“Trillions, Not Billions”: Political Expectations for the UN Climate Change Conference COP29 in Azerbaijan

Can the COP29 in Azerbaijan renew faith in the international climate process as an effective platform for global climate cooperation by delivering a new climate financing goal? The answer could be decisive for the credibility of future climate conferences.

A new tradition seems to be taking shape: This year, the World Climate Conference (Conference of the Parties – COP) is once again taking place in a country that is heavily dependent on fossil fuels, and which is also home to a difficult human rights situation and is the target of corruption allegations: Azerbaijan. After Egypt and the United Arab Emirates, negotiations over the global phase-out of fossil fuels are once again taking place in a “petrostate.” Many are already placing their hopes in Brazil, where it is hoped that COP30 will be able to chart a more ambitious course.

The central focus of the negotiations at COP29 is the question of financing: How much money will be made available for climate protection measures in the future? A new financing target – the New Collective Quantified Goal (NCQG) – is to be established. But positions are wildly divergent on this issue.

Climate finance: How to close the billions gap?

Until now, the objective has been for the wealthy industrialised countries to mobilise $100 billion annually, as agreed at the 2015 climate conference in Paris – a sum that was not reached until 2022. Now, the question is how high the total should be starting in 2025. Currently, sums of up to a trillion dollars are under discussion, because the needs have proven vastly higher than the amount of money thus far pledged – and those needs are likely to expand even further as the climate crisis progresses. Specifically, there are demands for the climate financing target to be underpinned by clear targets for a number of different areas so as to meet the particular needs of the Global South and boost trust in the multilateral process. Currently, the majority of climate financing is flowing into measures for reducing emissions. Often overlooked, however, is the fact that funds are also badly needed for adapting to the consequences of climate change and for support in dealing with climate-related damage and losses. How can such an immense sum of money be mobilised when only a tenth of that total has thus far been raised?

Many industrialised countries are increasingly insisting that other economically strong countries like China, oil states and countries with high emissions or earnings should contribute to climate financing. But many nations, led by China, reject such demands and cite the now-outdated classification from 1992, which established which countries were industrialised and which ones were seen as developing economies. The conflict between the wealthy donor nations and the Global South further complicates the negotiations.

Many industrialised countries are also insisting, in response to tight national budgets, that private capital play a larger role and that only a small part of climate financing come from public funds. The Global South is sceptical: Loans are often only granted at market conditions, which increases the debt burden of countries forced to take them. Instead, these countries are asking for increased financing through grants and public funds, arguing that private credit should only be used as a supplement. The approach is intended to establish trust and bring the climate targets within reach.

Progressive financing approaches for global climate protection

Progressive proposals for alternative financing possibilities from civil society have likewise been placed on the COP29 agenda. Among those ideas are a global wealth tax, higher taxes on activities that contribute to climate change and the elimination of subsidies that are harmful to the climate. To create more leeway for countries of the Global South, a reform of international financing institutions is likewise under discussion. The Global Solidarity Levies Task Force – led by Barbados, France and Kenya – is pushing forward other funding sources, such as solidarity payments. Such payments, it is hoped, would enable countries to stand up to the climate crisis without endangering social or economic stability. Whether such reforms will find their way into the closing document will, however, depend on the negotiating skills of a handful of progressive governments.

Given the increasing global tensions and geopolitical upheavals, it would be a step backwards if the international community was unable to at least agree on a minimum compromise and establish a foundation for future climate financing. Because even as the countries of the Global South desperately need support in the fight against the climate crisis, the trust and the cooperation of the Global South is also indispensable for the industrialised countries, most of which are in the West – both for climate protection and for other global challenges.

It is important to emphasise that the negotiations over climate financing cannot be viewed in isolation from other areas of focus. A clear example here is the second main issue on the table at COP29: the question as to whether enough countries will strengthen their Nationally Determined Contributions (NDCs) by the beginning of next year to achieve the 1.5-degree target. According to the Climate Action Tracker, only 69 of the 195 parties to the Paris Agreement have tightened their NDCs, and only five of these have set more ambitious emissions reduction targets.

To achieve the 1.5-degree target, global warming would have to be reduced by 43 percent by 2030 relative to the baseline year of 2019 – and fully 60 percent by 2035. This clearly shows the urgency of the situation. Countries of the Global South in particular are dependent on reliable financial pledges to reduce their emissions, since the introduction of renewable energies, to take one example, is far more expensive there than in industrialised countries. Without sufficient funding and the fulfilment of financing pledges already made, the countries of the Global South are not prepared to make additional efforts.

Just Transition Work Program is overshadowed by the negotiations

Other important issues have unfortunately receded into the background. That includes the Just Transition Work Programme (JTWP), which was agreed at the 2023 COP in Dubai. The concept of Just Transition was, to be sure, anchored in the preamble to the Paris Agreement in 2015, but concrete steps toward implementation have thus far been lacking. The JTWP creates the possibility of implementing concrete measures, but this opportunity has not yet been sufficiently exploited. One ray of hope is that labor rights have been mentioned here for the first time. But nevertheless, the negotiations continue to focus on procedural questions instead of creating clear definitions of the concrete elements necessary for the Just Transition.

The guidelines from the International Labour Organisation on the Just Transition already provide a valuable framework that could be used much more extensively. It would be especially important to emphasise connections with other key negotiation topics, particularly because the Just Transition should play a crucial role in areas such as climate finance and the NDCs. At COP29, this potential must be promoted even more proactively in order to strengthen the foundation for a just and sustainable climate policy.