Climate finance divisions remain entrenched

Who should pay, and how much, remain critical sticking points to a deal, write Georgia Gratton, Caroline Varin and Chloe Jardine

UN climate talks in Bonn, Germany, ended this week with little progress made on the key issue of climate finance, despite two weeks of negotiations.

Countries that are party to UN climate body the UNFCCC managed to "streamline" some details of a new climate finance goal. "We've taken modest steps forward [but] too many issues were left unresolved," UNFCCC executive secretary Simon Stiell said. Countries must finalise details of the new collective quantified goal (NCQG) at the UN Cop 29 climate summit in Baku, Azerbaijan, in November. But existing positions remained entrenched and there are still significant divisions among countries, think-tank E3G said.

The NCQG represents the next stage of the $100bn/yr in climate finance that developed countries committed to deliver to developing countries over 2020-25, and countries must decide on several points. These include how much finance should be provided, who should contribute, who should benefit or qualify as "particularly vulnerable" and the quality of the finance — loans or grants — along with the role of private finance. Some countries, including those classed by the UN as the least developed countries (LDCs), are also calling for sub-goals to address issues such as ‘loss and damage', which refers to the unavoidable and irreversible effects of climate change.

Developed countries did not come forward with a new finance number during the negotiations, despite being pressed repeatedly by developing nations to do so. The latter, including Saudi Arabia, India and African nations, are calling for at least $1 trillion-1.3 trillion/yr.

The US said that it supports a goal that is "fit for purpose" and "from a floor of $100bn/yr", while long-running disagreement on the donor base re-emerged. The UNFCCC works from a list of developed and developing countries dating from 1992, when the body was established. But the EU and other developed nations argue that circumstances have changed in that time and call for some high-emitting developing countries, such as China or Saudi Arabia, to contribute some finance.

China made it clear that it has no intention of doing that. "Developing countries voluntarily support each other beyond our capacity and we have no intention to make your numbers look good," the country's negotiator said. While amending the lists of developed and developing nations is technically possible, it would be a lengthy and difficult process. And "the costs of the climate crisis… are only getting worse", Stiell reminded delegates.

Trust in the process

The issue of climate finance loomed over other discussions in Bonn too. Many countries at the closing plenary expressed deep regret about the lack of progress made in talks about mitigation, which refers to cutting emissions. Means of implementation — finance — and mitigation are "two sides of the very same coin", Brazil's representative said.

Brazil, as this year's G20 president and next year's Cop 30 host, has taken a leading role in the climate space. The country's negotiator also raised the issue of trust. Many workstream processes "are now a courthouse, where we accuse each other and where we judge each other", he said. It is a recurring theme in climate finance discussions, as many parties point out that developed nations only hit the $100bn/yr goal in 2022.

The issues discussed in Bonn will be carried forward for further negotiation at Cop 29, although Stiell called for a "substantive framework of a draft decision" on the NCQG ahead of the summit. There is a "very steep mountain to climb to achieve ambitious outcomes in Baku", he told delegates.