The 29th annual United Nations climate summit, COP29, has commenced in Azerbaijan, bringing the global community face-to-face with the urgent need to address climate change. A key priority on the agenda is devising a new roadmap for financing developing countries in their fight against climate damage. The current commitment of $100 billion annually, made by advanced nations in 2015, is due for an upgrade in 2025, making the decisions at COP29 crucial for the future of global climate action.
The need to establish this “new collective quantified goal” (NCQG) by 2025 was established in the 2015 Paris Agreement, aiming to take into account the specific needs and priorities of developing countries. This commitment is a marked improvement from the $100 billion annual figure, which didn’t adequately consider these factors. This enhanced financial support is crucial for strengthening developing countries’ national climate plans, which are also scheduled for an update in 2025.
Calls for Increased Funding: Several countries, including India, have advocated for developed countries to provide around $1 trillion per year for climate action. A new report by the United Nations Conference on Trade and Development (UNCTAD) suggests a needs-based approach, estimating that developing countries would require $1.1 trillion in 2025, rising to $1.8 trillion by 2030. According to UNCTAD calculations, at least 75% of this funding should come from wealthy nations, equating to 1.4% of their GDP in the initial year. While this figure represents a significant investment, it is relatively lower than other recent major expenditures by developed countries, making it feasible.
Addressing Adaptation Shortfall: The NCQG would also play a vital role in supporting climate adaptation – the crucial aspect of climate action that helps countries adjust to existing climate impacts. The current level of adaptation finance is insufficient, with a vast gap between what is provided and what is needed. The UN’s Adaptation Gap Report highlights this critical shortfall, showing that while international public adaptation finance flows improved from $22 billion in 2021 to $28 billion in 2022, the requirement is almost 18 times higher. Even if the funding increases to around $40 billion by 2025 – double the 2019 levels as aimed by the 2021 Glasgow pact – it would only reduce the gap by approximately 5%.
COP29’s Impact on Paris Agreement: If COP29 successfully establishes a robust financial framework to succeed the current one, it could mark a significant milestone towards achieving the Paris Agreement’s goal of limiting global temperature rise well below 2°C, preferably to 1.5°C, above pre-industrial levels. However, concerns arise from the United States, where Donald Trump is set to become president again in January. During his previous term, he withdrew the US from the Paris Agreement, a move reversed by his successor. This political shift could significantly impact global climate efforts, as the US is the second-largest greenhouse gas emitter.
Laurence Tubiana, CEO of the European Climate Foundation, commented on the potential implications: “The election result is a setback for global climate action, but the Paris agreement has proven resilient and is stronger than any single country’s policies.” Tubiana also noted that the context today is significantly different from 2016, with strong economic momentum behind the global transition. The US has played a leading role and benefitted from this transition, but now risks forfeiting its progress. The recent devastating hurricanes serve as a stark reminder that all Americans are affected by worsening climate change.
Beyond Finance: COP29 negotiations will extend beyond financial frameworks to focus on mitigation strategies and greenhouse gas reduction targets. Vulnerable nations are pressing their industrialized counterparts and emerging economies to submit more ambitious plans with stronger emission cuts and faster transitions from fossil fuels. Recent global temperature data underscores the urgency of these demands.
Record-Breaking Temperatures: The period from February 2023 to January 2024 marked a troubling milestone, as it was the first 12-month period when global temperatures averaged 1.5°C above pre-industrial levels, reaching 1.52°C, according to the Copernicus Climate Change Service. The US’ National Oceanic and Atmospheric Administration’s average greenhouse gas index (AGGI), which measures how much heat Earth’s atmosphere is trapping due to long-lived greenhouse gases, has risen 52% since 1990. The World Meteorological Organization (WMO) projects an 80% chance that temperatures will surpass the 1.5°C threshold for at least one year before 2028.
Global Carbon Market: COP29 also aims to finalize rules for a global carbon market, which could help companies offset their emissions by investing in green projects and earning ‘carbon credits’. Members approved the standards for such a UN-backed market on the opening day. The Least Developed Countries (LDCs) have been early adopters of carbon markets, but their small economies limit their influence and benefits. A UNCTAD analysis reveals that the value of carbon credits coming out of LDCs has been minimal compared to more common sources of funding, such as development aid, foreign direct investment, and remittances. In 2023, LDCs captured just about $403 million in carbon credit value, representing only 1% of the total development aid they received.
From finance and emission targets to fossil fuel transition, COP29 faces high stakes. The outcomes of these negotiations will have profound implications for the future of our planet and the success of global efforts to mitigate climate change.
