COP29 Ends with Finance Fiasco: A Wake-Up Call for Climate Action

The conclusion of COP29 in Baku leaves a sour taste in the mouths of many, particularly the developing countries bearing the brunt of climate change. A central theme of the conference was the much-needed climate finance to help mitigate and adapt to climate change impacts. However, the final agreement on finance has sparked widespread criticism for falling short of the needs of poorer nations.

The Disappointing Outcome of COP29

Two weeks of intense negotiations culminated in a final agreement among delegates. Unfortunately, the text did not embody an ambitious action plan that developing nations, especially those in Africa, desperately needed. The finance deal promises $300 billion a year by 2035 to aid developing nations, but that is a mere fraction compared to the estimated $1.3 trillion per year required by these nations.

Evans Njewa, chair of the Least Developed Countries bloc, expressed his discontent succinctly: “This is not just a failure; it is a betrayal.” The agreed finance goal is criticized for being poorly executed, with many describing the outcome as a far cry from what is urgently needed.

A Deal Far from Needs-Based

The New Collective Quantified Goal on Climate Finance (NCQG) was initially intended to be needs-driven, based upon careful calculations of what is required for effective mitigation and adaptation. Yet the process was hampered by tight budgets in developed countries. Initially offering only $250 billion, the developed nations reluctantly increased the figure to $300 billion, a concession met with disappointment by many small island nations who temporarily walked out of discussions.

A Glaring Lack of Clear Action

Beyond the modest financial commitment, the COP29 outcome text lacks detailed mechanisms to ensure the funds reach those most in need. There is no clear allocation strategy among developed countries, nor is it established which nations will bear the financial responsibility. Notably, the text ambiguously references various funding sources without specifying how private finance will be leveraged.

• The NCQG lacks commitment to exclude interest-bearing loans as climate finance.
• Assurances of “scaling up” financing to $1.3 trillion remain vague and non-committal.

David Abudho, climate justice lead for Oxfam in Africa, lamented the lack of ambition, describing the agreement as a “soulless triumph for the rich, but a genuine disaster for our planet and communities.”

The Path Forward: Mobilizing Private Finance

With public finance currently falling short, the burden of meeting climate finance needs may largely fall upon development finance institutions and their ability to attract private investment. According to Marco Serena from the Private Infrastructure Development Group, while the $300 billion figure is inadequate, it offers a starting point he believes could be built upon by de-risking investments and structuring capital in innovative ways.

Holger Rothenbusch of British International Investment emphasized the urgent requirement for adaptation financing, which should come predominantly as grants to alleviate potential financial burdens on developing countries. He stressed that many adaptive infrastructure projects demand direct public or donor support due to their non-commercial nature.

Need for Comprehensive Reform in Climate Action

Feeling disenfranchised, various stakeholders are calling for a significant overhaul of the COP process. Proposals include improved transparency mechanisms and a more equitable distribution of financial responsibilities. South Africa’s Ivor Ichikowitz voiced his frustration, urging Global South nations to lead the negotiations process rather than be passive recipients of inadequate offers.

The renewed call for reform reflects the broader disillusionment with the current state of global climate governance—a sentiment exacerbated by events such as Donald Trump’s return to the US presidency, which brought back fears of undermining global climate efforts.

Final Thoughts

As the world grapples with the challenges of climate change, the outcomes from COP29 underscore the pressing need for more impactful global cooperation and strategic financial mobilization. While the immediate agreement may fall short, it underscores a critical juncture for rethinking and revitalizing international climate finance frameworks.

African and other developing nations must now pivot toward innovative solutions and proactive measures, leveraging both public and private sector resources, to secure their resilience against an uncertain climate future.

To stay informed and engaged on climate finance issues and ongoing developments, consider subscribing for comprehensive coverage on topics spanning finance, politics, and sustainable development.

Source: https://african.business/2024/11/finance-services/cop29-ends-with-finance-fiasco