COP 29 Climate Summit: A ‘Finance COP’ – Overview and Key Agendas

Context: The Baku Climate Summit (COP 29) is set to prioritize climate finance, marking the first dedicated focus on this issue in over a decade. The summit aims to implement financial structures to facilitate global climate action.

 

Key Agenda Points at COP 29

1. Establishing New Climate Finance Goals

• Target: Transitioning from the existing $100 billion goal to a proposed $1 trillion annually, specifically to support climate actions in developing countries.
• Funding Sources: Primarily from wealthy nations, with emerging economies like China and India possibly contributing.
• Paris Agreement Update: Revisiting climate action targets and the New Collective Quantified Goal (NCQG) commitments by 2025.

2. Climate Finance Action Fund (CFAF)

• Source: Voluntary contributions, including initial funds from fossil fuel companies and Azerbaijan.
• Allocation: 50% of funds directed to climate projects in developing countries, with the remaining 50% to support national climate action.
• Operational Conditions: Activation requires at least 10 shareholder nations and $1 billion in starting capital.

3. Loss and Damage Fund

• Purpose: Financial support for vulnerable countries facing climate-related disasters.
• Current Funding: Approximately $660 million mobilized, with the fund based in the Philippines.
• Baku Focus: Expanding the fund and ensuring its sustainability.

 

Azerbaijan’s Key Proposals

• Energy Storage & Green Hydrogen: Increase global energy storage sixfold by 2030 and encourage green hydrogen development as a sustainable energy alternative.
• Reducing Digital Carbon Footprint: Emphasize carbon reduction in digital and data sectors.

 

Challenges Facing COP 29

1. Differentiation in Responsibilities

• Contention Over Contributions: Debate on whether developing countries should contribute financially.
• Developing Nations’ Perspective: Argue for developed countries to lead due to their historical emissions and resource advantages.

2. $100 Billion Finance Shortfall

• Unfulfilled Commitment: Developed nations have not yet delivered the promised $100 billion annually.
• Transparency and Timeliness Issues: Ambiguities in climate finance definitions and slow disbursement have led to mistrust.

3. Carbon Markets and Trading Mechanisms

• Carbon Credit Trading: Proposed mechanisms to allow developed nations to fund renewable projects in developing countries for carbon credits.
• Lack of Clear Rules: Absence of standard guidelines impacts global carbon trading efforts.

4. Transparency and Accountability

• Biennial Transparency Reports (BTRs): Expected from countries to demonstrate progress in climate action.
• Accountability Issues: Calls for more transparent tracking of climate finance.

 

India’s Position on Climate Justice and Financial Accountability

• Demand for Climate Finance: India advocates for a $1 trillion annual commitment by developed nations by 2030 to support global climate efforts.
• Historical Responsibility: Emphasizing developed countries’ historical emissions, India insists on greater responsibility for them.
• Balanced Development: Calls for sustainable development strategies that do not hinder emerging economies.

 

Possible U.S. Political Impact on COP 29

• Potential Disruptions: A potential U.S. policy shift, especially a withdrawal from the Paris Agreement, could weaken developed nations’ collective efforts.
• Global Consequences: Potential setbacks in securing financial commitments and maintaining a unified approach.

 

Expected Outcomes and Path Forward

• Formalizing Climate Finance: A primary goal is to establish binding financial commitments to support climate action.
• Equitable Responsibility Sharing: Ongoing discussions aim to balance financial responsibilities, considering historical emissions and current economic strength.
• Renewable Energy Goals: Focus on tripling global renewable energy capacity and doubling efficiency, aligning climate action with economic benefits like job creation.