Why furious nations agreed to new climate finance deal

The United Nations Climate Change Conference (COP29) featuring 200 countries finally concluded after two weeks of grueling negotiations that went more one day beyond scheduled closing plenary.

While the talks at world climate summit were acrimonious and controversial in equal measure, especially over its main agenda of climate finance, some lessons were learned and progress made on some key climate issues ahead of the next meeting, COP30 in Belem, Brazil.

Disgruntled developing nations including small island states complained over the $300 billion deal a year in climate finance deal reached after fractious talks in Baku, Azerbaijan. They felt the mount offered was inadequate as they continue to bear the burden of global warming caused by the biggest emitters from wealthy nations.

Citing the growing climate stress they continue to experience, representatives of the developing countries had demanded $1.3 trillion dollars but had to climb down to the new post-2025 climate finance goal after the fiery talks.

Private sector investment

However, the rich nations agreed to channel the $300 billion a year by 2035 for developing countries by taking the lead in providing money and mobilising private sector investment. This will be part of a wider effort to scale up financing to reach the $1.3 trillion target from all public and private sources.

Developing nations agreed to the deal rather than let the talks break down as it would have jeopardised their climate goals and left them in a more desperate position. UN Framework Convention on Climate Change Executive Secretary Simon Stiell described the deal as “an insurance policy for humanity”.

So, while the vulnerable groups wanted to ensure they get fixed amounts under the new finance goal since they are hardest hit by global warming, with least resources to protect their people and go green, they had no option but to comply with the New Collective Quantified Goal (NCQG) deal struck in Baku.

Proposed goal

“The goal is too little. Too distant,” Chandni Raina, and adviser with India’s Ministry of Finance told the plenary. The proposed goal shall not solve anything for us.” The developing countries criticized its “paltry size” and the weight given to funding from multilateral banks.

They said it does not respond to their requirements to grow sustainably and keep their people safe. In the end they compromised, settling for a process that will explore options to “design and implement” allocation floors for them, reported the authoritative UK-based Climate Home News.

Marshall Islands Climate envoy Tina Stiege said her Pacific Island state was leaving “with a small portion of the funding climate-vulnerable countries urgently need. “It isn’t nearly enough, but it’s a start, and we’ve made it clear these funds must come with fewer obstacles so they reach those who need them most.”

Despite the developed countries reservations and the grudging acceptance of the ‘Baku deal’, European Union climate commissioner Wopke Hoestra told the plenary that COP 29 would be remembered “as the start of a new era for climate finance”, saying the EU believes “it is ambitious, it is needed and it is achievable. We are confident this will be a tale of delivery.”

In the “Baku to Belem, Brazil COP30 Roadmap to $1.3 trillion”, the agreement between the developing and wealthy nations will be an effort to look for additional resources to drive low0carbon, climate resilient development and support the rollout of developed-country plans for cutting emissions and adapting to climate change.

The roadmap will be developed in the coming year and was put forward by the African Group whose chairman is Kenyan Ali Mohamed, Barbados, Colombia, Honduras and Panama in Baku.

Although details remain sketchy, Colombia’s environment minister Susana Muhamad referred to innovative possibilities that our countries have been working on. A taskforce led by Barbados, France and Kenya is considering how to introduce levies on shipping, aviation, fossil fuels and financial transactions.

According to Climate Home, the COP29 deal on the new finance goal was a compromise between efforts by rich countries to limit the amount of addition government finance they will have to stump-up – with many citing fiscal constraints – and the growing gap between funding and needs in climate-stressed parts of the world.

Developing countries rejected a strong push by wealthy nations to include richer, more polluting members, especially China and Gulf nations, in the official donor base. The text only “encourages” developing countries to make contributions to the new finance goal “on a voluntary basis.”

Sharp criticism

The Azerbaijani hosts of COP30 came in for sharp criticism on the way they handled the negotiations as the talks in Baku got dangerously close to ending without agreement. The Azerbaijan presidency had put a proposed figure for the government-led core of the finance goal on the table too late, threatening a collapse of the talks.

It eventually proposed a figure on Friday, which should have been the final day of the talks, with an initial suggestion of $250 billion a year provoking disappointment and anger from developing countries, whose minsters argued they were being forced to sacrifice their people.

In the end, they settled for not much more in return for commitments to avoid worsening already high debt levels and easing access to funding, including from the UN’s dedicated climate funds. The text promises to pursue efforts to at least triple annual outflows from those funds from 2022 levels by 2030, rather than earmarking a percentage of the goal for them, as earlier proposed.

Developing countries also capitulated on their demands for sub-goals to channel more money to under-funded work on adaptation, as well as repairing growing loss and damage from droughts, floods, storms and raging oceans. Those goals were left out of the agreed text.

Climate justice activists slammed the new finance goal for being far too low and failing to include a firm target to prioritise grants over loans.

Countries also adopted at COP29 a weakened decision on cutting carbon emissions which failed to explicitly mention last year’s pioneering pledge to transition away from fossil fuels in energy systems.