Last week, the world’s biggest annual climate conference kicked off in Baku, Azerbaijan. This year’s UN climate summit is struggling to focus attention on the health of the planet, with turbulent geopolitics, a confrontational host and the re-election of US climate skeptic Donald Trump stealing the limelight.
The annual conference that aims to produce global agreements to limit the warming which is tipping the world towards climate catastrophe is becoming a forum of frustration for negotiators seeking a finance deal.
Oil producer Azerbaijan, the host of this year’s 29th Conference of the Parties (COP), is tasked with the limited goal of rallying countries around a target for annual financial aid for developing nations facing the rising costs of climate change.
It is a mandate that pales in comparison with the agenda for next year’s confabulations in Brazil’s Amazon rainforest, where governments will chart a course for the next decade. But it is considered all-important for many countries ahead of Brazil’s COP30 and achieving it requires subtle diplomatic skills.
The trickiest issue facing the climate negotiations at COP29, goes by the fancy name of the “new collective quantified goal” (NCQG), as it sounds more dignified than a “climate dereliction fun” to be funded by the developed world. The NCQG is meant to replace the longstanding goal of an annual spending $100bn a year on climate finance from richer countries to poorer ones. It is supposed to be in place by next year, when all countries are expected to say what they are going to do to cut emissions in the next ten years.
A report in The Economist says that the good news is that in many of these countries, a little help from public financing can go a long way towards luring investors and cutting down borrowing costs.
Another trickier issue is how to disburse this fund? The Economist’s report says that a package of bilateral deals between rich and developing countries would expose funding to geopolitical whims and make it hard to track total commitments. It would probably be wasteful, too, as rich-world governments seek a return on their investments by demanding that the money is used to purchase their own equipment.
The Economist’s report further says that it would be wiser to entrust the World Bank with such a mission. That would require the lender to grow: the ETC’s recommended climate-finance pot is worth about six times what the bank doles out in a year.
The bank would need a mighty capital injection, too. Geopolitical tensions complicate the task. Two stumbling blocks seem to be China, which is unlikely to be more generous without more of a say, and America, which refuses to give up its veto over the institution’s decisions.
A report in Forbes says that experts feel that sticking with the status quo would be a huge wasted opportunity. Rich countries would get a much bigger bang for their buck – in terms of global emissions reductions – by spending money in the Global South.
In real terms COP29 is expected to build on the carbon market groundwork laid in prior COPs, aiming for a regulatory framework that ensures real, measurable emissions cuts. The International Institute for Sustainable Development says that clearer guidelines are essential for a functional and fair carbon market.
COP29 could be a decisive moment for determining how carbon markets can become a reliable tool for financing climate action or whether they will remain mired in regulatory uncertainty.
In communicating priorities for COP29, the United Nations outlined the importance of ensuring that vulnerable countries have access to resources without bureaucratic delays. Climate-driven economic losses are estimated in the hundreds of billions annually, and without improved climate funding, vulnerable countries face extreme financial strain.
In Baku, discussions are expected to focus on setting up the fund’s governance structure, mobilising resources, and scaling-up the fund to close the gap between current pledges and actual needs. It is expected that any progress on adaptation and loss-and-damage could bring life-changing support for millions of people worldwide, providing an essential safety net as climate impacts intensify.
Meanwhile, India expressed serious concern about the progress the COP29 made during the week. A GoI statement stated, “We have seen no progress in matters that are critical for developing countries. Our part of the world is facing some of the worst impacts of climate change, with far lower capacity to recover from those impacts or to adapt to the changes to the climatic system for which we are not responsible.”
India stressed that the Mitigation Ambition and Implementation Work Programme (MWP at Sharm Al-Sheikh was established with specific mandate that it shall be operationalised through focused exchanges of views, information and ideas, noting that the outcomes of the work programme will be non-prescriptive, non-punitive, facilitative, respectful of national sovereignty and national circumstances, while taking into account the nationally determined nature of nationally determined contributions and will not impose new targets or goal.
Expressing frustration on the unwillingness to engage on this issue by the Developed countries during the past week, India asserted that those with the highest capacity to take climate action have continuously shifted goalposts, delayed climate action, and consumed a highly disproportionate share of the global carbon budget.
But these solutions require integration within wider climate policies and identifying areas where real action is needed. COP29 will likely see a stronger emphasis on nature-positive initiatives, which not only support carbon sequestration but also enhance resilience against climate impacts like floods and droughts.
As noted by the World Economic Forum, protecting nature is essential for sustaining the world’s carbon sinks, including forests, which currently absorb about 7.6 billion metric tons of CO₂ each year. Recognising and scaling nature-based solutions would play a role in closing the emissions gap and offer numerous co-benefits for ecosystems and biodiversity.
On November 12th, multilateral development lenders including the World Bank pledged to increase their climate finance to $120bn by 2030 (including $42bn for adaptation). In Baku, any breakdown of talks over climate finance would be an abdication of responsibilities by the developed world. It would also be a massive failure of imagination, if delegates are unable to thrash out a workable formula at this year’s COP.
In the face of accelerating climate impacts, COP29 offers a critical opportunity for countries to act decisively. It is one of the last chances left to limit global warming below potentially catastrophic levels. From ramping up national commitments to refining the structure of carbon markets, there is much work to be done.
(Asad Mirza is a New Delhi-based senior commentator on national, international, defence and strategic affairs, environmental issues, an interfaith practitioner, and a media consultant.)
