The 29th Conference of the Parties (COP) of the United Nations Framework Convention on Climate Change (UNFCCC) is currently underway in Baku, Azerbaijan. Having been held in Dubai last year, COP29 marks the second consecutive year of the conference being hosted by a major fossil fuel producer. A group of scientists and climate experts – including former UN secretary-general Ban Ki-moon, the former president of Ireland Mary Robinson, and the former UN climate chief Christiana Figueres – have written an open letter to the United Nations climate chief Simon Stiell, calling for major changes in the COP process, including eligibility criteria for host nations to exclude countries who do not support the phase out and transitioning away from fossil energy, as well as for the meetings to be streamlined and held more frequently.
This year’s COP has been dubbed the ‘Finance COP’ as states are set to negotiate on two very important aspects of climate finance. First, states parties to the 2015 Paris Agreement have committed to establish a new collective quantified goal on climate finance (NCQG) to help developing countries reduce emissions and build resilience to the impacts of climate change. The NCQG would replace a commitment made in 2009 by developed countries to mobilise USD 100 billion per year by 2020 for climate action in developing countries, which is due to expire in 2025. The 2009 commitment covers two types of climate-related activities: mitigation (efforts to reduce greenhouse gas (GHG) emissions) and adaptation (efforts to build resilience to the impacts of climate change already in the pipeline).
As the 2009 target is outdated and falls far short of what is needed for nations most vulnerable to the effects and impact of climate change, agreeing on the NCQG is the top priority of Azerbaijan’s COP presidency. Setting a more ambitious goal will be essential to helping climate vulnerable countries adopt clean energy and other low-carbon solutions and build resilience to worsening climate impacts. In fact, the financial needs of developing countries significantly exceed $100 billion a year. Estimates vary, but developing states are predicted to need approximately $500 billion to $1 trillion a year for mitigation and adaptation activities. In the lead up to COP29, actors called for an NCQG that not only significantly increased the total amount of climate finance but also specified the timeframe and terms of its provision; what the finance will support; how it will reach the communities that need it most; and how all climate finance will be measured.
Secondly, COP29 will be pivotal for the operationalisation of the Loss and Damage Fund. Loss and damage refer to the negative effects of climate change that occur despite mitigation and adaptation efforts, such as damage to infrastructure, reduced crop yields, loss of culture and climate induced displacement. The establishment of a Loss and Damage Fund was a pinnacle of COP 27 and the culmination of decades of pressure from climate-vulnerable developing countries. At COP28 in 2023, countries agreed to operationalise the Loss and Damage Fund. Approximately 700 million US Dollars was mobilised, but over a year later, some of the operational details of the Fund remain undecided. Questions of who receives funding, for what purposes, and by what processes remain open. Furthermore, there is no officially recognised cost estimate for loss and damage. A 2022 UN Report estimated that annual loss and damage needs could reach $300 billion by 2030. Therefore, this year’s focus will not only be on how to mobilise more funds, but also on the streamlining process and how to allocate existing funding. $700 million may be a start, but it is minimal compared to the total damages experienced by climate-vulnerable countries. In other words: $700 million is nowhere near enough.
Climate change is arguably the most pressing challenge of our time, likely to define our generation. For millions of people, including present and future generations, climate change constitutes a serious threat to the ability to enjoy the right to life. Many countries and their citizens are already experiencing significant adverse effects of climate change, including, but not limited to, increased extreme weather events, ocean warming and acidification, air pollution, sea-level rise, and forced dislocation of nationals. In 2018, the Intergovernmental Panel on Climate Change (IPCC) predicted that, should the current rate of emissions continue, the global average temperature will increase by 1.5 degrees Celsius above pre-industrial levels at some point between 2030 and 2052. A 2023 Emissions Gap Report from the UN Environment Programme finds that current pledges under the Paris Agreement put the world on track for a 2.5-2.9°C temperature rise above pre-industrial levels this century, far exceeding the Paris Agreement goal of 1.5°C.
Without investing in adaptation measures to strengthen nations against climate-driven events like hurricanes and droughts, further widespread damage is inevitable. Paying now is an essential investment to protect the global economy and will ultimately cost far less than the price every country will face if we allow the climate crisis to continue unchecked, with increasing devastation to lives and livelihoods. At COP29, international climate finance must step up and scale up to meet the real needs of developing countries.
But from whom and in what form should the money come? Responsibility for meeting the 2009 $1 billion target rests with developing States who were OECD members at the time of signing the UNFCCC in 1992. However, developed countries have called on high-emitting states, such as China and India, as well as on high income developing states to contribute to the financial target. Such calls have been firmly resisted. Relevant indicators, particularly favoured by developing countries, include ability to pay and historical responsibility for GHG emissions. One of the founding pillars of the Paris Agreement is indeed the principle of common but differentiated responsibilities, which is based on concepts of fairness and equity. It establishes that all states are responsible for addressing global environmental destruction, while recognising the differentiated responsibilities based on their abilities, capabilities and contributions to the deterioration of the global environment.
Whilst public funding is key, Mukhtar Babayev, president of COP29, has also called for funding from private actors: ‘the onus cannot fall entirely on government purses. Unleashing private finance for developing countries’ transition has long been an ambition of climate talks. Bullish predictions touted that each $1 in public money could mobilise a further $5, $7, or even $10 in private finance. However, the inverse has occurred: in 2022, developed countries spent $94bn on climate aid; it drew in just $21.9bn from the private sector’. So far, we simply do not have enough money to fund developing countries’ transition to clean energy solely through public grants or concessional financing. Private funding could take the form of taxes on profits from fossil fuels, frequent flyer levies, levies on shipping, carbon tax proceeds from carbon trading, and wealth tax, but many of these innovative forms of finance may be difficult to implement. A significant portion of the finance should be provided as grants or concessional loans and made readily accessible to those who need it most. It is also crucial to implement mechanisms to track and ensure that pledged funds are delivered as promised.
Core talks on the NCQG moved slowly on Tuesday, Wednesday and Thursday, with key disagreements over the total financial number to be mobilised, and what proportion of funding should come from public money, in the form of loans and from private finance. A first draft proposal of nine pages had been prepared by the two co-chairs on Tuesday and circulated amongst negotiators. This text was unanimously rejected by developing countries, who asked the co-chairs to produce a new text. The new draft expanded to no less than 34 pages. There was hope that the co-chairs would receive a mandate to significantly streamline the text; however, the parties only requested the removal of repetitive sections, leaving all substantial points intact. Some countries, including Norway and Canada, wanted to see the operationalisation of more rights-based language in the text. The new text ended up at 33 pages—just one page shorter than the previous version. On Thursday, the atmosphere in the room intensified. Many countries expressed disappointment that more progress had not been made at this late stage, and that many countries had shown little willingness in working together in agreeing on an acceptable text to all.
Further, countries unanimously asked for a streamlining of the text. A key point of contention concerned the mandate of the co-chairs. G77 countries and China agreed to the streamlining of the text but wanted no modifications as to its actual substance. This was met with opposition by representatives from inter alia the United Kingdom, the EU and New Zealand, who urged countries to come together and engage with unresolved questions on substance, particularly around the terms of loans for developing countries and questions of access to funding. The new text was even labelled ‘unworkable’ by some countries. Negotiations are currently ongoing, with the deadline of producing an acceptable outcome by this evening of Friday 15 November. This text will be negotiated by ministers during the second week of COP, who are scheduled to conclude their negotiations by Friday 22 November.
2024 has been a busy year for climate change. In April, the International Tribunal for the Law of the Sea issued its Advisory Opinion on Climate Change in Relation to the Marine Environment. In December, the International Court of Justice will hear oral submissions by states in its ongoing Advisory Proceedings on Climate Change. Several domestic and human rights courts’ have issued very important judgments and decisions on the impact of climate change on fundamental human rights. Many of those developments have focused on mitigation rather than climate finance for mitigation, adaptation and loss and damage. Baku holds the potential to become a pivotal moment for climate finance. The expectation is that nations will establish a new climate finance goal and agree on fair, transparent, and accessible methods for allocating existing funds. Developed states faced significant pressure to step up ahead of the conference, and as negotiations unfold, it remains to be seen whether they will meet these demands.
Dr Agnes Rydberg
Deputy Director of the Sheffield Centre for International and European Law
University of Sheffield Representative at COP29