COP29: Pressure mounts on wealthy nations to commit at least $1 trillion in climate financing

The Baku summit is scheduled to end on Friday but the annual UN climate meets are known to shoot past deadlines. (Courtesy: Reuters photo)

With less than 48 hours left to hammer out an agreement to ensure funding to address the climate crisis at the annual UN talks being held in Azerbaijan's Baku, pressure mounted on Thursday on the developed world to commit around $1 trillion so that poorer countries are able to mitigate and adapt to the impacts of global warming.

The summit presidency early morning local time released a draft text on the new collective quantified goal (NCQG) on climate finance, the primary aim of the Baku meet that has been dubbed the finance COP, short for the annual Conference of Parties, or nations signatory to the UN Framework Convention on Climate Change.

The draft decision text failed to specify a specific funding target, leaving a placeholder “USD [X] trillion” instead of an actual number. The NCQG, which will replace the $100 billion per year commitment by rich countries under the 2015 Paris climate pact, is necessary to scale up financial support from developed to developing countries after 2025.

Poorer nations, which have been disproportionately impacted by the climate emergency, have spoken about the critical need to bridge the growing finance gap. Their demands for trillions of dollars in annual support have been met with reluctance from the developed world.

The draft text acknowledged an UN-backed report that a global transformation to a low-carbon economy is expected to require investments of at least $4-6 trillion per year. The G77 countries, which includes India and China, have demanded that rich nations should provide at least $1.3 trillion in climate financing, mostly in form of public funding and concessional loans, and not through regular debt that would further burden countries already facing distress due to multilateral borrowings.

Transformative financing

“The proposed increase in climate financing from $100 billion to $1.3 trillion annually could be transformative for developing nations like India,” said Dhanpal Jhaveri, CEO of Eversource Capital, a climate-focused private equity firm.

The new draft presents divergent views and negotiators have a long way to go before developing a text that bridges the perspectives of rich nations and the developing world, according to David Waskow, director of international climate action at World Resources Institute, a Washington-based think tank. “A lot of work still needs to be done” before a consensus can be reached, Waskow said.

“We must focus not only on the vast sums required, but on ensuring these funds are provided as grants, not loans, to shield nations most impacted by climate change from further financial burden,” said Harjeet Singh, global engagement director for the Fossil Fuel Non-Proliferation Treaty Initiative.

The latest draft recognized the need to prioritize grants, but remained silent on the critical scale of the new finance goal, instead shifting pressure onto developing countries to mobilize more domestic resources, Singh pointed out.

The Baku summit is scheduled to end on Friday but the annual UN climate meets are known to shoot past deadlines to fashion pacts and declarations that are agreed upon by nearly 200 attending nations only by consensus.