Elizabeth Morgan | COP29 climate financing: Arduous negotiations, limited results

Financial negotiations are never easy, even in the presence of the clear and present danger posed by climate change, and with time against the planet. Governments are all representing their tax payers, considering their budgets and national priorities.

Developing countries, it has been estimated, need as much as US$5-7 trillion to address climate mitigation and adaptation by 2030. This is estimated at US$455-584 billion per year. Adaptation finance alone needs an estimated US$215-387 billion annually until 2030.

The 2015 Paris Climate Agreement confirmed the 1992 agreement’s financial support from developed countries to developing countries in implementing their climate change plans. The 2009 Copenhagen Climate Summit saw developed countries pledging US$100 billion per year by 2020 to address the needs of developing countries. This was implemented in 2022, missing the 2020 deadline by two years. Of course, COVID-19 had intervened.

Before 2025, a new target, the New Collective Quantified Goal (NCQG), had to be established, which would be negotiated at COP29, the finance summit. It is one thing to make a financial pledge and another to implement it.

The United Nations Conference on Trade and Development (UNCTAD) estimated that, from 2025, developing countries would need at least US$1.1 trillion, rising to US$1.8 trillion by 2030, for climate mitigation and adaptation. The new target for developed countries, according to UNCTAD, should be about 1.4 per cent of their GDP.

Delegates at COP29 in Baku, Azerbaijan, negotiated the NCQG with developing countries, including Small Island Developing States (SIDS), aiming to hold developed countries to making the highest commitments possible.

Following from last week’s article on ‘Challenges facing climate change and finance’, we are looking at the outcome of COP29, which was officially scheduled to conclude on November 22. It actually ended in the wee hours of Sunday, November 24, 36 hours after the scheduled end.

Those who have worked or who are working in the multilateral arena know that delegations attending trade and economic meetings have to be able to change travel arrangements and extend hotel accommodations at short notice. Delegates need to have stamina to be able to survive these arduous, make-or-break sessions. Small delegations can be at quite a disadvantage in these meetings.

CARICOM, from reports, seems to have had quite a strong, well-prepared, and coordinated delegation at COP29. They were also collaborating with the Alliance of Small Island States (AOSIS). This alliance building does make the multilateral arena an important operation base for small states.

NEW FINANCING TARGET

The meeting, described as fractious at one point, was reported as deadlocked, with SIDS delegations walking out. Delegates, with last-minute proposals, and going into extra time, did arrive at a consensus. The developing countries did not come away with all they wanted.

The COP29 decision relating to finance states in paragraphs 7 and 8:

7. Calls on all actors to work together to enable the scaling up of financing to developing country parties for climate action from all public and private sources to at least USD1.3 trillion per year by 2035;

8. Reaffirms, in this context, Article 9 of the Paris Agreement and decides to set a goal, in extension of the goal referred to in paragraph 53 of decision 1/CP.21, with developed country parties taking the lead, of at least USD300 billion per year by 2035 for developing country parties for climate action.

The reporting is indicating that the financing fell short of expectations by developing countries who were seeking over US$1 trillion per year in funding, or at least US$390 billion per annum, which should be in the form of grants and not loans, especially for SIDS.

The original proposal on the table was for US$250 billion, which was increased to US$300 billion by the developed countries. Developing country critics are reported calling it a paltry sum, a Band-Aid, and a betrayal by the developed countries.

Developed countries wanted the donor base to be expanded to include emerging economies, such as China, and the oil producing states, such as Saudi Arabia. Reports indicate that the UK played an active role in the negotiations, as did the European Union (EU).

Following COP29, the UK has said that it wants a global coalition assembled to push for climate action. For the US, the Biden administration called the finance outcome ambitious, stating confidence that, in the years ahead, the US will continue this work. President Biden stated that “While some may seek to deny or delay the clean energy revolution that’s underway in America and around the world, nobody can reverse it – nobody.”

The Loss and Damage Fund was also important to CARICOM countries. At COP29, an agreement was reached on fully operationalising it. This fund still has to be properly organised.

So, with these limited gains for SIDS and developing countries generally, countries will now be looking for finance implementation and working towards COP30 in Belem, Brazil, in November 2025. Of course, everyone will be watching to see what the US Trump administration will do after January 20, 2025.

If funding for climate change, a clear and present crisis, is such a battle, can you imagine what it could be for other claims in the trillion-dollar range?

Elizabeth Morgan is a specialist in international trade policy and international politics. Email feedback to columns@gleanerjm.com