COP29 Climate Summit Countdown Starts With Finance at Forefront

(Bloomberg) -- Political leaders said this year’s COP29 talks will center on a challenge they’ve failed for years to overcome: massively increasing funds to help poorer countries fight global warming. 

At the Petersberg Climate Dialogue, Germany’s foreign affairs minister Annalena Baerbock said developing nations would need $2 trillion annually, with half of that coming from foreign sources. The event in Berlin this week is an important point in the climate diplomacy calendar leading up to the annual United Nations climate summit, which will take place in Baku in November. 

Mukhtar Babayev, the Azerbaijani minister who’s set to preside over COP29, criticized the World Bank and the International Monetary Fund for not stepping up with more support at the Spring Meetings held earlier this month in Washington.

“We know that the world needs to increase the overall flow of climate finance by several multiples,” Babayev said. “While we heard a great deal of concern and worry, we did not yet see adequate and sufficient action.”

Azerbaijan, a major fossil fuel producer, was appointed the host of COP29 in a last-minute decision at last year’s meeting in Dubai, where the world agreed for the first time to move away from dirty energy. Now the focus shifts to how to fund the transition, especially in the poorest countries. 

Babayev stressed that the Paris Agreement’s long-term target of keeping global temperatures from rising more than 1.5C from pre-industrial levels has not yet been breached. But time is running out with warming currently at 1.2C. 

With less than seven months to go to COP29, countries must work out how to raise more money. For much of the past decade, developed countries failed to deliver on a commitment to provide poorer nations with $100 billion a year. The goal was only reached in 2022. Landmark rules for global voluntary carbon markets, which could spur huge amounts of finance, have also not yet been agreed.

Unlocking fresh funds will not be easy with tepid growth and high inflation squeezing government budgets. Donor nations have said that public money won’t be enough, and that concessional financing from multilateral development banks and innovative financial solutions are necessary. 

Baerbock also called for countries to widen the pool of donors to nations such as China, which has rapidly developed over the past three decades and is now the world’s biggest carbon emitter. That’s likely to cause tensions at the talks in Baku.

“The world has changed since 1992,” Baerbock told delegates in Berlin. Back then, she said, the richest countries made up 87% of the global economy but now account for only half. “I strongly urge those who can to join our effort, and particularly the strongest polluters of today.”

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