damaged confidence and encouraged claims that wealthy nations were avoiding their responsibilities.

Nearly 200 countries are anticipated to reach a consensus on a new financing target beyond 2025 at COP29.

The countries on the hook want other major economies to contribute, but India has sought for $1 trillion annually, and some other ideas go higher.

They contend that only 30% of historical greenhouse gas emissions currently come from the large industrialised nations of the early 1990s, demonstrating that times have changed.

There is a specific desire to make the oil-rich Gulf nations and China, the biggest polluter in the world today, pay. This proposition is rejected by them.

According to UN-commissioned experts, developing nations—aside from China—will require $2.4 trillion annually by 2030.

However, the distinctions between private capital, foreign aid, and climate finance are frequently hazy, and activists are calling for more precise terminology that identifies the sources and forms of funding.

Dozens of environmental, scientific, and activist organisations urged wealthy countries to provide $1 trillion annually to developing nations in three distinct categories in a letter to governments sent in October.

Government funding for disaster relief, or “loss and damage” funds, would total around $400 billion, $300 billion for adaptation measures, and $300 billion for lowering emissions that cause global warming.

In an effort to address the provision of loans as climate finance, which poorer nations claim exacerbates their debt problems, the signatories stated that all of the funds should be grants.

Developed nations do not want any new climate finance agreement negotiated at COP29 to include funding for “loss and damage.”

The majority of climate financing assistance now passes through development banks or funds, including the Global Environment Facility and the Green Climate Fund, that are co-managed with the participating nations.

The $100 billion pledge has drawn harsh criticism from campaigners since two-thirds of the funds were provided as loans rather than grants.

Any new government guarantee, even one that is revised upward, is probably going to fall far short of what is required.

Nevertheless, this pledge is seen as extremely significant and essential to opening up more funding sources, namely private financing.

At the World Bank, the International Monetary Fund, and the G20, where Brazil is hosting this year, financial diplomacy is also evident as the country seeks to create a global tax on millionaires.

With the support of UN leader Antonio Guterres, France, Kenya, and Barbados also support the notion of new international levies, such as those on aviation or maritime transportation.

Other alternatives include wiping out poor countries’ debt in exchange for climate investments or shifting fossil fuel subsidies to clean energy.

COP29 host Azerbaijan, meanwhile, has asked fossil fuel producers to contribute to a new fund that would channel money to developing countries.

AFP