COP29: How rich nations ducked their climate finance duties

The Baku summit promised trillions for climate action but delivered hollow rhetoric.

A demonstration at the COP29 UN Climate Summit in Baku, Azerbaijan, on November 16.  | Photo Credit: AP

In the global climate negotiations that continued at the 29th edition of the Conference of Parties (COP29) in Baku, Azerbaijan, between November 11 and 22, there was agreement on one issue. If the international community has to take forward a multilateral agenda to keep global warming below 2^oC, and even better at the 1.5^oC ceiling, finance to the tune of trillions of dollars will be needed in the years to 2030 and onwards to 2050. Those resources must be urgently mobilised since the world is off track in its effort to stay within the global warming targets. It has completely gone off the rails when it comes to mobilising the needed resources. Hence, COP29 was slated as the “finance COP” (aligning climate finance contributions with estimated global needs), wherein clear commitments to the realisation of a New Collective Quantified Goal (NCQG) would be made.

A large part of climate spending would have to occur in developing countries, which cannot mobilise resources of that magnitude on their own without collapsing in crises. So, common sense suggests that developed countries, which are responsible for much of the cumulative carbon emissions that have contributed to the ongoing global warming, must provide a large part of the needed finance. It helps they can do that with little pain given the capital and wealth accumulated over the years of excess emissions. This perception was reflected in the Paris Agreement’s principle of “Common but Differentiated Responsibilities, and Respective Capabilities”. The less developed countries in the G77 and other like-minded states have indicated that the resources that must flow from the Global North to the Global South must be around $1.3 trillion a year until 2030. That is the figure negotiators at Baku must commit to deliver—largely as public flows in the form of grants or concessional finance.

The fact that COP29 was identified as the finance COP meant that leaders and officials congregating at Baku were aware of the ask for long. In fact, preparations had begun once the decision was made to move on from the disappointing experience with the promise of $100 billion a year by 2020 made at Copenhagen in 2009 to the NCQG, with a substantial step up in flows. Given this background, the failure to evolve a consensus on the issue by the end of the first week at Baku, resulting in an impasse on the matter, is a sign of the breakdown of multilateralism. And no one else is to blame other than the developed countries that want to abrogate their responsibility to deliver a satisfactory NCQG.

Rather, the messages sent out leading up to and at Baku seek to divert attention from the principal task. The developed countries are raking up one or other extraneous issue to stall agreement on an NCQG and an associated timeline and means of implementation. The first of these has been the effort to widen responsibility for financing from those who have swallowed up most of the available carbon budget and to call for the “richer” less developed countries like China, India, and Brazil to share the burden of financing mitigation, adaptation, and compensation for loss and damage. These countries, especially China, have taken on additional responsibilities themselves. Asking them to do more is a separate agenda. Linking that to the responsibilities of principal polluters, the so-called “advanced nations”, is nothing but diversionary.

But there is a larger diversionary agenda being pursued with the assistance of the IMF, the World Bank, and other multilateral development banks. This involves pushing the idea that the financial resources required to tackle the climate challenge are enormous, and with the private sector controlling a significant share of the world’s financial surpluses, only private initiative can effectively implement the programmes needed to achieve the Sustainable Development Goals and address climate change.

The corollary of that position is that the role of governments is no more to try and move surpluses from private to public hands (through new forms of international tax cooperation, for example) but to use the available public resources as means to unlock private investments and expenditures. The call is to go beyond the recognition that the tasks of ensuring the needed carbon transition, and building resilience the world over, are primarily governmental or “public” responsibilities, and that cooperation among governments (or multilateralism) is the best means to implement those tasks. Pragmatism demands, it is argued, that these tasks and therefore multilateralism, or the conjoint responsibilities of global governments, must be “outsourced”.

The limited prospects of success in that effort are obvious. Since climate mitigation and adaptation expenditures are in most areas unlikely to yield any or significant monetary returns while delivering large social benefits, interest-bearing borrowing cannot be a viable form of financing. Hence the need for these to be public flows in the form of grants or concessional loans which are in large measure grant-equivalent. It is also true that the climate finance requirements are so large that less developed countries, many of which are debt-stressed or have defaulted on their external debt payments, cannot be expected to raise the needed resources domestically.

Thus, the burden of financing mitigation and adaptation efforts must largely be shouldered by governments in the developed countries. The social benefits from addressing these problems are not just immense, but also global: the developed would also derive those benefits not just the less developed, global majority countries, as UN Secretary-General António Guterres has reiterated. The private returns are too low and, in some cases, the risks too high for the private sector to take on the responsibilities unless they do so as mere implementers contracted by government to do a job in return for a fee.

But even that kind of apportioning of responsibilities between the state and the private sector is unlikely to work, because the incentives of the two sets of actors are incompatible. Governments want to realise social benefits for the public good; the private sector wants to realise profits to further the agenda of corporate accumulation.

Fortunately, the moment is conducive for aggressive public action. Enough surpluses have been garnered and accumulated by globalised big capital in the past 25 years. So multilateralism has a role to play in mobilising resources globally, and not just in implementing the agenda.

Unfortunately, it is at this time of challenges and opportunities that the developed countries citing their own “domestic problems” are withdrawing from a much-needed global financing push. Climate finance negotiations bear witness. Instead, they are making a case to outsource to the private sector what is clearly a responsibility only governments can bear. 

C.P. Chandrasekhar taught for more than three decades at the Centre for Economic Studies and Planning, Jawaharlal Nehru University, New Delhi. He is currently Senior Research Fellow at the Political Economy Research Institute, University of Massachusetts, Amherst, US.