By AFP - Agence France Presse
Climate finance: billions at stake at COP29
Benjamin LEGENDRE
Rich nations will be under pressure at this month's UN COP29 conference to substantially increase the money they give poorer countries for climate action.
However, there is deep disagreement about how much is needed, who should pay, and what should be covered, which ensures that “climate finance” will be the main issue on the agenda at COP29 in Baku.
- What is climate finance? -
This is the buzzword at this year's negotiations, which run from November 11 to 22, but there is no agreed definition of climate finance.
In general terms, it is money spent in a way that is “consistent with a pathway towards low greenhouse gas emissions and climate-resilient development,” according to the phrase used in the Paris Agreement.
This includes government or private money for clean energy, such as solar and wind, technology, such as electric vehicles, or adaptation measures, such as dykes to contain rising seas.
But could a subsidy for a new water-efficient hotel, for example, be counted? The COP summits have not addressed this directly.
In the annual UN negotiations, climate finance has come to refer to the difficulties the developing world faces in obtaining the money needed to prepare for global warming.
- Who pays? -
In a 1992 UN agreement, some of the rich countries most responsible for global warming were obliged to provide funding.
In 2009, the United States, the European Union, Japan, Great Britain, Canada, Switzerland, Norway, Iceland, New Zealand and Australia agreed to pay $100 billion a year by 2020.
They only achieved this for the first time in 2022. The delay undermined confidence and fueled accusations that rich countries were shirking their responsibility.
At COP29, almost 200 nations are expected to agree on a new financial target beyond 2025.
India has asked for US$ 1 trillion a year, and some other proposals go further, but the countries on the hook want other major economies to contribute.
They argue that times have changed and that the large industrialized nations of the early 1990s now account for only 30% of historical greenhouse gas emissions.
In particular, there is pressure for China - the world's biggest polluter today - and the oil-rich Gulf countries to pay. They don't accept this proposal.
- What is being negotiated? -
Experts commissioned by the UN estimate that developing countries, excluding China, will need US$ 2.4 trillion a year by 2030.
However, the line between climate finance, foreign aid, and private capital is often blurred, and activists are pushing for clearer terms that specify where the money comes from and in what form.
In a letter sent to governments in October, dozens of activist groups, environmentalists, and scientists called for rich nations to pay developing countries $1 trillion a year in three clear categories.
Around $300 billion would be government money to reduce emissions of planet-warming gases, $300 billion for adaptation measures, and $400 billion for disaster relief, known as “loss and damage” funds.
The signatories said that all the money should be earmarked for donations, seeking to offset the granting of loans such as climate finance, which, according to the poorest countries, aggravate their debt problems.
The developed countries do not want the money for “loss and damage” to be included in any new climate finance pact reached at COP29.
- Where will they find the money? -
Currently, most of the financial aid for the climate is provided through development banks or funds managed jointly with the countries involved, such as the Green Climate Fund and the Global Environment Facility.
Activists are very critical of the $100 billion pledge because two-thirds of the money has been granted as loans, not grants.
Even revised upwards, any new pledge from governments is likely to fall far short of what is needed.
But even so, this commitment is seen as highly symbolic and crucial to unlocking other sources of money, namely private capital.
Financial diplomacy also takes place at the World Bank, the International Monetary Fund, and the G20, where Brazil, this year's host, wants to create a global tax on billionaires.
The idea of new global taxes, for example, on aviation or maritime transport, is also supported by France, Kenya, and Barbados, with the backing of UN chief Antonio Guterres.
Redirecting fossil fuel subsidies to clean energy or writing off the debt of poor countries in exchange for climate investments are also among the options.
Meanwhile, COP29 host Azerbaijan has asked fossil fuel producers to contribute to a new fund that would channel money to developing countries.
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