COP29 | A new political reality behind climate finance

(Baku) The promise of rich countries at COP29 to release $300 billion per year in climate finance for poor countries aroused their anger, but it also reflects an evolution in global political realities.

The two marathon weeks of the COP in Baku opened a few days after the American presidential election of Donald Trump, who displays his skepticism on both the climate issue and that of international aid.

At the start of the year, elections in Germany, Canada and Australia could be won by conservatives, traditionally more reticent when it comes to environmental policy.

With the exception of the United Kingdom, whose new Labor government has put climate at the top of its agenda, in most Western countries, inflation and the budgetary consequences of the Russian invasion of Ukraine have been right ambitious pro-climate measures.

At COP29, Germany and the European Union maintained their position as climate defenders, but insisted on the need for a new approach to the financial aid expected from historic polluters for the most vulnerable countries. poor.

“We should have no illusions: we face major geopolitical challenges,” European Union negotiator Wopke Hoekstra told delegates at the COP closing session on Sunday.

But he promised that Europe would be there, hailing COP29 as “the start of a new era” for climate finance.

German Foreign Minister Annalena Baerbock, a member of the Greens, also called for a certain flexibility: Europe must “assume its responsibilities, but without making promises that it cannot keep”.

From the point of view of environmental activists, climate finance is a duty, not a choice, for the richest nations whose decades of greenhouse gas emissions have caused a crisis that hits the poorest and hardest. vulnerable.

The year 2024 is set to become the hottest year on record. Since COP29, deadly storms have hit the Philippines and Honduras, and Ecuador has declared a national emergency due to drought and wildfires.

“Creative accounting”

The promise of historic polluters to release $300 billion per year by 2035 to support the energy transition and adaptation to climate change in developing countries is a step compared to the previous commitment of $100 billion per year, but everyone recognizes that this is not enough.

The agreement reached at COP29 also mentions an overall climate financing objective, from all sources, of $1,300 billion.

But on the envelope of 300 billion dollars alone, some activists are skeptical.

“It is, in a way, also an empty promise,” says Mariana Paoli of the NGO Christian Aid.

For her, this objective comes down to “creative accounting”, regretting the lack of clarity on the part which will come from public funds and subsidies rather than loans.

The role of multinational banks

The Baku agreement also provides that, from now on, climate financing from non-developed countries granted via multilateral development banks can be counted towards the 300 billion objective.

The text specifies that financial contributions remain “voluntary”: China, the world’s leading polluter, refuses to be subject to the same requirements as developed countries in the name of their historical responsibility.

In a joint statement published during COP29, the multilateral development banks – within the World Bank Group based in Washington, but which also includes the Asian Infrastructure Investment Bank based in Beijing – considered that they could finance $120 billion per year for the climate and mobilize $65 billion from the private sector by 2030.

Melanie Robinson, director of the climate program at the World Resources Institute, justifies this use of multilateral development banks because of the quantity of capital they can mobilize and the tools at their disposal.

“They are the most effective way to transform every dollar of funding into impact on the ground,” she believes.

And it is already looking towards the COP30 which will be held next year in Brazil, encouraged by a Brazilian initiative during the last G20 in Rio with a view to reforming financial institutions to integrate climate concerns.

“There really is a much bigger opportunity for us: to change the entire financial system.”