COP29 begins in Azerbaijan amid uncertainty over financing

Starts today (11), in Baku, Azerbaijan, the 29th United Nations Climate Change Conference (COP29)beginning the new round of global negotiations seeking to keep the increase in the planet’s temperature below 1.5 degrees Celsius (ºC), in accordance with the Paris Agreement.

COP29 continues until November 22nd. This year, the meeting, which is already considered the “COP of financing”, has as one of its main objectives to establish a New Global Quantified Finance Target (NCQG). In practice, it means defining a new value and where the resources will come from to replace the last agreement, which provided for US$100 billion annually between 2020 and 2025.

In the analysis of the president of the research institution World Resources Institute (WRI), Aniruddha Dasgupta, what is already clear is that there is a demand for US$ 1 trillion per year, which needs to be transferred from the richest to the least rich countries, so that a global transition towards climate security takes place. The idea is that half, US$500 billion, will have international public financing and the other half will have private financing.

“Developing countries cannot meet the transition goal if they do not receive external financing. This is critical. And, if these countries do not make this transition, there will be a direct impact on everyone in the world, not just these countries”, he explains.

According to Dasgupta, although the figure seems high, it represents less than 1% of the global Gross Domestic Product (GDP). He adds that the transfer to less developed countries is not charity but something that needs to be done for humanity and the planet. “In fact, countries in the Global South [menos desenvolvidos] spent $1.4 trillion on climate change from their own resources.”

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The debates surrounding this value indicate that the demand for the resource will occur in layers, and the success of the negotiations in Baku will only be the beginning of a cycle. According to the global director of WRI’s Climate Economy and Finance Program, Melanie Robinson, there is a gap between need and reality, which leads to the implementation of a strategy that foresees the design of climate financing with the following steps: US$ 200 billion by 2030 and US$400 billion by 2035.

To be effective, this design would also require solid commitment from countries to adaptation measures and part of this financing to be “concessional”, with attractive rates and conditions, explains the director. “Greater political will and willingness to act will be needed to continue expanding this cycle if we are to meet the climate security goals we set out in the Paris Agreement.”

Ambitions

In experts’ analyses, progress in financial negotiations should reflect the delivery of Nationally Determined Contributions (NDCs) by countries. The deadline for the third update of countries’ ambitions, in relation to reducing greenhouse gas emissions, ends in February 2025, nine months before COP30, in Belém, Brazil.

“Ambitions and financing are interconnected. You can’t have bigger ambitions without funding, and if you don’t have funding, you won’t commit to bigger ambitions,” says Dasgupta.

According to the director of WRI’s International Climate Initiative, David Waskow, so far, Brazil, the United Kingdom, the United Arab Emirates and Azerbaijan have promised to bring forward their emissions targets to 2035, with delivery scheduled for COP29. The United States intends to conclude it by the end of the year, before the change of government. “The summit in Baku is a critical moment to establish expectations of what the next generation of NDCs will be, what their aspirations should be,” he explains.

For the expert, this will give evidence of each country’s trajectory towards so-called net zero emissions – in which there is net neutrality with a balance between the removal and emission of greenhouse gases. According to Waskow, more than 100 countries are committed to this goal to be achieved either in 2050 or 2060.

This trajectory will depend on the sectoral goals designed by the countries, such as national fossil fuel transition policies for this decade and commitments to the objectives of tripling renewable energy in countries, doubling global energy efficiency, strengthening actions against transport emissions and qualify forest management.

Uncertainties

With the return of Donald Trump, who already abandoned the Paris Agreement in 2017 in his first administration, to the Presidency of the United States, the success of the COP in Baku gains further uncertainty in relation to one of the main impasses in the negotiations. Who will pay for climate finance?

So far, the rule is developed countries pay developing countries. But the idea of ​​expanding the group of payers has gained strength among the richest parties to the agreement.

According to Melanie Robinson, this group defends the need to include countries that now have more wealth and more capacity to contribute to closing the account. Among the countries listed to reinforce the budget are China, Singapore, Korea and the Gulf countries – Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates.

The ability of these countries to contribute is confirmed by the amounts of investments made in climate initiatives on a voluntary basis. According to the expert, China, for example, already provides US$4.5 billion a year to developing countries for climate change.

A possible path suggested by experts is to ensure that these contributions continue to occur, even if there is no change in development classifications. More transparency and accountability of the parties would also be necessary, with the definition of financial flows.

In Melanie’s view, some possible paths would be the strengthening of multilateral development banks (MDB), the construction of international taxes and the reallocation of fossil fuel subsidies to international financing.

It would also be necessary to make private capital investment in developing countries more attractive. “For this to be effective, they would need [ser feitas] public policy reforms in developing countries”, he concludes.

Exit

According to David Waskow, a new withdrawal of the United States from the Paris Agreement would not yet be reflected in the results of this COP29, as the process of withdrawing support from a party at the United Nations takes a year. Even so, the United States’ commitments to the climate change convention (UNFCCC) would remain.

Even before the results of the presidential elections in the United States, the current US head of state, Joe Biden, and his vice, Kamala Harris, had already announced their absence in Baku. According to an official statement from the State Department, a delegation led by the advisor for international climate policy, John Podesta, will represent the country in the negotiations.

Brazil

President Luiz Inácio Lula da Silva will also be absent, due to medical recommendations following a domestic accident. In his place, vice-president Geraldo Alckmin will lead the Brazilian delegation, also made up of the Minister of the Environment and Climate Change, Marina Silva, and the ambassador of the Ministry of Foreign Affairs, André Corrêa do Lago.

Among the other leaders who have already confirmed their absence are the President of China, Xi Jinping, the Prime Minister of India, Narendra Modi, and the President of the European Union, Ursula von der Leyen.