COP29 in Critical Phase as Nations Seek Agreement on Climate Finance Goal 

   

 The Equation Read More 

As the second week of the UN climate talks, COP29, get underway in Baku, Azerbaijan, negotiations are reaching a critical stage.

Nations remain far apart in reaching agreement on a new climate finance commitment from richer countries and will need to double down on efforts over the next few days to secure an ambitious outcome. Finance is the top priority for this COP and is the linchpin to help lower-income nations transition from fossil fuels to clean energy, close the energy poverty gap, adapt to climate impacts, and address mounting loss and damage.  

As a report from the International Renewable Energy Agency (IRENA) points out, the goal of tripling renewables and doubling energy efficiency by 2030 that countries agreed to last year in Dubai requires investments on the order of $1.5 trillion annually. The International Energy Agency confirms that midcentury climate goals can be met but will require trillions of dollars for renewable energy, energy efficiency, grid transmission, and energy storage. Those investments will deliver huge climate and public health benefits from reduced fossil fuel pollution. Meanwhile, the latest UN Adaptation Gap report estimates that the finance gap for adaptation is $187-359 billion per year. And with every year of delay on robust climate action, loss and damage is piling up across the world. 

The US election results, coming just days before COP29 started, certainly cast a pall over the opening days of COP29. The United States is the largest historical emitter of heat-trapping emissions and a major player at these negotiations. The prospect of an incoming Trump administration that has threatened to exit the Paris Agreement and roll back key climate and clean energy policies is deeply concerning, especially against a backdrop of rapidly worsening climate impacts and a continued rise in global heat-trapping emissions. Unfortunately, with a prospective anti-science administration that seems hellbent on undermining global diplomacy, we can fully expect that they will follow through on their threats.  

While some politically and economically popular clean energy provisions of the Inflation Reduction Act may prove durable and action from forward-looking states and businesses will be significant, there’s no doubt that a lack of robust federal leadership will leave US climate action hobbled for a time. Other nations—including the European Union nations and China—and states and businesses in the US will need to step up to fill the void.  

Nevertheless, here at COP29, the Biden administration still represents the US, and, despite the election outcome, has an important opportunity to show leadership, take responsibility, and champion ambitious outcomes in these negotiations. These global outcomes can also help set north star goals for what’s needed well past the term of the next administration.  

Ahead of COP, the Union of Concerned Scientists (UCS) joined over 80 US-based groups in sending a letter urging the Biden administration to support an agreement to collectively provide at least $1 trillion annually in climate finance for lower income nations. UCS is also calling on the Biden administration to announce an ambitious emissions reduction commitment for the country—aka a nationally determined contribution (NDC)—for 2035. That will give the climate advocates, subnational actors, and others who support climate action an important goal to rally around through the Trump administration’s term and beyond. Cutting emissions sharply by ramping up renewable energy and transitioning away from fossil fuels is good for the nation’s economy and for public health, in addition to contributing to global climate efforts to stave off the worst impacts of climate change.

Week one of COP29 saw little progress on the core issue of climate finance—or the new collective quantified goal (NCQG)—with the negotiating text still at a lengthy 25 pages and containing a lot of bracketed options showing areas where nations have still not reached consensus. The key and contentious issues of the overall quantity of finance, the quality of the sources finance (e.g. public grants versus loans), and how to define which nations will be part of the contributor base will be punted to the ministerial segment, which gets underway in the coming days.  

On the issue of expanding the contributor base, it was encouraging to see China announce that it has already provided and mobilized $24.5 billion in climate finance for developing nations since 2016, which closely matches estimates of China’s south-south finance contributions from US-based experts at WRI.  

A new study recently released by the Independent High-Level Expert Group on Climate Finance (IHLEG), underscored the need for climate finance to be made available to developing countries (not including China) on the order of at least $1 trillion annually by 2030, and $1.3 trillion by 2035. This is the third report of the IHLEG, which has been providing an independent perspective on the finance agenda since COP26. Overall, the report estimates that “the global projected investment requirement for climate action is around $6.3–6.7 trillion per year by 2030.” The report also warns that if countries fail to marshal sufficient funding in a timely way, the task of cutting emissions becomes much harder, requiring more money more quickly, and that funding needs for adaptation and loss and damage will also rise sharply as climate change worsens.  

Another new study, from the Global Solidarity Levies Taskforce, shows opportunities for raising funds from innovative sources to help meet climate finance goals. Options could include a cryptocurrency levy (which could raise $5.2 billion annually), a tax on the ultra-wealthy (which could raise $200-250 billion annually), and a plastics production levy (which could raise $25-35 billion annually). These kinds of options should be additive to what is committed directly by richer nations through public finance and would require global tax agreements outside of the UN climate talks.  

During the first week of COP29, there was a signing ceremony to finally get the Fund for Responding to Loss and Damage operationalized so it can start receiving and disbursing funding for lower income nations often coping with the most extreme impacts of climate change. The World Bank is serving as the trustee for the Fund and the Fund’s first executive director, Ibrahima Cheikh Diong, began his four-year term this month.  

While this marks important progress for this hard-won fund, the amount of actual funding collected remains woefully inadequate. At COP29, only one new contribution has come in—$19 million from Sweden—bringing the overall amount to $720 million thus far. Last year at COP28 in Dubai, the United States contributed a paltry $17.5 million to the fund.  Without a significant ramp-up in pledges, this fund will not deliver justice for those on the most acute frontlines of the climate crisis. And to ensure ongoing predictable and adequate levels of funding, it’s crucial for the NCQG agreement to also include specific provisions for funding for loss and damage.  

Meanwhile, the UN’s Adaptation Fund is also suffering from gross underinvestment. So far, that fund has only raised contributions of around $61 million from donor countries, far short of its annual goal of $300 million. And richer countries are still far off track from delivering on their pledge to double adaptation finance to at least $40 billion annually by 2025.  

Adaptation has historically received much less attention and funding than emissions reduction efforts and is much less attractive for private sector, profit-driven investments. It must get appropriate attention in the NCQG outcome, and it’s especially important to ensure the focus is on grant-based funding so as not to feed into the cycle of debt with which low-income nations are already contending. 

The midpoint of climate negotiations is always a challenging time. Not enough progress has been made thus far at COP29, and the clock is ticking for nations to reach consensus on a range of crunch issues. This is the time for major emitting nations, especially richer countries, to show leadership and negotiate in good faith to maintain trust and credibility. There are some hopes that the G20 summit happening simultaneously this week in Brazil can deliver some helpful climate breakthroughs from major economies that could contribute to advancing proceedings at COP.  

The major presence and influence of fossil fuel lobbyists at COP29 continues to be alarming. As my colleague Kathy Mulvey notes: “Countries must resist any attempt by the fossil fuel industry to swindle funding that should rightly be put toward climate finance desperately needed by Global South nations.”   

The science is clear that without urgent collective action, the world could be on track for a catastrophic rise in global average temperatures of up to 3.1°C above pre-industrial levels this century. Meanwhile, extreme climate-fueled disasters—like hurricanes Helene and Milton in the United States, devastating floods in Spain, and Typhoon Man-yi that just hit the Philippines—continue to batter people and economies around the world.  

As the final week marathon gets underway, UCS will join civil society colleagues to make sure the voice of the people is loud and present at COP29, and that world leaders feel the pressure to deliver science-aligned, ambitious, and equitable outcomes. We have already participated in press conferences (see here and here), engaged in direct advocacy with negotiators, and joined in public actions at COP29—all geared toward pushing forward our key asks.  

And for a more light-hearted take, check out the cats of Baku, who have also joined forces with us in meowing for more climate finance.