Dec. 2024
During this year’s UN Climate Change Conference (COP29), the anticipated discussion on the updated path forward for climate finance resulted in the following commitment for developing* countries under the New Collective Quantified Goal on Climate Finance:
- USD 1.3 trillion annual financing from private and public sources by 2035
- USD 300 billion annual financing in the form of grants and low-interest loans by 2035, which is triple the commitment made at COP15 in 2009 [1][2]
The UN defines climate financing as “local, national or transnational financing—drawn from public, private and alternative sources of financing—that seeks to support mitigation and adaptation actions that will address climate change”[3]. A particular responsibility is given to developed* countries to provide these resources, as outlined in the Paris Agreement, seemingly recognizing that the devastating effects of climate change are not equally felt and managed. While these newer, bigger numbers seem like a big step forward, the agreement was not settled without pushback.
“This document is nothing more than an optical illusion. This, in our opinion will not address the enormity of the challenge we all face[…].” - Chandni Raina of India [1]
“That the developing (sic) country is saying that he’s taking the lead with $300 billion till 2035 is a joke.” - Nkiruka Maduekwe of Nigeria [1]
“The scope of the decision adopted demonstrates the lack of agreement between our developed country partners int he face of the global panorama of climate change and reflects a clear intention to renounce their responsibilities.” - Pedro Luis Pedroso of Cuba [1]
A major reason for the discontentment came from the rejected USD 1.3 trillion developing countries demanded, a number reflecting the estimates by the Independent High-Level Expert Group on Climate Finance [4]. Additionally, when we look at how climate funds were allocated from 2015 to 2022, we see more cause for concern.
The 2024 report produced by the OECD first shows that the USD 100 billion annual climate financing commitment was only met in 2022, two years later than the orignal target of 2020 made at COP16 in 2010. The report then provides the following financing breakdown: 60% for mitigation, 27% for adaptation and 13% for crosscutting efforts. Mitigation financing is meant for emission reduction and adaption financing is meant for adaptive measures against the adverse effects of climate change. Within each of these climate themes, the report further specifies which activities or sectors were financed. Energy was the main area of focus, taking 43% of mitigation financing, while general environmental protection, government and civil society, social infrastructure and services, and disaster preparedness (GGSD) took the lead in adaptation (43%) and crosscutting (55%) efforts. Overall, total financing is about equal for activities in the energy (28%) and GGSD (29%) sectors. However, when we examine the forms of financing, we find that 69% of public financing took the form of loans and that the energy sector benefited the most from private financing at 48%.[5]
What do these numbers mean on the ground? The OCED report shows that about 19 thousand climate projects were financed in 2022 through public funds. Of the 294 projects under the Green Climate Fund, the operating entity of the UN’s climate financing mechanism, only 30 are under implementation and two are completed [6][1]. Many countries are at risk and in need of serious support to address the impact of climate change, yet we don’t have a clear outline on the project design, approval and implementation process.
Organizations like the International Rescue Committee and Concern Worldwide regularly report on countries most at risk of climate disaster, the latter listing the following 10 countries: Chad, Central African Republic, Eritrea, the Democratic Republic of Congo, Guinea-Bissau, Sudan, Afghanistan, Somalia, Liberia and Mali [7]. When looking at a CO2 emissions map, we quickly see that these countries are not the main emitters yet bear the brunt of the effects [8][9]. The vulnerability mostly has to do with the lack of structural (infrastructure and political) resilience when faced with extreme climate events. With this knowledge, why is most of the allotted climate finance dedicated to climate change mitigation? Climate change is a social issue and the GGSD is too broad of an activity area to truly understand how financing is supporting its needs.
Are developed countries that are causing climate change only investing in projects that will be give them a return, thus profiting economically, politically and socially from their disregard of their impact on the climate? Mitigation financing is looking like investment in projects (mostly energy and transportation) that will generate a revenue rather than reduce greenhouse gas emissions.
It’s not enough to throw money at a problem without addressing its underlying causes and without accountability. Climate finance should not be used as a deflection to keep major emitters unchecked for another decade. A logical approach would be to tackle the major cause of greenhouse gas emissions, which is the reliance on fossil fuels, which is provide by states that are not interested in having a serious conversation about transitioning away from this source of energy[10]. Developing countries are not the ones that should be mainly prioritizing mitigation; the focus should be on adaptation. A yearly meeting with almost 200 participants who do not evenly yield power may not be an effective approach to create meaningful change. The experience some of us had in our high school group projects will remind us that need, effort and merit are not equitably spread.
Finally, it shouldn’t solely be about how much money is provided but how effectively and sustainably it’s mobilized. What does reporting look like? The Enhanced Transparency Framework, which requires Parties to submit their first biennial transparency report by the end of 2024, will be our first chance to see what significant actions have been taken since 2015 [11]. As always, we have to wait and see.
* The UN established a range of development classifications in their ‘World Economic Situation and Prospects 2024’ document, starting on p.135 https://www.un.org/development/desa/dpad/wp-content/uploads/sites/45/WESP_2024_Web.pdf. The OECD also refers to the Paris Agreement definitions in their analysis ‘Climate Finance Provided and Mobilised by Developed Countries in 2013-2022’ [6]
References
[1] Harvey, Fiona; Morton, Adam; Noor, Dharna; Carrington, Damion. Cop29 agrees $1.3tn climate finance deal but campaigners brand it a ‘betrayal'. 23 November 2024. https://www.theguardian.com/environment/2024/nov/23/cop29-agrees-13tn-climate-finance-deal-but-campaigners-brand-it-a-betrayal
[2] COP29 UN Climate Conference Agrees to Triple Finance to Developing Countries, Protecting Lives and Livelihoods. 24 November 2024. https://unfccc.int/news/cop29-un-climate-conference-agrees-to-triple-finance-to-developing-countries-protecting-lives-and
[3] Introduction to Climate Finance. https://unfccc.int/topics/introduction-to-climate-finance
[4] Bhattacharya, Amar; Songwe, Vera; Stern, Nicholas; Soubeyran, Eléonore. Raising ambition and accelerating delivery of climate finance: Third Report of the Independent High-Level Expert Group on Climate Finance. https://www.lse.ac.uk/granthaminstitute/wp-content/uploads/2024/11/Raising-ambition-and-accelerating-delivery-of-climate-finance_Executive-summary.pdf
[5] Climate Finance Provided and Mobilised by Developed Countries in 2013-2022. https://www.oecd.org/en/publications/2024/05/climate-finance-provided-and-mobilised-by-developed-countries-in-2013-2022_8031029a.html
[6] Project Portfolio - Green Climate Fund. https://www.greenclimate.fund/projects
[7] The 10 countries most affected by climate change. 24 April 2024. https://www.concern.net/news/countries-most-affected-by-climate-change
[8] CO2 emissions - Our World in Data. https://ourworldindata.org/co2-emissions
[9] Carbon Emissions - Global Carbon Atlas. https://globalcarbonatlas.org/emissions/carbon-emissions/
[10] Rokke, Nils. COP29: Lessons Learned From The UN Climate Change Conference. 9 December 2024. https://www.forbes.com/sites/nilsrokke/2024/12/09/cop29-lessons-learned-from-the-un-climate-change-conference/
[11] Preparing for the Enhanced Transparency Framework. https://unfccc.int/process-and-meetings/transparency-and-reporting/preparing-for-the-ETF