What went wrong with the climate financing bid?

Kudakwashe Manjonjo - The United Nations’ 29th annual climate change conference of the parties, COP29, ended with countries from the global north committing US$300 billion per year in climate finance to developing countries. This money is meant to pay for developing countries to carry out climate change adaptation and mitigation and move away from fossil fuels. But the amount falls far short of the US$1.3 trillion per year needed.Finance demandThe African bloc of government leaders went into COP29 with a finance demand of US$1.3 trillion per year to be provided to developing countries, including African countries, by developed nations from 2025. African countries would have used their share of this climate finance to cope with climate change, loss and damage (compensation for damage caused by climate change) and mitigation (ways to work within the warming world).The figure of US$1.3 trillion per year was based on research conducted by independent experts tasked by the COP26 and COP27 presidencies. The rest of the global south took it up during the negotiations as a reasonable figure for developing countries to meet the Paris Agreement requirements.What was achieved?Developed and developing countries reluctantly agreed to set a new collective quantified goal on climate finance of at least US$300 billion per year by 2035 for all developing countries. Developed countries took the lead to provide and mobilise climate finance from public and private, bilateral and multilateral finance institutions. The agreement also stated that other more affluent global south countries such as China, Singapore and Brazil were encouraged to contribute to this new yearly target.A second target was agreed, calling on all actors – ranging from governments to private bankers – to scale up all sources of public and private climate finance to at least US$1.3 trillion per year by 2035. The agreement also launched the Baku to Belém Roadmap to 1.3T. This is a process that aims to scale up climate finance to developing countries through grants and interest free loans.Major problemsThe main issue is that the US$300 billion per year falls far short of what is required for Africa to begin to cope with climate change and extreme weather disasters. For example, if inflation were to average 5% per year across the continent over the next 10 years, then by 2035 the US$300 billion per year would only amount to US$175 billion in today’s terms.This is barely any more than the US$163 billion that African countries pay every year to service their debts to the global north (in other words, on interest alone).Even though African governments agreed to this new deal, representatives from the continent and Nigeria in particular registered their disappointment. The Nigerian representative described the deal as an “insult” compared to what is needed for climate financing.Repairing damageAnother problem is that not funding climate adaptation enough now means that even more financing will be needed in the next decade, to repair more damage caused by climate change.The final problem is that it is not clear how much of the US$300 billion per year will be from interest free loans or grants that don’t need to be repaid. The money could also be coming in the form of concessional loans, or loans from private investors. In other words, it is not clear how the US$300 billion per year will increase Africa’s indebtedness. Also, relying on private investors won’t work for Africa because most countries are already in debt distress and would struggle to repay large sums of further debt.LobbyistsWhy did African countries not achieve what they aimed for?The first major factor was that nearly 2 000 fossil fuel lobbyists attended COP29 – substantially more than the previous conferences of the parties.Some fossil fuel lobbyists had access to the highest level of bilateral and multilateral meetings. They campaigned to water down commitments on phasing out fossil fuels.Secondly, geopolitical tensions caused uncertainty. These tensions were triggered by the election of Donald Trump as US president, the rise of far-right leadership in Europe and Argentina, ongoing conflicts in the Middle East and Ukraine, and food and energy affordability issues triggered by high inflation globally.These political and humanitarian crises meant the climate agenda fell down the list of priorities of most countries, especially in the global north.AzerbaijanLastly, Azerbaijan as a fossil fuel country hosting COP29 was a conflict. Azerbaijan’s focus is on delaying the transition to renewable energy as long as possible. Its president describes oil and gas as a “gift from God”. The lack of energy transition plans from Azerbaijan and continued investment in fossil fuels meant there were countries that could have been better hosts of COP29.What needs to happen next?COP29 established the “road to Belém” initiative, so climate finance will continue to be discussed at COP30 in Belém, Brazil in November 2025. African countries need to negotiate better deals with countries on a state to state level and link those negotiations with multilateral negotiations such as COP30.For example, the global north is seeking critical energy transition minerals in Africa through the Minerals Security Partnership. They are willing to invest billions for access to Africa’s minerals. But they are not willing to give African countries the climate change adaptation finance they ask for at COP meetings.Therefore, Africa should withhold minerals such as copper, lithium and graphite that are necessary for the energy transition if finance for climate adaptation is not forthcoming. This way, the United Nations’ annual climate change meetings will stop being talk shops and become the action based discussions that are necessary to avert further climate disaster. - The Conversation

What went wrong with the climate financing bid?

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