Contentious COP: Some context and clarity
The UN climate summit, COP29, teetered dangerously close to failure, but in the eleventh hour agreed to a financing plan of $300 bn per year, till 2035, in support of developing countries. But how does one assess if that’s sufficient? And what are the terms and impact of the deal?
Samantha Mooi, SA Sustainability head, simplifies the jargon and summarises the key takeouts from the UN’s Climate Change Conference in Baku, Azerbaijan.
Q: The main objective of COP29 was to agree to a NCQG. What does that stand for and why is it important?
NCQG stands for the New Collective Quantified Goal on Climate Finance.
The NCQG is a crucial agreement that aims to significantly increase the financial support provided to developing countries, by developed countries.
This funding is essential to help developing countries adapt to the impacts of climate change, such as rising sea levels and extreme weather events – and transition to low-carbon economies.
The NCQG is important because it recognises the historical responsibility of developed countries for greenhouse gas emissions, and the disproportionate impact of climate change on developing nations.
With adequate financial support, developed countries can help developing countries build resilience, reduce emissions and achieve the sustainable development goals.
Q: What measures and calculations are used to arrive at the new collective qualified goal and how does one assess if $300 bn (£240 bn) is reasonable or sufficient?
Determining the exact amount of the NCQG involved a complex process. It considered factors like the needs assessments of developing countries, the economic impact of climate change, existing financial flows, and the capacity of countries to access and utilise climate finance. The agreed figure of $300bn per year is three times more than the previous goal and reflects the growing urgency of the climate crisis.
While $300bn is a substantial amount, it’s important to remember that it’s a minimum target. The actual needs of developing countries may exceed this figure, and the effectiveness of climate finance will depend on a number of things, including the efficiency of how it’s used, and the evolving nature of climate challenges.
Monitoring and evaluation of the NCQG is crucial to ensure that the funds are used effectively and that all the agreed-upon goals are met.
Q: Do we know which countries will provide the finance and what form the finance will take?
The agreement doesn’t explicitly outline which countries will contribute what amount, but its understood that developed countries, historically responsible for the bulk of global emissions, will be the contributors – this could include the US (although a Trump presidency might change this), the EU (although again, politics could impact if they contribute), Japan, Canada and Australia.
Form of finance could include:
- Grants: Direct financial transfers from developed to developing countries
- Loans: Low-interest or concessional financing, probably from bilateral donors or multilateral DFI
- Private sector investment: PPPs, blended finance or green bond type mechanisms to mobilise private capital
- Tech transfers: Knowledge and technology sharing to help developing countries adopt clean technologies and practices
- Debt-for-climate swaps: Converting debt obligations into investments in climate positive projects
Q: What is the Fund for Responding to Loss and Damage (FRLD) and is it in anyway linked to the NCQG? (do some of the funds from the $300bn go to funding FRLD?)
While the NCQG is a significant step forward in climate finance, its important to note that it’s not explicitly linked to the Loss and Damage Fund. The NCQG primarily focuses on providing financial support for mitigation and adaptation efforts.
There is, however, growing recognition that loss and damage is a critical component of climate finance. Developing countries argued that the NCQG should include dedicated funding for loss and damage. The NCQG doesn’t directly allocate funds to FRLD, but it’s possible that a portion could be used to support loss and damage initiatives, particularly through grants and concessional loans.
Ultimately the allocation of funds will depend on the decisions made by the UNFCCC (United Nation’s Framework Convention on Climate Change) and its member countries. It’s likely that a balance will need to be struck between supporting mitigation, adaptation, and loss and damage efforts.
Q: What are National Determined Contributions (NDCs) and how does the new finance deal impact them?
The NDCs are national climate action plans submitted by each country to the UNFCCC. They outline a country’s emission reduction targets, adaptation plans and climate finance commitments.
NDC’s are reviewed every 5 years, with the UK having updated theirs in November 2024 and South Africa due in 2026. While the consequences could include diplomatic pressure, reputational damage and potential sanctions, the worst is probably the potential loss of funding from mechanisms like the NCQG.
The new $300bm pledge is a huge boost for developing countries to implement their NDCs. The funding can help countries enhance their NDCs, by perhaps setting more ambitious targets and developing more comprehensive climate action plans. The funding can be used to finance climate projects making it easier to achieve their goals. It can help countries build more resilience, helping them adapt to the impacts of climate change.
Q: What now needs to be done to make the goal pledged something tangible for countries that need it the most? Are there any measures in place to ensure transparency?
The specific details around how this $300bn will be distributed, used and monitored will be subject to further negotiations and discussions. But a plan around operationalising the fund with clear guidelines, efficient disbursement mechanisms and capacity-building support for developing countries, will need to be devised.
Robust monitoring, independent verification and public disclosure will be essential to ensure the funds are used effectively, but at this stage we are waiting for more detailed information.
Q: If you were to sum up your overall impression of COP29, how would you?
The agreement to triple climate finance to $300bn per year by 2035 is a major step forward. This increased funding will empower developing countries to implement ambitious climate action plans, build resilience and transition in a just and equitable way.
Challenges remain, but COP29 demonstrated the collective will of nations to address climate change and secure a sustainable future for all.
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