COP29: Finance dispute disrupts deal between developing and developed countries

Following serious criticism on financial issues on the closing day of the UN Climate Summit (22 November), COP29 was extended until today (23 November). However, a sharp divide on climate finance remains between developed countries and LDCs and AOSIS.

An hour and a half before the closing plenary, LDCs and AOSIS temporarily withdrew from the final negotiations, arguing that the proposed text failed to meet climate finance targets.

After several meetings today, developed countries revised their commitments to $300 billion annually by 2035. However, the proposal remained unresolved as LDCs and AOSIS rejected the proposal. They have consistently requested over $1.3 trillion annually to meet their climate finance needs.

Earlier Friday, the United States, the European Union and other wealthy countries pledged $250 billion annually in climate finance for developing countries. But the announcement sparked widespread outrage, with countries vulnerable to climate change calling it a “mockery” and a “death sentence for millions of people”.

While developing countries expressed strong dissatisfaction with the draft climate finance agreement announced at the summit on Friday, the agreement was extended for another day.

Despite being postponed twice on the extended day (Saturday), the closing plenary, originally scheduled for 3pm, failed to proceed due to lack of consensus. While a new time was determined as 19.00 Baku time, the leaders of LDCs and AOSIS temporarily withdrew from the talks at 17.00.

“We have currently distanced ourselves from stalled NCQG discussions that do not offer a progressive path forward,” Samoans and AOSIS minister Cedric Schuster said in a statement at 6pm Baku time (8pm Bangladesh time). he said.

He also said: “We want nothing more than to continue the relationship, but the process must be inclusive. If this is not the case, it becomes very difficult for us to continue our participation in COP29. But we find ourselves constantly insulted.” “Due to the lack of participation, our calls are not taken into consideration.”

Commenting on the strike, Power Shift Africa Director Mohamed Adow said: “The proposal on the table is insufficient to address NCQG and climate finance targets. Moral voices of climate justice have withdrawn from the talks, refusing to engage with a text that will undermine climate action over the next decade.”

“We have temporarily withdrawn from the meeting but will continue to engage in talks until we achieve a fair agreement on COP29,” said Jiwoh Emmanuel Abdulahi, Sierra Leone minister and head of LDCs.

Shawkat Ali Mirza, Director of Climate Change and International Convention at the Ministry of Environment and Bangladesh negotiator, told The Business Standard: “The draft text proposes a $300 billion commitment from developed countries, but there are significant gaps.

The Green Climate Fund (GCF) as a channel to access resources is completely absent. Instead, it only mentions financial institutions such as the Adaptation Fund (AF), the Least Developed Countries Fund (LDCF) and the Special Climate Change Fund (SCCF). Additionally, grant-based financing for adaptation and loss and damage, as well as highly concessional loans for mitigation, are also missing. “This is an unacceptable text at this stage.”

What’s in the draft agreement?

The draft agreement sets a goal of raising $1.3 trillion to fight climate change, with an annual commitment of $300 billion by 2035. But experts and climate advocates are deeply concerned that the first-year pledge will be limited to just $100. billion is a tiny fraction of the funding needed.

Many argue that this amount is far beyond meeting the immediate needs of the world’s most vulnerable countries, especially those already suffering from the devastating effects of climate change.

COP29 delegates have outlined plans to set the New Collective Quantitative Target (NCQG) for climate finance at $300 billion per year; They argued that this figure would help meet the financial demands of climate adaptation and mitigation efforts.

But that goal has yet to be achieved, with strong support from the richest countries, many of which have a history of failing to deliver on past climate finance promises.

Criticism has been particularly harsh from less developed countries, AOSIS and countries facing severe climate-related damage, who say the agreement will not provide the resources needed for adaptation and recovery.

Climate experts have also criticized the minimal increase in adaptation financing (an increase of just 1% to 3%), arguing that this will not meet the scale of the problem.

In addition, the practice of double counting, where financial contributions count towards both development aid and climate finance, threatens to further undermine the integrity of the agreement.

They warn that the 2035 target of meeting these financing targets could be too late for millions of people already at risk from rising seas, extreme weather and changing farming patterns.

The draft agreement also leaves key financial mechanisms, such as the Green Climate Fund and the LDC Fund, largely unchanged; This has led many experts to question whether these will be enough to meet the growing needs of the most vulnerable populations.

“This is not charity; this is our fair share,” said Sohanur Rahman, executive coordinator of YouthNet Global, a youth-focused environmental organization.

“The commitments of developed countries are insufficient, now is the time to take action,” he said.

Support from developing countries is expected in the draft text!

The draft proposal suggests that the $300 billion annual financing target should include voluntary contributions from developing countries, saying: “It encourages developing country parties to make additional contributions through or complementing South-South cooperation.”

However, this issue has not been decided yet.

The agreement also includes the following statements: “Decides that a significant portion of public resources should be provided in a way that ensures equitable distribution through the Fiscal Mechanism, Adaptation Fund, Least Developed Countries Fund, Special Climate Change Fund and other relevant mechanisms.” “It also decides to pursue efforts to collectively triple the flow from these funds from 2023 levels by 2035 to support achievement of the target.”

What are the sources of money?

The draft text of the “New Collective Quantified Target” (NCQG) published today states that “developed country parties will take the lead and $300 billion per year will be targeted for developing country parties to support climate action by 2035. This will come from a wide range of sources.” A variety of sources, both public and private, bilateral and multilateral, including alternative sources.”

The fund is intended to meet the evolving needs of developing countries through grants or grant-equivalent conditions. The financing will be new, additional, cost-effective, predictable and non-debt-bearing, supporting adaptation, mitigation and loss and damage.

It will assist developing countries in implementing their Nationally Determined Contributions, Long-Term Strategies, National Adaptation Plans, Climate Finance Strategies and Technology Action Plans from 2023 to 2035.

However, the draft text does not specify how much of the promised 300 billion dollars will be given as grants and how much as loans. Moreover, experts and activists say the text leaves the door wide open to loans for private sector financing, which risks locking developing countries in a cycle of further debt, poverty and disease. They described this as “a mockery”.

M Zakir Hossain Khan, managing director of Change Initiative, told TBS: “It is clear that they are keeping the doors open for credit, which is a cycle of debt for developing countries. They are not talking about debt relief; they are talking about debt sustainability. It means encouraging credit. So that developing countries “Thousands of people in these countries will fall into the poverty line and fall into the debt trap. Moreover, the necessary funds for a just transition must also be allocated on the basis of a loss and damage fund.”

Returning empty-handed?

Harjeet Singh, climate activist and director of global engagement at the Fossil Fuel Non-Proliferation Treaty Initiative, said: “Prolonged climate talks reveal deep inequalities in the multilateral process. The latest draft ignores the urgent needs of developing countries and climate voices.” justice advocates.

“The COP29 Presidency must ensure an inclusive and transparent process that centers those on the front lines of the crisis. Developed countries must commit trillions of dollars rather than empty promises; anything less makes them directly responsible for the failure of these talks and the betrayal of billions across the globe.”

Pavel Partha, ecology and diversity researcher and Director of Bangladesh Indigenous Knowledge Resource Center, shared his thoughts before boarding the plane to Bangladesh.

“We are not returning empty-handed; we carry a heavy burden of disappointment. We leave Baku under the ruthless delays and false promises of the world’s biggest carbon polluting nations. Their deceptions have become all too familiar. This shameless and ruthless game of climate bargaining continues, but For LDCs and AOSIS, this is a matter of existence and survival.

“While the promise of $250 billion has now increased to $300 billion annually, we asked for trillions. Urgent decisions are needed on adaptation, loss and damage (L&D), and how to allocate and manage funds for LDCs. This is important. This is important.” “To implement binding commitments on how countries will provide this financing.”

He added: “Key issues such as agriculture, food systems, indigenous knowledge, the rights of indigenous and local communities, and localized adaptation strategies were prominently absent from the final agreement.”