COP29 Falls Short on Finance

Credit: Murad Sezer/Reuters via Gallo Images

By Andrew Firmin
LONDON, Dec 2 2024 (IPS)

COP29, the latest annual climate summit, had one job: to strike a deal to provide the money needed to respond to climate change. It failed.

This was the first climate summit dedicated to finance. Global south countries estimate they need a combined US$1.3 trillion a year to transition to low-carbon economies and adapt to the impacts of climate change. But the last-minute offer made by global north states was for only US$300 billion a year.

The agreement leaves vague how much of the promised target, to be met by 2035, will be in the form of direct grants, as opposed to other means such as loans, and how much will come directly from states. As for the US$1 trillion annual funding gap, covering it remains an aspiration, with all potential sources encouraged to step up their efforts. The hope seems to be that the private sector will invest where it hasn’t already, and that innovations such as new levies and taxes will be explored, which many powerful states and industry lobbyists are sure to resist.

Some global north states are talking up the deal, pointing out that it triples the previous target of US$100 billion a year, promised at COP15 in 2009 and officially reached in 2022, although how much was provided in reality remains a matter of debate. Some say this deal is all they can afford, given economic and political constraints.

But global north states hardly engaged constructively. They delayed making an offer for so long that the day before talks were due to end, the draft text of the agreement contained no numbers. Then they made a lowball offer of US$250 billion a year.

Many representatives from global south states took this as an insult. Talks threatened to collapse without an agreement. Amid scenes of chaos and confusion, the summit’s president, Mukhtar Babayev of Azerbaijan, was accused of weakness and lack of leadership. By the time global north states offered US$300 billion, negotiations had gone past the deadline, and many saw this as a take-it-or-leave it offer.

The negotiating style of global north states spoke of a fundamental inequality in climate change. Global north countries have historically contributed the bulk of cumulative greenhouse gas emissions due to their industrialisation. But it’s global south countries that are most affected by climate change impacts such as extreme weather and rising sea levels. What’s more, they’re being asked to take a different development path to fossil fuel-powered industrialisation – but without adequate financial support to do so.

These evident injustices led some states, angered by Babayev bringing talks to an abrupt end, to believe that no deal would have been better than what was agreed. For others, waiting another year for COP30 would have been a luxury they couldn’t afford, given the ever-increasing impacts of climate change.

Financing on the agenda

Far from being settled, the conversation around climate financing should be regarded as only just having begun. The figures involved – whether it’s US$300 billion or US$1.3 trillion a year – seem huge, but in global terms they’re tiny. The US$1.3 trillion needed is less than one per cent of global GDP, which stands at around US$110 trillion. It’s a little more than the amount invested in fossil fuels this year, and far less than annual global military spending, which has risen for nine years running and now stands at around US$2.3 trillion a year.

If the money isn’t forthcoming, the sums needed will be eclipsed by the costs of cleaning up the disasters caused by climate change, and dealing with rising insecurity, conflict and economic disruption. For example, devastating floods in Valencia, Spain, in October caused at least 217 deaths and economic losses of around US$10.6 billion. Research suggests that each degree of warming would slash the world’s GDP by 12 per cent. Investing in a transition that reduces greenhouse gas emissions and enables communities to adapt isn’t just the right thing to do – it’s also the economically prudent option.

The same problems arose at another recent summit on a related issue – COP16 of the Biodiversity Convention, hosted by Colombia in October. This broke up with no agreement on how to meet the funding commitments agreed at its previous meeting. The international community, having forged agreements to address climate change and protect the environment, is stuck when it comes to finding the funding to realise them.

What’s largely missing is discussion of how wealth might be better shared for the benefit of humanity. Over the past decade, as the world has grown hotter, inequality has soared, with the world’s richest one per cent adding a further US$42 trillion to their fortunes – less than needed to adequately respond to climate change. The G20’s recent meeting said little on climate change, but leaders at least agreed that ultra-wealthy people should be properly taxed. The battle should now be on to ensure this happens – and that revenues are used to tackle climate change.

When it comes to corporations, few are richer than the fossil fuel industry. But the ‘polluter pays’ principle – that those who cause environmental damage pay to clean it up – seems missing from climate negotiations. The fossil fuel industry is the single biggest contributor to climate change, responsible for over 75 per cent of greenhouse gas emissions. It’s grown incredibly rich thanks to its destructive trade.

Over the past five decades, the oil and gas sector has made profits averaging US$2.8 billion a day. Only a small fraction of those revenues have been invested in alternatives, and oil and gas companies plan to extract more: since COP28, around US$250 billion has been committed to developing new oil and gas fields. The industry’s wealth should make it a natural target for paying to fix the mess it’s made. A proposed levy on extractions could raise US$900 billion by 2030.

Progress is needed, and fast. COP30 now has the huge task of compensating for the failings of COP29. Pressure must be kept up for adequate financing combined with concerted action to cut emissions. Next year, states are due to present their updated plans to cut emissions and adapt to climate change. Civil society will push for these to show the ambition needed – and for money to be mobilised at the scale required.

Andrew Firmin is CIVICUS Editor-in-Chief, co-director and writer for CIVICUS Lens and co-author of the State of Civil Society Report.