COP29 Climate Summit: Climate finance draft sets stage for a clash

India and other developing nations are set to clash with Global North, the rich side of the world, on Friday at COP29, the UN Climate Summit, in Baku, over the final draft of a global climate-finance plan, which ignores the needs and demands of poorer nations and leaves them exposed to the adverse effects of climate change.

 

The final version of the New Collective Quantified Goal on Climate Finance (NCQG), a key requirement to keep global warming below 2 degrees centigrade from pre-industrial levels, presented on November 22, does not offer any financial solution to developing nations on how to access grants or cheap funds. Instead, the draft shrinks the role of public financing, offering an escape route for rich nations to evade their historical responsibilities of polluting the planet.

 

The final version not only keeps the role of public financing ambiguous but also tries to put the burden of making contributions on developing countries. The arrow is aimed at China but could also be directed at India at a later stage, officials said.

 

Para 7 of the final NCQG “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 $1.3 trillion per year by 2035”.

 

A former Indian negotiator said Para 7 killed the acknowledgement from previous COPs that made Global North responsible for climate change and its financing. Now it makes financial mobilisation the responsibility of all actors.

 

Para 8 “decides to set a goal, with developed country Parties taking the lead, to (pay) $250 billion per year by 2035 for developing country Parties for climate action: (a) From a wide variety of sources, public and private, bilateral and multilateral, including alternative sources; (b) In the context of meaningful and ambitious mitigation and adaptation action, and transparency in implementation; and ) Recognising the voluntary intention of Parties to count all outflows from and finance mobilised by multilateral development banks towards achievement of the goal”.

 

An Indian official said the NCQG should mobilise $1.3 trillion, of which at least $600 billion should come in the form of grants and equivalent resources. 

 

The official said “what we decide here on finance will influence what we submit in the nationally determined contributions (NDCs), emission-reduction plans presented by countries to the United Nations every five years”, which is due by February 2025 and runs until 2030. 

 

The former negotiator said Para 8 weakened the responsibility of developed countries a great deal and puts a rider that they will mobilise money only if NDCs are ambitious.

 

The $1.3 trillion per year by 2035 for the developing world includes finance from all public and private sources and is at best a sham, said Vaibhav Chaturvedi, senior fellow, Council on Energy, Environment and Water, a Delhi-based global think tank. “Even the apparent increase in the provision from the developed world to the developing world of $250 billion annually by 2035 is the same as $100 billion by 2020 (committed in the 2009 COP under a global climate finance mechanism) if 6 per cent annual average inflation is accounted for. There is no grant or low-cost finance component. This is a bad deal for the developing world”.

 

“This is indeed a come down and a highly diluted version. Not only keeps the core finance goal subservient to the notional multilayered goal but weakens the sources of core finance by including private funds. The level itself is disappointing and is lower than even what G20 had estimated,” said RR Rashmi, distinguished fellow, Teri, and a former COP negotiator. 

 

The previous global climate-finance deal mandated that developed nations mobilise $100 billion a year to address the needs of developing countries by 2020 and through to 2025.

 

The latest NCQG also “invites developing country Parties to make additional contributions, including through South–South cooperation, to or supplementing, the goal set forth in paragraph 8 above”. Facing pressure from Western nations for funds, China said last week it had contributed around $25 billion as climate finance since 2016 under global south-south cooperation.

 

The final version still acknowledges “that costed needs reported in nationally determined contributions of developing country Parties are estimated at $5.1-6.8 trillion for up until 2030 or $455-584 billion per year and adaptation finance needs are estimated at $215-387 billion annually for up until 2030 …”