Last Update:29 October 2024 10:39 IST

A new climate finance target is expected to be set at COP29 in Baku to replace the $100 billion annual pledge by 2020 that rich countries made in 2009, which remains largely unfulfilled.

Representatives from more than 200 countries will meet in Baku this November for COP29, the biggest climate conference of the year. (Getty)

In its latest position paper published by the New Delhi-based Center for Science and Environment (CSE) ahead of COP29, it was stated that just one percent of global GDP (about $1 trillion per year) could help meet the urgent climate needs of developing countries.

Representatives from more than 200 countries will meet in Baku this November for COP29, the biggest climate conference of the year. The UN Summit is critical as it aims to set a new climate finance target for the first time since 2015. The new Collective Quantified Target (NCQG) is expected to be an important milestone as it will help climate-vulnerable developing countries maintain their temperature targets. The Paris Agreement is within reach.

It would also replace a previous $100 billion annual pledge by 2020 that rich countries made in 2009, which remained largely unfulfilled beyond 2022. While pressure is mounting on developing countries to undertake more aggressive climate action, the reality is that they appear to have limited financial resources and technology.

“Given how important financial support is for developing countries to achieve their climate goals, COP29 has the potential to be the most important climate conference since Paris. So far we have seen the Global North provide inadequate climate finance and the Global South repeatedly let down by unmet promises and commitments. We hope to see some change in this status quo in Baku,” CSE director general Sunita Narain said in her pre-COP briefing.

POLLUTORS WILL PAY TRILLIONS

According to the latest Second Needs Assessment Report of the UNFCCC Standing Committee on Finance (SCF), at least $5-6.8 trillion in cumulative support by 2030 to help developing countries meet stated Nationally Determined Contributions (NDCs). will be needed. This is more than the $5.8-5.9 trillion range suggested in the Initial Needs Assessment Report. Developing countries, especially India, have made strong claims of US$1-2 trillion annually.

The CSE said in its position paper that the NCQG level should be in the trillions and should be initially determined over a five-year period until 2030. “We believe this should be achieved through non-debt-creating financial instruments, primarily grants and concessions and loans for the Global South. This can help advance climate goals while meeting development priorities,” said Avantika Goswami, CSE Climate Change Program Manager.

LAST OPPORTUNITY FOR COURSE CORRECTION

Moreover, a review of national positions found that rich countries, led by the United States and the European Union, have so far refrained from bargaining over the amount or amount of financing to be provided. Instead, they turned the focus to other details, such as that everyone should contribute to it; experts described it as “mere distraction at this stage”.

“Our focus now should be on setting this finance target that will define the course of climate action across much of the world this decade,” Goswami said. “In an environment where trust in the multilateral process has eroded, the NCQG is one of the last opportunities for the Global North to chart the right course, show courage and do its part.”

QUALITY OF FINANCING IS VITAL

Experts also note that countries in the Global South are often assessed as ‘high risk’ environments by private credit rating agencies and face higher interest rates, making investments more expensive than in the Global North, hence the NCQG’s reliance on international public financing pointed out the need. and flows that do not create debt.

This is another important debate that is likely to shake up negotiations (public finance and private finance), with developing countries demanding that the NCQG be more of a public finance target to be supported by relevant governments. Rich countries are pressing for the inclusion of private financing.

“NCQG is essential to enable global climate action. Developed countries could mobilize more than $5.3 trillion annually for NCQG through taxes on fossil fuel extraction, aviation, and other measures. “They continue to pour money into harmful fossil fuel subsidies,” said Sehr Raheja, CSE Climate Change Program Officer, who co-authored the report.

Other issues likely to dominate COP29 discussions include Article 6 of the Paris Agreement and talks on increasing reduction targets and filling the widening adaptation gap as countries seek to operationalize carbon markets.