COP 29: Who pays for climate finance? • FRANCE 24 English

Summary

At COP 29 in Baku, negotiators are discussing a substantial increase in climate finance, aiming to raise the annual target from $100 billion to $1 trillion. This surge is based on new estimates showing that developing countries need $2.4 trillion annually to address climate impacts. The issue of climate justice underscores the need for wealthier, historically polluting nations to contribute more, with emerging economies also being considered. Funding will likely come from multilateral banks, private investments, and global taxes, though political challenges remain. The proposed target highlights the urgent need for increased funding to address the global climate crisis.

Takeaways

• 😀 The COP29 summit is being held in Baku, and this year's event is focused on climate finance.
• 😀 The main goal of COP29 is to increase the current $100 billion annual climate finance target to $1 trillion.
• 😀 The $100 billion target was set in 2009 but has been deemed inadequate, with the real financial need estimated at $2.4 trillion annually for developing countries to combat climate change.
• 😀 Half of the $2.4 trillion needed for climate action could come from developing countries' own domestic budgets, leaving the rest to be provided by wealthier nations.
• 😀 Climate justice is a key issue, as developing nations argue that they should not bear the costs of the climate crisis they didn’t cause.
• 😀 There are significant disparities in the cost of implementing green energy, with Africa, despite having excellent solar resources, struggling to afford solar panels due to high capital costs.
• 😀 The proposed $1 trillion target represents 1% of global GDP, which is comparable to the annual profits of the fossil fuel industry over the last 50 years.
• 😀 The funding debate also includes the question of whether emerging economies like China and oil-rich nations such as Saudi Arabia should contribute, given their growing wealth and pollution levels.
• 😀 The potential sources of funding discussed include multilateral development banks like the World Bank and IMF, which could provide low-interest loans, but reforms are needed for this to work.
• 😀 Other funding mechanisms, such as global taxes on billionaires, polluting industries, and financial transactions, have been proposed to raise additional funds for climate action.

Q & A

What is the focus of the COP29 summit being held in Baku this week?

The COP29 summit focuses on climate finance, with an emphasis on increasing the annual target to help developing nations address the impacts of climate change, particularly in terms of reducing emissions and adapting to its consequences.

Why was the $100 billion annual climate finance target initially set, and why is it now being questioned?

The $100 billion target was set in 2009 as a promise to help developing nations combat climate change, but it was never based on sound economic reasoning. Experts now argue it is insufficient given the scale of the climate crisis and the actual costs required to address it.

What is the new proposed target for climate finance at COP29, and why is this increase necessary?

The new proposed target is $1 trillion annually. This increase is necessary because studies estimate that $2.4 trillion per year is required for developing countries, excluding China, to reduce emissions and adapt to climate change. The previous target of $100 billion annually was considered inadequate.

How much of the $2.4 trillion required could come from domestic resources in developing countries?

It is estimated that half of the $2.4 trillion could come from developing countries' own domestic budgets and investments.

Why is the issue of climate finance framed as a matter of 'climate justice'?

Climate finance is framed as a matter of climate justice because developing nations, which are the most vulnerable to climate change, did not cause the crisis. Wealthy, industrialized nations are largely responsible for the emissions, yet developing nations are expected to bear the costs of addressing it without sufficient financial support.

How does the cost of installing solar panels in Africa compare to Europe?

Although Africa has some of the best solar resources globally, it faces higher costs for installing solar panels due to the higher cost of capital. In contrast, European countries like Belgium and the Netherlands, with less sun, have installed more solar panels than all of sub-Saharan Africa in 2023.

Where might the $1 trillion for climate finance come from if not from taxpayers in developed countries?

The funding for climate finance is likely to come from multilateral development banks like the World Bank and the IMF, which could offer low-interest loans. Additionally, innovative solutions such as taxes on billionaires and polluting industries, like shipping and aviation, are being explored.

What is the debate around expanding the donor base for climate finance?

The debate centers on whether only historical high emitters, such as developed countries, should contribute, or whether emerging economies, like China, South Korea, and oil-rich nations such as Saudi Arabia and the UAE, should also contribute to climate finance, given their wealth and pollution levels.

What role do multilateral development banks play in providing climate finance?

Multilateral development banks, such as the World Bank and the IMF, are expected to provide a significant portion of the climate finance in the form of low-interest loans. However, this will require reforms in the way these institutions operate.

How could a global wealth tax contribute to climate finance, and what is the Brazilian proposal?

A global wealth tax, such as a 2% tax on billionaires, could generate significant funds for climate finance. For example, Brazil's proposal suggests that a tax on just 100 billionaire families in Brazil could raise more than $250 billion annually. Additionally, taxes on polluting industries could also generate substantial funds.