Cop 29 climate finance deal settled but work remains

: Emissions
24/11/28

The UN Cop 29 climate summit technically achieved its aim of settling the details of a new climate finance goal, but it represents a huge compromise for poorer developing countries and the finance may take some time to reach them.

Almost 200 countries agreed — although this was later disputed by some — on a goal that will see developed countries "take the lead" on providing "at least" $300bn/yr in climate finance to developing nations by 2035, to support the latter to decarbonise and implement their energy transitions.

It is the new iteration of the current climate finance goal, under which developed countries agreed to provide $100bn/yr to developing nations over 2020-25.

The new goal trebles the previous target, but falls short of what developing countries were pushing in Baku — $1.3 trillion/yr, including $440bn-600bn/yr in public finance mostly in grants and concessional finance.

Other key aspects of the goal — the contributor base and the structure — remain largely unchanged. It only "acknowledges the need for public and grant-based resources and highly concessional finance", stopping short of calling for grants rather than loans. Developing nations have long emphasised the need for grants and concessional loans, to avoid increasing their debt burdens. The deal does not take inflation into account, and does not define climate finance. Civil society and non-governmental organisations largely dismissed it as weak.

Several developing nations and groups have decried the amount, saying it does not meet the minimum requirement to support their energy transition and adapt to the effect of climate change, and that it could further hinder their economic development.

For the least developed countries and small island developing states, in particular, the pill is hard to swallow. The goal does not include the sub-targets that they had called for. Some developed parties said that these nations needed more support. But specific targets proved a step too far, with a delegate from Somalia telling Argus that "rich" developing countries did not support such carve-outs.

Some ground may have shifted slightly on the contributor base — also a long-running bone of contention. UN climate body the UNFCCC works from a 1992 list of developed and developing countries, but the former group argues that economic circumstances have changed for many countries since then.

The Cop 29 finance text "encourages developing country parties to make contributions… on a voluntary basis", much like the Paris Agreement. But it clarifies that any provision of finance would not change a country's status. There was a notable focus during Cop 29 on China's climate finance contributions — which is likely to have supported developed countries' argument for a wider donor base.

From billions to trillions

The Cop 29 finance text acknowledged the need for trillions of dollars, calling on "all actors… 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". There was also reference to a "roadmap" for reaching that level, but the wording avoids calling for finance from any particular source.

EU climate commissioner Wopke Hoekstra said that, with the help of the multilateral development banks (MDBs) and with the deal's structure, the bloc is confident that $1.3 trillion/yr of climate finance could be reached. But he also pointed to a challenging global context. "This is a significant leap forward in exceptionally difficult geopolitical times," Hoekstra said. The EU is the largest provider of bilateral climate finance, contributing €28.6bn ($30.1bn) in 2023.

In the end a "bad" deal proved better than no deal for the least developed and most vulnerable countries. The election of Donald Trump as president of the US will add a new layer of uncertainty to the climate talks next year, and the geopolitical context shows no sign of easing.

But some developing countries worry that the finance may take a long time to reach them, if at all. Developed countries have a contested track record for the $100bn/yr goal, which they only met for the first time in 2022. The new deal has a 10-year timeframe, for the $300bn/yr from developed countries, and for the larger $1.3 trillion/yr aspiration. How much money will flow to developing nations in 2025-2035 is anyone's guess, but work on improving access to funds will be crucial in the meantime.

By Georgia Gratton

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24/11/28

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Sweden extends EU ETS 2 application

24/11/28

Sweden extends EU ETS 2 application

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Australia on track for 2030 GHG emissions target

24/11/27

Australia on track for 2030 GHG emissions target

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Cop: Talks leave ‘mountain of work’ for Brazil in 2025

24/11/24

Cop: Talks leave ‘mountain of work’ for Brazil in 2025

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Cop: Carbon market rules adopted as finance talks stall

24/11/23

Cop: Carbon market rules adopted as finance talks stall

Baku, 23 November (Argus) — Countries at the UN Cop 29 climate talks in Baku, Azerbaijan, on late Saturday adopted the rules for international carbon trading under the Paris Agreement, a rare bright spot in contentious negotiations that have dragged on well past their scheduled end. After adopting rules for Article 6.2 and Article 6.4 of the Paris Agreement during a late evening plenary, ministers and negotiators applauded in recognition of their efforts. The decisions come a year after the carbon market rules were supposed to have been adopted at Cop 28 in Dubai, nine years after Cop 29 in Paris, and about 24 hours after the Baku talks were scheduled to end. "We have ended a decade-long wait and unlocked a critical tool for keeping 1.5 degrees in reach," Cop 29 president Mukhtar Babayev said. "Climate change is a transnational challenge and Article 6 will enable transnational solutions. Because the atmosphere does not care where emissions savings are made." Article 6.2 and Article 6.4 govern how countries can use carbon credits to meet their greenhouse gas (GHG) emissions-reduction pledges, known as nationally determined contributions (NDCs). Article 6 aims to help set rules on global carbon trade. Article 6 discussions helped get Cop 29 off to a positive start, with the adoption of key standards for the creation of carbon credits under the Paris accord. But after that, negotiators still had to resolve a number of issues, most notably the design of an international registry to keep track of the credits. The talks ultimately settled on a "dual layer" approach, agreed to create a registry to issue and trade credits that would be run by the UN and would be separate from the Article 6 registry, which would only serve an accounting function. The text also says that the inclusion of any emissions credits — known as internationally transferable mitigation outcome (Itmo) units — in the UN registry does not represent any sort of validation of their environmental integrity, in response to concerns raised by the US and others. Further refinements were made to the decision text over the last three days before the Saturday night decision, including the details on what countries need to include in electronic reporting of the credits. Carbon market supporters have generally backed the Baku texts, although some do not agree with all of the details. But they say the text does not harm or constrain international carbon trading, meeting their main objective for Baku. Saturday standoff But Cop 29 has reached a stalemate in negotiations on a new climate finance goal, as developed and developing countries struggle to bridge a huge divide on how much the latter should receive from the former. The lack of progress has raised the possibility the talks could collapse and end without any agreement at all. "This is the final stretch you have all been working very hard and I know that none of us want to leave Baku without a good outcome," Babayev said. "However, time is not on our side." The cop presidency suspended the plenary after the Article 6 decisions to give countries more time to try to reach an agreement, saying it would resume "later tonight." Earlier in the evening, delegates from the Alliance of Small Island States (AOSIS) and the Least Developed Countries (LDCs) group staged a temporary walkout to protest what they say has been a process that lacks inclusion. "The process is not including us as much as it should be, and when it does, and we provide input, our inputs are being ignored," said Evans Njewa, a Malawai environment official who chairs the LDC Group. The most recent negotiating text , released on Friday, angered developing country officials by proposing that developed economies provide $250bn/yr in climate finance by 2035, from a broad range of sources, not just public funds. Developing economies earlier this week floated numbers of $440bn-$600mn/yr for a public finance layer. They also called for $1.3 trillion/yr in total climate finance from developed countries, a sum which the latest draft instead calls for "all actors" to work toward. As a potential compromise, some countries, including Brazil and Somalia, have suggested at least $300bn/yr and up to $350bn/yr or $390bn/yr. Further eroding trust among delegates were reports that an official from Saudi Arabia had been allowed to make changes to negotiating text. "At Cop 29, we are witnessing a geopolitical power play by some fossil fuel states at the expense of the poorest. As the EU, we strongly oppose abandoning the path set in Dubai," German foreign affairs minister Annalena Baerbock said. By Michael Ball Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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