A ‘paltry’ $300 billion climate finance deal on offer, is COP of any benefit anymore 

From the very beginning, there were doubts over Baku climate talks—COP29—achieving/delivering anything major or concrete on the climate finance required to deal with the global climate crisis.

Dubbed ‘finance COP,’ countries were supposed to agree on a New Collective Quantified Goal (NCGC), a commitment outlining how much developed nations will contribute to developing countries for climate action over the next decade.

In the end, as feared, the annual climate conference concluded with developing nations, including India, slamming the $300 billion climate finance deal as “inadequate and insufficient to address escalating impacts of climate change” across the world.

In its strong objection, India (which follows the CBDR principle) rejected the package as “paltry”. 

The country also accused the COP29 presidency and the United Nations Framework Convention on Climate Change system of forcing through the deal without giving it opportunity to speak its mind.

“This document is little more than an optical illusion,” India’s Chandni Raina, Adviser, Department of Economic Affairs, was quoted as saying, slamming the “meagre” $300 billion offer by 2035 as “too little and too distant”. Raina said the adoption process was not just “unfair” and “stage-managed,” it also reflected the troubling lack of trust in the UN system.

“We had informed the presidency and the secretariat that we wanted to make a statement before any decision on the adoption. However, and this is for everyone to see, this has been stage-managed, and we are extremely disappointed with this incident,” Raina said.

US President Joe Biden, however, termed it a “historic outcome”, while EU climate envoy Wopke Hoekstra said Baku COP would be remembered as “the start of a new era for climate finance”.

The contentious deal

So, what exactly did COP29 achieve after two weeks of hectic negotiations in Baku, the capital of Azerbaijan.

Basically, a new climate finance package of $300 billion annually by 2035 to replace the $100 billion pledge made in 2009 was agreed upon to help developing nations combat climate change.

Though a broader target of $1.3 trillion annually by 2035 was also adopted, only $300 billion annually had been designated for grants and low-interest loans from developed nations to help developing nations transition to low-carbon economies and prepare for climate change.

So far as the $1.3 tn figure is concerned, “all actors”, including public and private, were asked to “work together” to reach the level by 2035.

The finance relies on public and private, bilateral, multilateral and alternative sources rather than any clear, grant-based funding. According to critics, there was “no real money on the table” in the absence of “tangible financial commitments and clear timelines for implementation” in the deal

A fact also is that many pledges made at such conferences go unfulfilled. For example, in 2009, developed nations promised to provide $100 billion annually by 2020—a pledge that was rarely ever met. In 2020 the majority of funds were in the form of loans.

According to Vaibhav Pratap Singh, Executive Director of the Climate and Sustainability Initiative (CSI), “Financial gap restricts the development of renewable energy and access to it, leaving many communities vulnerable to climate change impacts”.

“Decarbonisation offers developing countries a chance for economic growth while reducing carbon emissions. However, limited financing and lower-than-expected national climate and qualitative goals (NCQG) can hinder vital decarbonisation efforts, particularly in least developed countries (LDCs). Consequently, these challenges may stunt economic growth and resilience, pushing these areas towards more carbon-intensive sectors that exploit local resources,” he adds.

As per experts, most of the finance is likely to come from private investment and alternative sources like proposed levies on fossil fuels and frequent flyers

While the deal states that developed nations would be “taking the lead” in providing $300 billion, the US and the EU want emerging economies like China, a rich country and one of the top emitters as well, to also contribute to this fund, as per reports.

Is COP of any use? 

The next COP in 2025 is expected to issue a report on how to boost climate finance.

However, Baku COP also raised a legitimate question regarding the future of such conferences and their ability to address global climate threat.

Environmentalists say even after years of climate agreements and negotiations in various parts of the country, greenhouse gas emissions and global temperatures continue to rise.

In fact, 2024 is expected to be the hottest year recorded.

So, can the COP process bring together countries to agree to a common ground?   

The differences

The Baku conference witnessed differences, not just between rich and poorer countries but also in the developing world.

There were hiccups on the first day itself with a delay in adopting the agenda after China (on behalf of BASIC Group) requested for the inclusion of “climate change-related unilateral trade-restrictive measures” like CBAM in the agenda, calling it an unfair economic burden on developing nations under the pretext of climate action.

The presiding country, however, decided the issue would be discussed informally.

Normally, such delays develop only towards the end of such conferences, not on the first day.

Divisions over climate-linked trade measures underlined the existing tensions between nations with different agendas and viewpoints. 

Differences between least developed countries (LDCs) and small island developing states (SIDS) over differences over financial demands further complicated negotiations, experts say.

Adding to the confusion was the election of Donald Trump as the US President

Along with his threat to withdraw the US from global climate efforts, the appointment of a “climate skeptic” as the energy secretary in the country (one of the largest emitters in the world) was another issue.   

Trump is a known climate skeptic and believes that climate change and efforts to boost green energy to be a “scam”. 

In 2017, he had withdrawn from the Paris Agreement—a legally binding international treaty with the main goal of limiting temperature increases to 1.5°C above pre-industrial levels.

The US rejoined the Paris Agreement in 2021 under Biden.

Trump’s electoral promises also include drilling more oil.

In last year’s COP28 summit in Dubai, a call to “transition away” from coal, oil, and gas was made. However, the Baku talks only referred to the Dubai deal without explicitly repeating the call for a transition from fossil fuels.

Perhaps as former UN Secretary-General Ban Ki-moon was quoted as saying, the COP Process was “no longer fit for purpose”.

India’s stance on climate

India’s stance on climate responsibility, finance and mitigation is well documented.

The long-term goal is to move towards a system that doesn’t lead to irreversible damage to the environment. At the same time, India’s growth story has to be protected in mind the fundamentals of the common but differentiated responsibility (CBDR).

India holds developed countries responsible for the current situation, their historical emissions in driving climate change, and wants finance, technology and capacity-building support to also come from them.

It believes that not all countries can be held responsible for the state of climate in the world today; therefore, action, including on the controversial issue of fossil fuels, has to be taken on the basis of individual national responsibilities and capabilities.

At the High-Level Ministerial Dialogue Climate Change Adaptation during the climate summit, India said, “Developing countries are suffering the impacts of climate change largely due to the historical emissions of developed countries. For us, as developing countries, our people’s lives, their very survival, and their livelihoods are at stake.”