Negotiators were warned on Thursday, November 14, 2024, that urgent action is needed to help poorer nations address climate change or the world will face even higher costs down the road. Experts stressed that developing countries require at least $1 trillion per year by the end of the decade to transition to greener energy and protect themselves from extreme weather events.
At the heart of the COP29 climate talks in Azerbaijan is the issue of financing, with the summit’s success likely hinging on whether wealthy nations, development lenders, and the private sector can agree on a new annual target for climate funding to developing countries.
The previous $100 billion per year goal, set to expire in 2025, was only met two years late in 2022, according to the OECD, and much of this amount was in the form of loans rather than grants—something many recipient countries say must change moving forward.
At the opening of the talks, a report from the Independent High-Level Expert Group on Climate Finance indicated that the target for annual climate finance would need to rise to $1.3 trillion by 2035, or even higher if progress is not made soon. The report warned that any shortfall in investment before 2030 would result in a steeper, costlier path to climate stability.
“Delays now will only increase the burden in the years to come,” the report stated. “The less we do now, the more we will have to invest later.”
Behind closed doors, negotiators are working on draft agreements, but early documents released by the United Nations climate body reveal a broad spectrum of views, with no clear consensus yet on the way forward. Some negotiators criticized the latest finance draft as too lengthy and complicated, awaiting a more streamlined version before substantive talks can begin.
Reaching an agreement may be challenging, especially given the reluctance of many Western governments—obligated to contribute under the Paris Agreement—to provide more funding unless countries like China also share the burden. The looming possibility of the United States pulling out of any future funding commitments under a potential second term for President Donald Trump has added further pressure, pushing delegates to explore alternative funding mechanisms.
One potential source of funds is the world’s multilateral development banks, such as the World Bank, which are currently undergoing reforms to enable them to lend more for climate projects. A group of 10 major banks has already committed to increasing climate finance by around 60%, aiming to reach $120 billion per year by 2030, with at least an additional $65 billion from private sector investments.
Proposals to generate fresh funding through taxes on polluting sectors like aviation, fossil fuels, and shipping, or through financial transactions, gained traction as more countries expressed support. However, any agreement on such mechanisms is unlikely to emerge at this summit.
On Thursday, Zakir Nuriyev, head of the Association of Banks of Azerbaijan, announced that the country’s 22 banks would commit nearly $1.2 billion to projects aimed at helping Azerbaijan transition to a low-carbon economy.
Despite some diplomatic tensions, including a spat between France and Azerbaijan over remarks by Azerbaijani President Ilham Aliyev, the talks are continuing. French climate minister Agnès Pannier-Runacher canceled her trip to COP29 after Aliyev accused France of “crimes” in its Caribbean overseas territories, a remark linked to ongoing diplomatic friction between the two nations over their support for opposing sides in the Nagorno-Karabakh conflict.
European Union climate commissioner Wopke Hoekstra emphasized that, regardless of bilateral disagreements, COP should be a forum where all nations can negotiate in good faith on climate action.
In another development, Argentina withdrew its negotiators from the COP29 talks, though the reasons for this decision remain unclear. President Javier Milei of Argentina has previously described global warming as a hoax, which may reflect the country’s stance on the issue.
As the talks move forward, all eyes will be on whether a deal can be struck to address the urgent financial needs of developing nations and accelerate global efforts to combat climate change.
