COP-out at Baku: Agreement on new climate-funding mechanism inconclusive

Baku climate talks failed to reach a consensus on funding, revealing deep divides between developed and developing nations. The outcome casts doubt on the progress expected at COP29

To no one’s surprise, negotiators meeting in Baku, Azerbaijan, failed to reach a consensus on financial commitments by member countries under a set of goals known as the “New Collective Quantified Goal on Climate Finance”. With just two months to go for the 29th Conference of Parties (COP29) to the United Nations Framework Convention on Climate Change under the Azerbaijani presidency, agreement on the new finance goal and who should pay for it looks unlikely. The meetings, held between September 9 and 12, were a continuation of talks this year in Colombia and Germany in April and June, respectively. What has emerged from the Azerbaijani leadership is an agenda that does not require a consensus but suggests a clutch of initiatives and options that national governments can adopt to meet their climate goals. How far these initiatives can tackle the race to net zero after the world witnessed one of the hottest summers on record is doubtful. They appear to let off the hook the developed countries that are historical contributors to global warming.

Among the suggested initiatives is a voluntary contribution fund from fossil fuel-producing countries and companies for those working on climate issues and grants to assist in climate-related natural disasters in developing countries. The hope is to leverage the “convening power” of COP to persuade nations to form coalitions to drive progress. It appears, however, to favour the preferences of developed countries. Under the Copenhagen Accord of 2009, 10 developed countries had committed to paying $100 billion a year to support climate action in developing countries. This target has been met only in one year — 2022. The reluctance of the developed world to underwrite their commitments in a meaningful way has been a sticking point of climate-change negotiations. Now, they are looking at ways of reducing their obligations. Climate-finance aid is channelled through development banks or special-purpose funds managed by the developed countries (such as the Global Environment Facility). But both the European Union and the United States, for instance, have sought to broaden climate finance to include private and public finance. The inclusion of private finance has raised concern among developing countries, especially those in Africa and least developed countries, about the terms on which such loans are extended, fearing that commercial loans rather than concessionary finance will convert the climate crisis into a debt crisis.

The adequacy of the $100 billion target is also under scrutiny. Estimates of requirements range from $2.4 trillion per year by 2030 to $10 trillion per year between 2030 and 2050. India, for example, has called for a $1 trillion annual target. The COP29 presidency has also sought support for a pledge to increase global energy-storage capacity six times above 2022 levels, which would require investment in adding or upgrading 80 million km of energy grids by 2040. While these numbers are being bandied about, developed nations have argued for an expansion of the contributor base in ways that reflect modern realities. This implies financial obligations for China and India, respectively, the world’s largest and third-largest carbon emitters currently, exonerating developed nations from the historical responsibility of piling up carbon stock in the earth’s atmosphere. How far COP29 can reconcile these myriad irreconcilable positions is an open question.