COP29: Developed nations may pitch $200 to 300 billion in NCQG talks
This number hardly matches the expectations of the developing countries, and they are unlikely to accept it.
Baku: The New Collective Quantified Goal (NCQG) quantum that was being discussed in the corridors of COP29 at Baku Stadium on Tuesday was around USD 200 to 300 billion as the core public finance goal (to be delivered from developed to developing countries) with the rest mobilised through various sources including private finance and investments.
Though this number was not being discussed formally, it is something that the EU is likely to put forward, observers said. But, this number hardly matches the expectations of the developing countries, and they are unlikely to accept it. Developing nations expect at least USD 600 billion to be provided in grants.
The new finance goal is to be set from the floor of $100 billion.
In fact, there is a “COP29 Finance Staircase” that was discussed among observers based on data from the Independent High-Level Expert Group on Climate Finance co-chaired by Vera Songwe and Nicholas Stern, and Amar Bhattacharya as Executive Secretary. The IHLEG said on November 14 that COP29 in Baku should deliver a commitment to mobilise USD 1 trillion per year by 2030 in external finance from all sources for the investments necessary by emerging market and developing countries (EMDCs) other than China to be able to meet Paris Agreement goals.
It should mobilise about $1.3 trillion by 2035, according to a new report published by the Independent High-Level Expert Group on Climate Finance. Any shortfall in investment before 2030 will place added pressure on the years that follow, creating a steeper and potentially more costly path to climate stability.
Rich countries feel that the core goal should be around USD 250 billion, but that is described as “mobilised” - not “provided”. i.e. it assumes investment pull through from the private sector rather than being money in the bank, observers said. This position is very different from what developing countries expect.
“It is very clear for developing countries that the goal is 1.3 trillion USD per year and at least 600 billion to be provided in grants through public finance. That is the minimum we expect to have in NCQG. Otherwise, it means that developed countries have tried to shift away from their legal obligation of providing finance. We will stick to this demand. It is our historical demand. Developed countries now need to show political will in this critical situation in the context of climate crisis,” said Diego Pacheco, spokesperson for Like Minded Developing countries, a coalition which includes India.
“We heard some of the European countries talking about 200 to 300 billion USD as the new successive number for the USD 100 billion and that is small but important talks to unlock the talks here. Now we need to see them saying that on the record. We need them to say is that ‘provided’? Is that grants? loans? what’s the quality of that finance and what is the share that can go to adaptation finance?” said Linda Kalcher, executive director, Strategic Perspectives.
What the rich countries are also arguing is that their designation as the “rich world”, which dates back to the Kyoto protocol in 1994, no longer applies, and that countries such as China, now the world’s second largest economy, and Saudi Arabia, a G20 state, should also be contributing to the core of climate finance. Developing countries have said they will accept any renegotiation of the Paris Agreement as article 9.1 of the agreement states: “Developed country Parties shall provide financial resources to assist developing country Parties with respect to both mitigation and adaptation in continuation of their existing obligations under the Convention.”
“We need to see the differentiation between current contributors and new contributors (developing countries) and that needs to be reflected if nobody wants to reformulate the Paris Agreement in anyway,” added Kalcher.
For the first time in a COP setting, China has described its voluntary contribution to climate finance as amounting to 3.1 billion. Whereas the Annex 1 countries have pushed that the expanded donor base should be accountable.
Multilateral development banks believe they can deliver $120bn a year by 2030 to low- and middle-income countries, including $42 billion for adaptation (plus $65 billion from the private sector) as per a note issued by the World Bank. This is more than the $74.7bn collective climate financing mobilised in 2023 for low- and middle-income countries. Still, the Independent High-Level Expert Group said banks must triple their financing by 2030 to support climate goals.
Some are talking about “innovative sources of finance” to match the USD 1.3 trillion goal global levy on stock-market trades of 0.1%, as suggested by French President Emmanuel Macron.
Developed countries claimed earlier this year that they provided and mobilised $115.9 billion in climate finance for developing countries in 2022, exceeding the annual 100 billion goal for the first time and reaching a level that had not been expected before 2025. The claim was immediately contested by experts who believe the number to be an overestimate as a bulk of the amount mobilised is likely to have been loans leading to increased debt burden among developing countries.
In 2022, as in previous years, developed countries’ public climate finance provided bilaterally and through multilateral channels mainly took the form of loans (69% or $ 63.6 billion) and, to a lesser extent, grants (28% or $25.6 billion), the “Climate Finance Provided and Mobilised by Developed Countries in 2013-2022” report said.