More than 80 countries have put together a proposal that could potentially bring in additional financing to the $1.3 trillion climate finance target being proposed by many developing nations at COP29.
This proposal was made by the African group, Barbados, Least Developed Countries, and the islands. In a joint press statement, the negotiating blocs proposed a path to the COP29 presidency to resolve discussions regarding the new climate finance goal, New Collective Quantified Goal (NCQG), for climate finance to achieve $1.3 trillion needed to undertake climate action. Negotiations on NCQG have been slow, with many developing countries expressing disappointment that developed nations have not put a number on the table.
“More than 80 countries vulnerable to climate change that urgently need finance are calling for an additional effort to provide and mobilise $1.3 trillion per year, moving beyond the $100 billion agreed upon in 2009,” Shantal Maxine Munro Knight, Party Head of Barbados and Minister in the Prime Minister’s Office of Barbados, said at a press conference.
In 2009, developed countries agreed to a goal of collectively mobilising $100 billion per year to address the needs of developing countries to mitigate and adapt to climate change by 2020 and through to 2025. This goal, however, was only met in 2022.
At the press conference, Knight explained that developed countries can use innovative strategies such as redirecting fossil fuel subsidies of developed countries to raise new public resources and reorient public spending to meet the $1.3 trillion that is needed. “We jointly request to work together for a roadmap,” she added.
Finance can be redirected through fossil fuel subsidies. “That is subsidies away from oil and gas, aviation, shipping etcetera. That is one of the ways of doing that,” Knight told Down To Earth (DTE). A draft on NCQG released in the early hours of November 21, highlighted that global fossil fuel investments averaged $958 billion per year in 2021-2022, and that fossil fuel subsidies averaged $1.1 trillion per year for the same period.
Knight added that all developing countries have been negotiating, putting different suggestions from developing countries as a whole and recommendations for the way forward. She also explained that the proposal is partly drawn from the Bridgetown Initiative 3.0. Bridgetown was announced by the Prime Minister of Barbados Mia Amor Mottley to drive financial system reforms necessary for climate action.
“We want this option of innovative mechanisms be included in the NCQG text. This option can be explored as part of the mobilisation component of the finance goal,” Knight explained. ‘Mobilising climate finance’ involves governments shifting private finance toward climate action in developing nations while ‘provision’ refers to the transfer of international public funds from developed to developing countries for climate action.
G77 has asked for a financial provision of $600 billion. The new goal should be achieved and delivered through grants and highly concessional finance to avoid worsening the debt crisis, the negotiators said.
Though developed countries finally met their goal of $100 billion in 2022, nearly 70 per cent of this money was again in the form of loans, according to Oxfam International. According to the International Monetary Fund, as of September 30, 2024, 11 countries are in debt distress and 24 others are at high risk of dent distress. A policy brief reported that more than half of African nations are spending heavily on paying interest to their creditors, limiting investments on healthcare.
The European Union’s Wopke Heokstra told DTE at a press conference on November 20 that the bloc is looking at the whole financial package. “Debt relief is also very high on the agenda. I am not going to comment on each of the boxes as it will not be helpful for the negotiations,” he said.
On November 21, the African negotiator said Africa spends 5-9 per cent of gross domestic product every year on responding to challenges the continent faces due to climate change. “We are asking additional and affordable financing,” Ali D Mohamed, Chair of the African Group of Negotiators, said at the press briefing.
Knight told DTE that developing countries need a number from the developed nations. The new draft text on NCQG does not have a number yet. “We just have a few hours left for COP29 to end. Without a number, how do you get a fit for purpose structure? We need that number as an anchor and that would allow us to deal with other issues such as improving access to finance and quality and transparency,” she explained.