The U.S. presidential election is looming large over the UN Climate summit (COP29) that is due to meet in Baku, Azerbaijan, on November 11-22. For now, John Podesta, senior advisor on international climate policy, will lead the U.S. delegation at the summit. It is hard to predict if the United States will have its climate envoy by the time COP30 rolls around.
The U.S. election is not the only puzzle for the summit. More worryingly, COP29 is divided over its very self-professed goal: climate finance.
The Baku COP is so focused on climate finance—and its New Collective Quantified Goal (NCQG)—that it has been dubbed the “Finance COP.” According to the NCQG, wealthy member states determine their quantified contributions to the annual climate finance targets agreed to after the active intervention of President Barrack Obama in 2009 at COP15 in Copenhagen, Denmark. Developed nations at COP15 consented to contribute $100 billion a year by 2020. They didn’t, however, deliver on that promise until 2022, and that too only twice.
Developing member states complain that not only does $100 billion a year fall far short of what is needed, the fund is marked by accounting gimmicks, double counting, and high-cost loans to already indebted nations. Although the promised pot of $100 billion is still hard to fill, cost estimates of financing global climate action are rising ever higher. Some believe the world has to come up with a whopping $2 trillion a year in climate finance to go beyond greenwashing and actually match global climate action to global climate change. The figure of $2 trillion has not been plucked out of thin air, though. The amount is in response to the extent of adaptation and mitigation needed to repair the damaged atmosphere and the degraded planet. How serious the expense is can be gauged from a statement by Podesta when he said that required climate finance would be “well above $1 trillion” a year.
Despite Podesta’s bold statement, there is disagreement over how to pay for even $1 trillion a year. Choices range from public financing and philanthropy to private financing, bilateral and multilateral loans, and domestic mobilization of financial resources, or a mix of all. While developing nations, including China, want climate finance paid with public financing, Podesta thinks public financing should be one of the many elements. He leans more on private financing, philanthropy, and domestic finance (i.e., developing countries’ own contributions).
But this is not what developed nations pledged at the UN Framework Convention on Climate Change (UNFCCC) in 1992, and later in the Paris Agreement in 2015. At both founding pacts on climate change, developed nations promised to pay for climate finance, and developing nations would be entitled to receive it.
Developed nations now argue that more recent changes in world economies ought to be taken into account. If this argument holds, quite a few among developing nations will be asked to pay their fair share towards climate finance. Developing nations, nevertheless, stand united in their insistence that climate finance should never be their responsibility. They threaten that if developed nations revisit their pledges or want developing nations to contribute to climate finance, it will amount to reopening the founding agreements, including and most importantly the Paris Agreement which is are legally binding on all signatory nations. These divisions bode ill for any hoped-for outcome of COP29, especially its central goal of approving NCQG: who will contribute how much?
Although Article 9 of the Paris Agreement requires developed nations to provide climate finance, it encourages developing countries to pay their fair share “voluntarily.” Many developing countries have outgrown their classification as “developing” ones. For instance, Qatar’s per capita GDP is as large as the U.S. In fact, all members of the Gulf Cooperation Council (GCC) are prosperous economies. Brazil, which is a member of BRICS, has an economy that is larger than four members of G-7 countries (France, UK, Italy, and Canada). India, another member of BRICS, has a GDP that is second only to one member of G-7 countries: the United States. In Purchasing Power Parity (PPP), the Chinese economy, at $40 trillion, is the world’s largest. Indonesia, a member of G-20, is the world’s seventh largest economy after Germany.
The developing countries in such groupings as the GCC, BRICS, and G-20 are thus prime candidates for “voluntary” contributions to climate finance. Their voluntary contributions will incentivize developed nations to do their part more willingly.
While this back and forth continues, climate change goes on exacting its toll on the rich and poor alike. The United States recently endured two back-to-back hurricanes—Helene and Milton—that were just two weeks apart. The president of COP29, in his letter to summiteers and delegates, noted that the cost of Hurricane Helene alone could soar as high as $250 billion. Hurricane Milton, meanwhile, developed from Category 1 to Category 5 in less than 24 hours, a pace of intensification so rare in meteorology that it makes Milton only the third-most rapidly intensifying Atlantic storm on record.
The economic tab of such calamities is on a staggeringly upward trajectory. Although the estimated cost of global climate finance fluctuates between $1 trillion and $2 trillion a year, the Asia-Pacific alone is poised to see the cost of climate disasters grow to $1.4 trillion a year. This toll comes to 4.2 percent of the regional GDP. By the middle of the twenty-first century, the global toll of climate-caused disasters is set to reach $38 trillion a year. As Foreign Policy in Focus has noted, the projected global cost of climatic disasters is far higher than the cost of all wars, including world wars, fought in the twentieth century.
What sits next in priority to climate finance for COP29 is climate action or what in UN-speak is called NDCs (Nationally Determined Contributions).Climate action is inextricably linked to climate finance. If there is no progress on climate finance, chances are that climate action at COP29 will be served up with the usual lip service. Why are NDCs important? Progress on NDCs will determine whether the world can keep planetary warming below or at 1.5 degree Celsius? It doesn’t look likely, however. According to the European Union’s Copernicus Climate Change Service, global temperatures averaged 1.64 degrees Celsius all year long in 2023. This should be enough to set off alarm bells and secure COP29 commitments on climate finance and climate action. But normative precepts do not apply to a world made up of “national islands” whose vision is limited to their own boundary walls.