The UN COP29 conference, which is scheduled to be held, from 11 November to 22 November in Baku, might pressurize rich countries to increase their contribution to ‘climate finance’ for poor countries by hundreds of billions of dollars.
Climate finance is likely to be the top agenda at the conference amid disagreements on how much is needed, who should pay and what should be covered in it.
Climate finance
Though there is no universally agreed upon definition of climate finance, as per the Paris agreement, it refers to the money spent in a manner “consistent with a pathway towards low greenhouse gas emissions and climate-resilient development.” It includes government or private money to promote clean energy like solar and wind, technology like electric vehicles, or adaptation measures like dykes to hold back rising seas.
At the UN negotiations, climate finance is discussed to resolve the difficulties faced by the developing world and use the money to prepare for global warming.
At present, most climate finance assistance is transacted through development banks or funds that are co-managed with the countries involved, like the Green Climate Fund and the Global Environment Facility.
Which nations pay
Under a 1992 UN accord, a handful of rich countries that are most responsible for global warming are obligated to provide finance. In 2009, the United States, the European Union, Japan, Britain, Canada, Switzerland, Norway, Iceland, New Zealand and Australia agreed to pay $100 billion per year by 2020, however, this was achieved for the first time in 2022. The delay in paying eroded the trust of developing countries and fuelled accusations that rich countries were shirking their responsibility.
Nearly 200 nations are expected to agree on a new finance goal beyond 2025 at COP29.
India has proposed a call for $1 trillion annually, with some other proposals suggesting even higher amounts.
However, the responsible countries request other major economies to contribute as well, arguing that there is a huge difference between 1990 and 2024 economies as big industrialized nations in the 90’s represent only 30 percent of historic greenhouse gas emissions today.
China is particularly pushed for being the world’s largest polluter, along with the gulf countries. But this proposal has not yet arrived at a conclusion.
Negotiations
UN commissioned experts estimate that apart from China, other developing countries would require $2.4 trillion per year by 2030.
The distinction between climate finance, foreign aid and private capital is often unclear and campaigners are pushing for transparency to specify where the funds come from, and in what form.
Grants instead of loans
According to AFP, coallations of activists, environment and scientific organizations wrote to governments in October asking rich nations to pay $1 trillion a year into three clear categories.
Around $300 billion would be government money for reducing planet-heating emissions, $300 billion for adaptation measures and $400 billion for disaster relief known as “loss and damage”.
Developed countries, however, are opposed to including funds for “loss and damage” in any new climate finance agreement reached at COP29.
Campaigners are also critical of the $100 billion pledge because two-thirds of the money was given as loans and not grants. The signatories believe that all the funds should be given as grants, instead of loans, as loans could worsen debt problems for poorer countries.
Alternatives
France, Kenya and Barbados support the idea of new global taxes, for example on aviation or maritime transport, with the backing of UN chief Antonio Guterres.
Redirecting fossil fuel subsidies to support clean energy or canceling the debt of poorer countries in return for climate investments are also potential solutions.