New climate finance goal discussions remained limited to process, substantive elements pushed to COP29
Photo for representation: iStock As the dust settles on the 28th Conference of the Parties (COP28) to the United Nations Framework Convention on Climate Change (UNFCCC), we look back at the major finance-related outcomes from the landmark climate change conference.
A New Collective Quantified Goal (NCQG) on climate finance is to be decided at COP29 by 2024. The need for countries to identify a new climate finance goal has arisen as a response to the non-negotiated, arbitrary goal announced at COP15 in 2009, wherein, developed countries committed to mobilising $100 billion per year from 2020 onwards through to 2025 to support climate action in developing countries. However, this goal has not been met in any year since.
In 2021, the total climate finance provided by developed countries was $ 89.6 billion, according to the Organization for Economic Cooperation and Development. In addition to not being met, the $100 bn goal does not represent the scale of resources required by developing countries — an estimated $5.9 trillion up to 2030. In this context, NCQG is expected to be reflective of the needs and priorities of developing countries.
The Independent High-Level Expert Group on Climate Finance estimated that emerging markets and developing countries, excluding China, need $2.4 trillion of investment a year for just energy transition, adaptation and resilience, loss and damage and the conservation and restoration of nature by 2030.
A report released by the United Nations Conference on Trade and Development (UNCTAD) at COP28 calculated that $500 billion should be channelled to developing countries in 2025 under the new finance goal to support climate action. This should then be scaled up to $1.55 trillion by 2030.
Meena Raman, head of programmes of Third World Network, noted at the launch of the report that developed countries do not want to talk about the quantum of the goal. They say it is a political issue.
Countries negotiated NCQG at COP28 in Dubai as well, with the major outcome of two weeks of talks being an agreement to shift the mode of work on the climate finance goal from technical deliberations to negotiations-centric ones in the coming months leading up to COP29.
On day one of the negotiations on NCQG, developed and developing country groups aspired to discuss ‘substantive elements’, which includes timeframe (whether the goal will first be linked to a five year period through 2025 or a longer one), structure (whether there will be a single quantified goal, what type of quantitative or qualitative sub-goals it should have), transparency arrangements for tracking progress and scope of the goal — in addition to the work scheduled for 2024.
By day two, however, several of the positions were reversed and by the end of the first week, consultations shifted to an informal mode, which was closed to civil society groups. “In the second week, a clean text was produced on the work programme but substantive elements continued to be a sticking point,” Marcin Kowalczyk, senior climate policy specialist at the World Wildlife Fund (WWF) in Poland, told Down To Earth (DTE).
Also in the second week, the European Union referred to expanding the donor base, which calls for global efforts to fund climate action instead of only from developed nations, at a press conference. Kowalczyk explained that this is a contentious issue and will be discussed at COP29.
Another issue between developed and developing countries is Article 2.1c of the Paris Agreement, which aims to make financial flows consistent with a pathway aligned to low green emissions and climate-resilient development.
Developing countries have expressed fears that wealthy nations could add conditionalities to the climate finance that is provided. For example, India, on behalf of the Like-Minded Developing Countries bloc, expressed concerns over Article 2.1c orienting finance away from fossil fuels and other activities, which could help eradicate poverty, in its submission on the Sixth Technical Expert Dialogue under the Ad Hoc Work Programme of the NCQG. The article, the country noted, is not in line with the Paris Agreement.
At a high-level ministerial dialogue on the NCQG on climate finance held on December 3 also in Dubai, some participants said that the structure should include a goal on domestic and other policy incentives, which would aim at “making finance flows consistent with a pathway towards low greenhouse gas emissions and climate-resilient development” – a reference to Article 2.1c. “Article 2.1c will be discussed at future meetings,” Saber H Chowdhury, special envoy to Prime Minister of Bangladesh for Climate Change, told DTE at a press briefing.
The only aspect that saw full convergence towards the end of COP28 was the need to shift NCQG work from the technical mode (on what the goal should look like) to the negotiations mode (for the preparation of draft text based on insights from technical discussions ahead of COP29).
The inability of Parties to engage constructively on substantive elements within the given timeframe led to the watering down of the draft text from a 205-paragraph iteration to a 26-paragraph four-pager. This resulted in a relatively weak version, focusing on the call to move towards negotiations in the coming year.
It was a missed opportunity, as countries could have accelerated work on the contentious substantive elements. It was decided that at least three Technical Expert Dialogues and meetings conducive to negotiations are to be held in 2024, along with increased political engagement with ministers starting early in the year.
Developing countries, including India and China, called for operationalising an agreed upon definition of climate finance on priority at finance related negotiations at COP28, as this remains elusive till date. The final text of the Global Stocktake also made note of the “diversity of definitions of climate finance in use by Parties and non-Party stakeholders…”.
The UNFCCC Standing Committee on Finance is to prepare a report on ‘common practices regarding climate finance definitions, reporting and accounting methods among Parties and climate finance providers’ for discussion at COP29.
The need to address structural changes in the global financial architecture in the context of climate change has been acknowledged at COP28. “The global financial architecture’s main foundations are The Bretton Woods Institutions (which include the IMF and World Bank) created in 1944, when most of the Global South was still colonised. It was created for extractive purposes from the colonies and not for climate or development,” Fadhel Kaboub from the Global Institute for Sustainable Prosperity, an independent public policy think-tank, told DTE.
Issues of sovereign debt, high cost of capital and inherently unequal structures of international financial institutions hindering climate ambition in developing countries were highlighted. Beginning with the UAE Leader’s Declaration on a Global Climate Finance Framework which comprises a host of different suggestions for increasing the availability, affordability and accessibility of climate finance.
Through various official government announcements and side events at COP28, the focus on working towards systemic change appears to have gained momentum. The main initiatives in this vein announced at COP28 included:
Within negotiations related to finance, the call by developing countries for adequate financial assistance as a prerequisite to scaling their ambition continued since the Bonn Climate Change Conference held in June 2023. The decision text of the Global Stocktake reflected the need to scale up ‘non-debt instruments’ and ‘highly concessional’ finance for climate ambition in developing countries.
The broader conversation on the need for transformation at a systemic level to support vulnerable economies extended beyond negotiation rooms, which could be considered a step in the right direction.
We are a voice to you; you have been a support to us. Together we build journalism that is independent, credible and fearless. You can further help us by making a donation. This will mean a lot for our ability to bring you news, perspectives and analysis from the ground so that we can make change together.
.png)
Comments are moderated and will be published only after the site moderator’s approval. Please use a genuine email ID and provide your name. Selected comments may also be used in the ‘Letters’ section of the Down To Earth print edition.