World leaders and COP29 negotiators face the challenge of setting a new financing target to meet the costs of low-income countries’ adaptation to climate change.
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As world leaders continue their discussions at COP29 in Baku, Azerbaijan, negotiators agree that substantial funding is needed to help low-income countries adapt to climate change.
However, disagreements remain over who should bear this financial responsibility. And the numbers for this new climate finance target are enormous.
According to many experts and reports, combating the intensifying effects of climate change requires trillions of dollars, a cost that is far from being affordable for the poorest countries.
The new funding target is intended to replace the annual target of $100 billion (€95 billion) set in 2009, which was narrowly reached in 2022two years late.
According to a report by the Climate Policy Initiative, global financing for the fight against climate change approached $1.3 trillion (€1.2 trillion) per year on average in 2021/2022, compared to $653 billion (€619 billion). billion euros) in 2019/2020.
Other organizations estimate that the amount needed is 1,000 billion dollars (948 billion euros) per year.
According to some groups According to experts, the amount of financing needed to fight climate change is expected to reach $9,000 billion (€8,500 billion) by 2030.
To meet these enormous monetary needs, governments around the world are exploring various options, including wealth taxes, shipping taxes, and debt.
Backed by taxpayers, large international banks have become the main providers of climate finance for developing and fastest-growing countries.
These banks were one of the main reasons why, in 2022, the world met the goal that countries set in 2009 of providing developing countries with $100 billion per year to fight climate change .
However, international development banks have been urged to act more quickly and effectively.
The research group Climate Policy Initiative estimates that the world needs about five times the current annual amount of climate finance to limit warming to 1.5°C.
The independent high-level panel on climate finance estimates that by 2030, developing countries (excluding China) will need $2.4 trillion (US$2.3 trillion). euros) per year to invest in the climate sector.
The World Bank provided $42.6 billion (€40.4 billion) in financing the fight against climate change in its last fiscal year, an increase of 10% compared to the year previous.
Developing countries depend much more on these banks for financing climate projects than industrialized countries.
ADVERTISEMENTCommercial banks and corporations financed more than half of climate-friendly projects in the United States and Canada in 2022, according to the Climate Policy Initiative.
In contrast, private lenders only contributed 7% to this type of financing in sub-Saharan Africa. This disparity is explained by the difficulty for developing countries to access low interest rates.
Developed countries, including the United States and the European Union, recognize that developing countries have climate investment needs in the trillions. However, they have not yet set a specific target for international financial support.
In 2023, the European Union and its 27 Member States contributed €28.6 billion from public sources and mobilized an additional €7.2 billion in private finance to help developing countries fight against climate change.
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