Consensus on new climate finance goal remains elusive
Developing countries want ‘x’ trillion dollars annually, from 2025 to 2035, as grants or low cost loans to help their climate transition; developed countries seek more wiggle room in timing, fund sources, and financing modes
by Jacob Koshy · The HinduA day before this round of UN climate talks are scheduled to end in Baku, developed and developing countries are far from agreeing on a number — still denoted as ‘x’ in the draft text — that will define the world’s new collective quantified goal (NCQG) on climate finance.
The NCQG refers to money that will be given by developed countries to developing countries to help them meet their goals to transition away from the continued use of fossil fuels and curb greenhouse gas emissions. Developing countries have been repeatedly saying that this would cost “trillions of dollars”. To this end, developed countries say they have mobilised and transferred $115 billion in 2021-22 – though developing countries claim that target has not yet been met – but as per the Paris Agreement, a new target above $100 billion must be agreed upon by 2025.
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A crucial point that is to be resolved is making a clear distinction between the NCQG and climate finance in general. Climate finance technically includes every dollar that is even remotely connected to some aspect of ‘climate’ and therefore includes profit-making business investments as well. By this metric, there is agreement that global climate finance flows in 2021-2022 increased by 63% compared to 2019-2020, reaching an annual average of $1.3 trillion.
Fissures on finance
According to a contentious paragraph in the current version of the agreement text made public on Thursday morning, a block of developing countries have submitted that the NCQG must be ‘x’ trillion dollars annually, from 2025 till 2035, to be made available to all developing countries as grants or low-cost loans. This money must be provided not only to help countries meet their nationally determined contributions but also buffer against existing threats of climate change and compensate for climate damage that has already taken place. The NCQG should also reflect contributions by developed countries on the basis of their historical contribution to existing carbon concentrations in the atmosphere as well as their per capita GDP, they said.
Another version of this paragraph, ostensibly proposed by developed countries, removes the mention of ‘grants and loans’ and says that the ‘x’ trillion dollars, to be given annually to developing countries by 2035, can be made through all finance sources. A final text is expected to choose between one of these interpretations or may find a middle ground that is acceptable to both groups.
“Then there’s also a dispute on what proportion of the fund will be made available to the LDCs (the 47 Least Developed Countries) and the SIDS (Small Island Developing States). Another disagreement is on how much of the money will be from public finance. Of the $100 billion that earlier came in, only about $20 billion was public money,” a person close to the negotiations told The Hindu.
Also Read: ‘Unwieldy’ first draft at Baku sets 2030 goal of $5 trillion for climate action
‘Hanging by a thread’
Representatives from several developing countries expressed dissatisfaction at the state of progress.
“The document needs to be specific on the structure, quantum, quality, timeframe, access, transparency and review. The goal for mobilisation needs to be $1.3 trillion, with $600 billion of this coming through grants and grants-equivalent resources,” Union Environment Secretary Leena Nandan said in a statement. “Expansion of the contributor base, reflection of conditional elements such as macroeconomic and fiscal measures, suggestion for carbon pricing, focus on private sector actors for scaling up resource flows as investments – all are contrary to the mandate for the goal. NCQG is not an investment goal.”
“Every year, we make the long journey to COP because it is where we are able to advocate for the 1.5 world that keeps my people above water. That world is hanging by a thread and I am here once again attempting to secure our place in it. And what I’m confronted with here is a text that neither secures 1.5 nor gives me the finance I need to live in the 2.7 world we are all hurtling toward,” said Tina Stege, the climate envoy for the Marshall Islands, referring to the goal of limiting global warming to 1.5 degrees Celsius above pre-industrial levels, though current climate policies are projected to result in a 2.7 degree increase in average global temperatures by the end of the century. “We have heard clearly in this room that this text is completely disconnected from real lives. As has been said: We cannot play geopolitics with the lives of our citizens,” she added.
Published - November 21, 2024 07:17 pm IST