COP29 second week begins: Rich nations soften stance on climate finance donor base issue?

China may have shown some willingness to report its existing voluntary climate finance provisions from developing countries under Article 9.2, thereby easing the tensions, say sources

COP29 has now entered its “political week”. The venue will now welcome some big-hitters—in the form of ministers and senior officials—who will take over negotiations over the final text. The “sticky issue” here at COP29 has, of course, been climate finance. There have been too many points of contention and the fear is there isn’t enough time to resolve all of them. But some experts are saying developed nations are backing down on their hardline on expanding the climate finance donor base. 

First the good news. “The technical negotiations for the Just Transition Work Programme have been completed. They have a text out and it appears to be possible that there could be a good outcome. The same, too, with adaptation,” said Tasneem Essop, Executive Director, Climate Action Network International: 

Avantika Goswami, Programme Manager for Climate Change, Center for Science and Environment, India, also added some hope that the talks on finance will see progress in the second week. “On the contributor base question, we have heard that developed countries are starting to back down somewhat and have softened their earlier very hardline position that the base must be expanded. China may have shown some willingness to report its existing voluntary climate finance provisions from developing countries under Article 9.2 . And that may have to some extent helped pacify some of the developed countries. We’ve also heard that developed countries have realised that pushing hard on the contributor base expansion  is a very bad look for them and it’s hurting them in their relationships so they may have taken a step back. Again this is conjecture and it might change through the course of this week, we have a wait and watch situation.

Negotiations on the Mitigation Work Programme, however, remain stuck. “We have been seeing for years and years at COP that when there is big contestation around an issue—this year it is finance—then that issue tends to hold up other issues. It is like a hostage taking of other issues. So if we don’t move forward on finance, we will potentially see its impact felt in the other negotiation areas,” Essop added. 

The first week also saw a lot of back and forth on other finance-related issues such as transparency, the quantum of the New Collective Quantified Goal (NCQG) along with the mechanisms related to climate finance disbursement. “The first week has seen a lot of wasting of time,” said Goswami. “There were no serious deliberations on issues such as the quantum and quality of finance or the structure of the new climate finance target. Engagement from developed countries is completely lacking on these issues.” The hope is that if negotiators are able to move past the donor base issue, these issues will then be up for discussion and resolution. 

Attendees, especially from the Global South, who are following negotiation proceedings, have noticed a possible narrative being built that pushes investment as the preferred means to deliver on climate finance. “There have been discussions and a lot of push from developed countries to structure the new climate finance target as a broad investment goal. So there is a lot of language around the multilayer target for the NCQG,” said Goswami. 

But investments are not necessarily a bad thing, Goswami adds. “The problem is developing countries face a very high perceived risk. So there is a very high cost to attract climate finance. It is called the high cost of capital. So private finance doesn’t readily come into developing countries. Climate technologies face even higher perceived risks. They need public finance to drive them.”

In other words, private investments are not sustainable and investors will head for the exit the moment they see trouble triggered by perceived risks elevated by climate impacts. Private money also does not come under the purview of UNFCCC. So, “countries are pledging money they don’t control” . Public money, on the other hand, is more consistent and follows transparency mechanisms, which will hold the government accountable for unexplained costs.

All eyes are also on the G20 summit in Rio—which is currently on till the 19th—for some signals on climate finance. Even COP president Mukhtar Babayev seems to be pinning his hopes for success at COP29 on the Rio summit. “The G20 will be meeting later today in Brazil. They account for 85% of global GDP and 80% of emissions. Their leadership is essential to making progress on all pillars of the Paris Agreement, from finance to mitigation and adaptation. We cannot succeed without them, and the world is waiting to hear from them,” he said.

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Anushka Mohite

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