COP29 kicks off; host asks nations to urgently resolve differences on new climate finance goal

Azerbaijan, the host of this year's UN climate conference, on Monday called on all countries to urgently resolve outstanding issues to agree on a new climate finance goal to help developing nations combat and adapt to climate change.

Delivering his remarks at the opening ceremony of the UN summit, COP29 President Mukhtar Babayev said current policies are leading the world toward 3 degrees Celsius of warming, which would be catastrophic for billions of people.

He said the COP29 Presidency's top priority is to find consensus on a fair and ambitious New Collective Quantified Goal (NCQG), or new climate finance goal, to replace the previous goal of USD 100 billion per year agreed in 2009.

Babayev emphasised that the NCQG must be effective and adequate to address the scale and urgency of the problem.

Negotiations have seen some progress but a lot of work is left, with just 12 days to land the deal. Countries now urgently need to finalise the elements, resolve their differences on contributors and quantum, and set the new goal, he said.

Babayev acknowledged that the negotiations are complex and challenging, with both political and financial constraints.

He said while the numbers may sound large, they pale in comparison to the cost of inaction. "Nothing has a greater impact on the security, prosperity, and well-being of all nations than climate change," he said.

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Negotiations over the new climate finance goal in recent months have revealed deep divides, with countries disagreeing on almost every element of the NCQG, including the amount of funding needed, who should contribute, the types of projects eligible, and the time period it should cover.

Developing countries have argued that unlike the $100 billion climate finance goal agreed upon in 2009, the NCQG must address their "needs and priorities".

Estimates indicate that developing and poorer countries will require trillions of dollars in the coming years to adapt to and combat climate change. Among Global South negotiators, the Like-Minded Developing Countries (LMDC) group has suggested that $1 trillion per year is needed, the Arab Group has called for $1.1 trillion, the African Group $1.3 trillion, India $1 trillion, and Pakistan $2 trillion.

According to the UNFCCC Standing Committee on Finance's Second Needs Determination Report, $5.01 trillion to $6.85 trillion will be needed by 2030 to support developing nations in achieving their Nationally Determined Contributions (NDCs) to meet the Paris Agreement goals, including limiting warming to 1.5 degrees Celsius.

However, this is not a full estimate, as only 98 of the 142 countries that submitted their NDCs provided 'costed' needs.

According to the United Nations Framework Convention on Climate Change (UNFCCC), adopted in 1992, high-income industrialised nations (referred to as Annex II countries) are required to provide finance and technology to help developing countries address and adapt to climate change. These countries include the United States, the UK, Canada, Japan, Australia, New Zealand, and EU member states such as Germany and France.

Some developed countries, led by the EU and the US, have argued that the global economic landscape has changed significantly since 1992. They have suggested that nations that have become wealthier since then, such as China and some Gulf states, should also contribute to the new climate finance goal.

Developing countries also insist that the new climate finance goal, or NCQG, should focus on public, grant-based, and concessional finance, as these forms of funding are less burdensome for nations already facing financial challenges.

Public finance ensures a stable source of support, while grants and concessional loans (with very low or zero interest) are easier for developing countries to manage. This approach helps them avoid piling on debt and allows them to focus on urgent climate action, like building infrastructure to adapt to climate impacts, without jeopardising their economic stability.