Finance COP fails to offer adequate finance to developing countries for climate action
After an extension and over two weeks of intense negotiations, the 29th UN climate change conference or COP29 in Baku finally reached a consensus on a new collective quantified goals (NCQG) on climate finance but disappointed developing countries with only $300 billion per year by 2035 as against a required $1.3 trillion. The Standing Committee on Finance of COP29 last week acknowledged that the nationally determined contributions of developing countries will cost $5.1–6.8 trillion up until 2030, or $455–584 billion per year, and adaptation finance needs are estimated at $215–387 billion annually until 2030. “The NCQG’s heavy reliance on loan-based financing and private capital, with limited emphasis on grants or low-cost mechanisms, risks exacerbating debt burdens for developing countries. This could shift undue responsibility onto these nations, compelling them to seek additional contributions," said Suryaprabha Sadasivan, senior vice president at Chase India, a public policy and advocacy advisory firm. The NCQG refers to finance that is meant to be provided by developed countries to developing countries to help them meet their goals to transition from fossil fuels and curb greenhouse gas emissions. This will cost “trillions of dollars" to developing nations. Developing countries are due to share their new NDCs by early 2025. Experts have raised concerns that the lack of predictable and adequate finance constrains the ability of developing nations to scale up climate ambition. “COP29 comes at the close of a brutal year—a year seared by record temperatures and scarred by climate disaster—all as emissions continue to rise," UN secretary-general António Guterres said in his closing remarks. “Developing countries swamped by debt, pummelled by disasters, and left behind in the renewables revolution, are in desperate need of funds." Onus on developed countries The final draft of NCQG said developed countries must take the lead on climate finance, mobilizing at least $300 billion per year by 2035 for developing countries. It recommended diversifying funding sources to include public and private, bilateral and multilateral and alternative sources. “The COP29 decision on NCQG is the final nail in the coffin of 1.5°C," said Vaibhav Chaturvedi, senior fellow at the Council on Energy, Environment and Water (CEEW). “Accelerating mitigation actions without the required means of implementation is only a fool’s dream." A funding agreement at COP29 was essential to help nations take measures that would keep global temperature rise below 1.5°C of pre-industrial levels. COP29 closed in the wee hours of Sunday, two days beyond its schedule. Despite extended plenary sessions, the summit witnessed a dramatic walkout by developing and vulnerable nations, including India and Cuba. “The NCQG outcome is extremely disappointing; the developed countries have completely let down the Global South," said Sehr Raheja, programme officer, climate change, at the Centre for Science and Environment (CSE). Developing countries voiced their opposition to the NCQG in its present form. “The call by developed countries for ambitious NDCs was heard frequently at this COP, but the means of implementation to enable high ambition in NDCs does not really seem to have matched the needs." Raheja lists a number of reasons as to why the outcome from COP29 has been deemed weak. Among the most pressing issues were the quantum of finance, the lack of goals for mitigation, adaptation, loss and damage, the long timeline of 10 years (2035) and reduced emphasis on grants and grant- equivalent finance. The agreement did say, “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." Identifying alternative fund sources Part of the negotiations this year was to identify alternative sources of climate funding for developing countries, particularly exploring public and private sources. Rich countries, which are primarily responsible for historical climate change, committed in 2009 to providing $100 billion annually by 2020 to developing countries. This pledge, already seen as grossly inadequate, was only fulfilled in 2022, two years behind the deadline. “Current NDCs will require $7 trillion. By 2035, NDCs are to be revised at least twice, so the needs will be much greater. Unlike NDC revisions, there is no provision for revising the $ 300 billion target every five years. This sends a negative signal for raising ambition. It would not be surprising if the collective enhancement in NDC 3.0 ambition by developing countries is only symbolic or absolutely conditional," said Manish Shrivastva, senior fellow, earth science and climate change, at New Delhi-based The Energy and Resources Institute (TERI).
