The direct commitment from the rich industrialised world is much lower: $300bn. That may be a significant increase on the existing $100bn a year goal, but that was set in 2009 and not reached until 2022, two years after the target date. And there is no allowance for the impact of inflation, further eroding its real value.
Some delegates from rich countries acknowledged the inadequacy of the offer. But they note that the prevailing mood in the west – with the impact of inflation, the war in Ukraine, and the impending Trump presidency among other political and economic crises – is not conducive to a more ambitious figure.
“In their defence, for developed countries to be able to stump up this cash requires them to sell it to their people,” Fiona said. “And even though most people in most countries want to see serious climate action, the success of right-wing parties at the ballot box makes it very difficult to achieve. We’re living in an Alice in Wonderland situation in which almost everyone agrees what is good for the planet, and yet the people who disagree are in the ascendant.”
Why is the money important?
Headlines about billions in commitments from wealthier countries may understandably lead to a perception that this is about charity, or reparations. But while it is true that some of the money will be spent on protecting people living in the global South from the worst impacts of the climate crisis, a large proportion of the finance provided will be spent on transitioning to green sources of energy like solar farms and wind turbines.
That means it is also crucial to blunting global temperature rises that will ultimately devastate western economies and lives as well. As UN secretary-general António Guterres put it: “Finance is not a handout. It’s an investment against the devastation that unchecked climate chaos will inflict on us all.”
Is $300bn a year a fair figure?
Absolutely not. As much as $300bn sounds, it is about 10% of what is invested in global energy infrastructure each year. And even the $1.3tn overall figure falls well short of any just accounting of which countries did the damage. An LSE study last year estimated that countries in the global South would be entitled to about $192tn by 2050 on the basis of the share of the global “carbon budget” consumed by the global North.
“If there was any justice in the world, developing countries would be receiving many trillions a year from the countries that emitted so much for so long,” Fiona said. Meanwhile, many of those same nations are paying huge sums in debt service that severely hamper their ability to invest in climate mitigation projects – $443.5bn in 2022, with China now the world’s biggest bilateral lender even as it is responsible for about a third of the world’s current emissions.
Any concept of reparations is off-limits at Cop summits, considered unachievable and likely to close down negotiations – which adds to the sense of injustice in the developing world. As Samoa’s natural resources minister Cedric Schuster asked: “Is this how we treat the countries with the moral high ground in the process, who stand to lose the most and have already lost so much?”
Is it enough?
That’s a slightly different, and even more complicated, question. “The estimate of the core finance needed to leverage other forms of investment provided by the high level expert group was about $300bn a year,” Fiona said. “That would need to come with about $500bn a year from private sector investment, and the remainder would be new forms of finance – a whole mixture of things, from carbon trading to taxes on fossil fuels and frequent flyer levies.”
In theory, $300bn could be enough to kickstart that wider investment and get somewhere close to the overall figure. But there are reasons to be sceptical. Individual countries have not yet been required to set out their national commitments towards meeting the overall goal, and past experience suggests that they will probably fall short. Meanwhile, new taxes and private sector investment need to be widely introduced to be effective, and are vulnerable to local political and economic crises.
“None of it really exists yet,” Fiona said. “A lot of these things are not that difficult to put in place, and it is very important to keep talking about things like a modest wealth tax so that it is understood as a reasonable idea. But there is a danger that they will be pie in the sky.”
Are there any grounds for optimism?
You can find some, but they’re pretty scant. The deal at least reaches the $1.3tn figure in theory, and developing countries have secured a commitment to a “roadmap to 1.3tn” that will act as a yardstick for future progress. And although carbon markets have failed in the past, new rules agreed in Baku could do a better job of funding climate mitigation projects and capping emissions, as Patrick Greenfield explains here.
Meanwhile, one major source of anger at Cop29 was how the summit was managed by the Azeri hosts, who were widely viewed as falling short. The next round is in Belém, Brazil, where there are hopes that the organisers will prove more effective. “They wanted a relatively straightforward Cop focused on national plans to reduce emissions,” Fiona said. “Now they have to clean up a bit of a mess.”
It is also true that the Baku summit was in danger of failing totally – leading to the collapse of the least-bad mechanism available for international cooperation against the climate crisis. Angry though many developing nations are, they will already be planning for how to improve the outcome next time.
But even these slim pickings should be seen in the context of the real-world impacts that are already being felt, and sometimes seem very remote from officials hammering out the fine details of a diplomatic text. As things stand, most climate scientists consider the goal of limiting temperature increases to 1.5C above preindustrial levels as already out of reach. Even if every country on earth honoured their current commitments, the world would warm by about 2.7 degrees. “If countries don’t have serious commitments to keeping below 1.5 in Belém, we will be toast,” Fiona said. “It will be too late.”
