Making the global financial system "fit for purpose" and producing a "clear plan" to fund the energy transition must be this year's goal, UN climate body UNFCCC executive secretary Simon Stiell said in Baku, Azerbaijan, as the country starts preparations to host the UN Cop 29 climate summit.
Stiell said that a new climate finance goal — moving on from the missed $100bn/yr commitment from developed countries by 2020 — must be agreed at Cop 29, and that developing countries must be confident that they will be able to rapidly access sufficient concessional support. Technical dialogues between developed and developing countries have started to set this new finance goal — the so-called NCQG — by 2025, but a lot of work remains to be done before parties shake hands on how much money should be set aside, and where it should be spent.
"Whether on slashing emissions or building climate resilience, it's already blazingly obvious that finance is the make or break factor in the world's climate fight — in quantity, quality, and innovation," Stiell said. Cop 29 host Azerbaijan has already promised to put reforming finance mechanisms at the top of the talks' agenda.
He noted that a total of $2.4 trillion per year is needed for renewable energy, adaptation, and other climate-related issues in developing countries, excluding China, according to the High-Level Expert Group on Climate Finance — a group tasked by the Cop 26 and Cop 27 presidencies to work on finance needs. The group released a report in November last year calling for an integrated climate finance framework to deliver on the Paris Agreement and boost all sources of finance — public, private, domestic and international. A five-fold increase in concessional finance is also needed by 2030, according to the group.
Stiell warned that "without far more finance, 2023's climate wins will quickly fizzle away into more empty promises", and that it must not be "quietly pilfered from aid budgets".
He also said clear progress is needed to address "the assessment of investment risk, the allocation of special drawing rights" — reserves of interest-bearing foreign currency that can provide liquidity to countries in need — but also innovative sources of financing and creative mechanisms to tackle debt burdens. Talking about multilateral development banks, he said that they should take innovative steps that would "double, if not triple" their financial capacity by 2030, especially grants and concessional finance. He highlighted their crucial role when it comes to leveraging their engagement with the private sector to double and triple the overall rate of private capital mobilisation.
He said that the Cop 28 agreement to transition away from fossil fuels would have been "unthinkable" a few years ago, and that it sent a "very strong signal about the inevitability of global decarbonisation". "But now is no time for victory laps. It's time to get on with the job," he said. "Hiding behind loopholes in decision texts, or dodging the hard work ahead through selective interpretation, would be entirely self-defeating for any government, as climate impacts hammer every country's economy and population."
