Apr 25, 2024 - Energy & Environment

Next round of UN climate talks turn to money as tensions mount

Illustration of a row of rolled up currency from around the world behind graphic shapes and a black and white photo of a tree.

Illustration: Annelise Capossela/Axios

Money will take center stage at the next UN climate summit, to be held in Baku, Azerbaijan, in November. And in the run-up to the meeting, there are currently few signs of major progress.

Why it matters: Industrialized countries need to spend at least $1 trillion to help developing nations move away from fossil fuels and adapt to climate impacts. So far, few countries have committed significant additional funds.

  • While estimates vary, developed countries such as the U.S. have only just met (or are close to meeting) a $100 billion a year funding goal set out at the Copenhagen climate summit in 2009. That was before the expanded scope of present-day climate damages became clear.
  • The original deadline was in 2022.
  • This failure has sown distrust and animosity between the Global North and South, undermining the chances for future climate finance agreements.

Zoom in: The main task at COP29 will be for negotiators to formally set a new climate finance goal, known as the "Collective Quantified Goal on Climate Finance." But there are few signs of progress.

  • Top international financial institutions are not reforming fast enough to provide a large spending injection, experts say.

At the annual spring meetings of the World Bank and International Monetary Fund in Washington last week, there was incremental movement on the climate finance and bank reform fronts.

  • Ministers put forward possible new sources of funding, such as taxes. Ideas are also needed for how to tap private sector money.
  • Little movement was made on how to help poorer nations dealing with the one-two punch of mounting sovereign debt and damages from climate change-related extreme weather events like droughts and heat waves.

What they're saying: "We are not seeing the real, fundamental change that we need in these institutions," UAE diplomat Majid al-Suwaidi, a longtime climate negotiator who served as the director general of COP28 in Dubai, tells Axios in an interview.

  • "It is a slow process by nature, but we must push for quicker action," he adds. "We simply do not have the time. There are six years to 2030 and to keep 1.5°C within reach and climate finance is critical to that."
  • "There was discernible movement — a system slowly but surely fixing things that get in the way of speed and scale," said Rachel Kyte, a former top World Bank climate official and current professor at Oxford University, in a statement about the spring meetings.
  • However, reforms and commitments to date are far from sufficient, Kyte added. "Many countries find themselves in a hole that climate change deepens and widens every year. Yet the support even the improving system provides are teaspoons for digging out. Shareholders need to do more."

The intrigue: The COP29 leadership, led by president-designate Mukhtar Babayev, met with a slew of officials while they were in Washington. The talks were geared toward scaling up climate finance and getting advice on how to hold a successful summit on relatively short notice.

  • These included top leaders from the World Bank, IMF, the White House, private financial institutions such as Bank of America CEO Brian Moynihan, and more.
  • "The COP29 presidency had many encouraging engagements in the spring meetings in Washington last week," Babayev said in a speech on Thursday morning in Berlin. "However, while we heard a great deal of concern and worry, we did not yet see adequate and sufficient action. That must change."

The bottom line: Climate negotiations have overcome seemingly insurmountable obstacles in recent years, from agreeing to a "transition away from fossil fuels in energy systems" in Dubai to setting up a loss and damage fund.

  • But how to raise the funds for climate adaptation and the energy transition without adding to developing nations' sovereign debt burden may prove to be the toughest.
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