The News
As time runs out on COP29, negotiators are stalled on the same questions that brought them to Baku: How much money to raise for climate action in developing countries, and how to raise it.
The main point of contention, negotiators say, is a paradoxical conflict between those two questions: No one can agree to a fundraising target without first agreeing on how it would be met, but developing countries want to veto any accounting structure that would result in a lower target. There are also divisions amongst developing countries on the extent to which private investment could be counted toward the target, and on whether to compromise with richer nations on the portion of finance that could be delivered as loans, as opposed to grants.
“It’s not going well,” Juan Carlos Monterrey-Gomez, Panama’s special representative for climate change, told Semafor. “After more than two years of technical negotiations and every kind of convening you can think of, we haven’t really advanced much.” There is “definitely a risk,” he said, that the summit ends without a deal.
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Tim’s view
Money has always been the hardest part of climate diplomacy. Developing nations blame richer peers for being responsible for the lion’s share of carbon emissions and, thus, the broader climate crisis. Wealthy countries argue the trillions of dollars from government coffers demanded by the Global South just aren’t there. Attempts to pool money from other sources — China, development banks, Wall Street — are repudiated by delegates from poorer nations as an attempt to dodge responsibility for the climate crisis.
One reason an agreement is so hard, officials here in Baku say, is the broad retreat of multilateralism: The reelection of Donald Trump as US president was just the latest signal from voters that politicians worldwide lack a mandate to strike any kind of cross-border deal, especially one that involves handing any amount of money to another country. Another problem, counterintuitively, is that the energy transition is almost too successful: As more rich countries recognize the economic advantages of clean energy, climate finance risks becoming a casualty of broader zero-sum trade competition, said Juan Pablo Hoffmaister, a climate finance expert at the Environmental Defense Fund and former finance negotiator on behalf of developing countries. “We’re seeing the native instincts of industrial policy start to kick in, where there’s a feeling that helping someone else’s energy transition may put you at a disadvantage,” he said.
The strange thing about the climate finance debate is that the amount of money developing countries are asking for — $1.3 trillion is a common figure — is ultimately only about 1% of global economic output, seemingly a small price to pay to save the planet. Whatever fundraising number negotiators land on — the European Union, for its part, is pushing for $200 billion to $300 billion — two things about it will be true. One, it won’t be enough: A report last week led by London School of Economics researchers concluded that at least $2.3 trillion is needed by 2030 for climate action in developing countries, excluding China.
Two, more money is not sufficient to solve the problem. Other details under negotiation are even more important for ensuring that climate finance actually has its intended effect; even once rich countries reached an earlier $100 billion climate finance target first adopted in 2009, many developing countries complained that the money was hard to access and too often contributed to their already considerable sovereign debt burdens. Measures are needed, Hoffmaister said, to provide under-resourced governments guidance on how to apply for funds, lowering barriers for middle-income countries to access concessional lending from development banks, and setting more specific rules for how much public finance should be set aside for climate adaptation projects, as opposed to decarbonization. At the moment, none of these measures are settled, because negotiators on all sides are reluctant to agree to any one provision before others are decided.
A new version of the draft finance agreement is expected Wednesday night or Thursday, which will be one of the last chances for negotiators to make progress. Most top negotiators are scheduled to fly out of Baku on Sunday. As with many other COPs over the last three decades, an eleventh-hour breakthrough is probably the most likely outcome. “The most potent force for agreement is the prospect of not reaching one,” said Avinash Persaud, special advisor on climate change to the president of the Inter-American Development Bank. “That prospect only looms large in the final hours of the last day.”
The View From BRICS
The impending withdrawal of the US from the Paris Agreement has many delegates tempering their expectations for what kind of deal may be possible. But powerful emerging economies are stepping into the power vacuum. Brazil, host of next year’s COP, urged world leaders this week to speed up their net zero deadlines from 2050 to 2040 or 2045. India’s negotiating team is pushing for a target of $600 billion for public climate finance, which would be used to derisk greater investment from the private sector. And although China is still strenuously resisting any attempt to be lumped in with the US and other rich economies that are obliged by the Paris Agreement to donate to climate finance, it is quickly emerging as one of the world’s biggest investors in climate action in the Global South — although almost entirely via lending that ultimately benefits its own economy.