COP29: Developing Countries Other Than China Need Around $ 2.4 Trillion Each Year for Climate Action by 2030

Bengaluru: As negotiations on finances rage on at the ongoing UN climate talks at Baku, Azerbaijan, a report published at COP29 on November 14 by the COP’s Independent High-Level Expert Group on Climate Finance said that emerging markets and developing countries except China will need approximately US $ 2.4 trillion every year for climate action by 2030 of which US $ 1 trillion will have to come from external funds. And by 2035, this number will escalate to US $ 3.1-3.5 trillion, and external funding to US $ 1.3 trillion, the report said.

Another report released on the same day at the COP suggests that India’s upcoming new Nationally Determined Contributions or NDC targets will have to be ones that drastically cut emissions, if it hopes to achieve the goal of limiting warming to 1.5°C per the Paris Agreement. To do so, India will have to implement NDCs that cut emissions that are 135-150% above 2005 levels as per its current NDC, to 18% by 2035.

On November 14, BASIC countries – Brazil, South Africa, India and China – asked developed countries to honour their commitments to provide climate finance rather than “diluting obligations” and also rejected attempts by the rich nations to shift their financial responsibilities. Meanwhile, Argentina has backed out of COP29, and France’s ecology minister has decided to give it a miss after the Azerbaijan president lashed out at France in his COP speech on Tuesday for France’s responses to the New Caledonia protests in May this year. The president had also claimed that oil and gas were a “gift from God”.

On November 13, China announced that it had voluntarily mobilised more than US $ 23 billion since 2016 to aid the clean energy transition in other developing countries. The US said on Wednesday that it was on track to meet the promised international public finance commitment of US $ 11 billion per year by the end of 2024.

Focus remains on more finance aid from developed countries

The ongoing 29th Conference of Parties or COP29 has been nicknamed the “Finance COP”, and among the money matters that are being discussed at Baku, Azerbaijan, since the event kicked off on November 11, is countries negotiating on a New Collective Quantified Goal (NCQG) – the total funds that will be required by developing countries for climate action. Currently, it is USD 100 billion per year, till 2025.

As per a report published at COP29 by the Independent High-Level Expert Group on Climate Finance (IHLEG) on November 14, emerging markets and developing countries (EMDCs) except China will need US $ 2.3-2.5 trillion every year to deal with climate change and its impacts by 2030. This number will climb to US $ 3.1-3.5 trillion by 2035. While countries can and are using their internal funds, external finance – from international public and private sources as well – will need to cover US $ 1 trillion per year of the total investment need by 2030 and around US $ 1.3 trillion by 2035.

The report, titled “Raising ambition and accelerating delivery of climate finance” is the third report of the Independent High-Level Expert Group on Climate Finance which was constituted by the COP26 and COP27 presidencies, and aims to provide “an independent perspective on the climate finance agenda”, per the UNFCCC which organises the annual UN climate summits. 

Also read: COP29 Kicks Off at Baku, Nations Agree to Carbon Credit Standards on Day 1

Of the around US $ 2.4 trillion required for climate action in ’emerging market and developing countries’ or EMDCs other than China, around US $ 1.6 trillion will be required for clean energy transition, US $ 0.25 trillion for adaptation and resilience, US $ 0.25 trillion for loss and damage, US $ 0.3 trillion for natural capital and sustainable agriculture, and US $ 0.04 trillion for ensuring just transition, the report noted.

“Ramping up climate investments in EMDCs is the only way to reach the Paris Agreement goals of limiting the global temperature increase to well below 2° Celsius and adapting to climate change, and arrest the accelerating threat to nature and biodiversity,” the report noted.

While South–South cooperation is already making “a significant contribution”, there is “great scope for enhanced support and financing from leading developing countries,” the report noted.

“The new climate finance ask reflects that in order to achieve tripling renewable energy and doubling energy efficiency goal, commitment from developed countries also need to increase multifold,” Vibhuti Garg, director, South Asia of the Institute for Energy Economics and Financial Analysis, said in a statement responding to the findings of the IHLEG report. 

“Also, it is not just the quantum but also the quality of finance,” she added. “There needs to be more commitment of concessional capital, increasing the availability of catalytic finance from MDBs [multilateral development banks] which can unlock private capital is required especially for nascent technologies. Most countries in the global south are already on the verge of debt trap so in order to help them transition faster, [the] new climate finance goal is [the] minimum that countries in [the] Global North need to commit to.”

World hurtling towards 2.7° C warming

An annual global temperature update by Climate Action Tracker (a project that tracks governmental climate action and measures it against the Paris Agreement’s aim of limiting warming to 1.5°C below 2005 levels, and ensuring that this remains below 2°C) also published on November 14 during COP29, suggests that current current climate action is still insufficient. It shows that global warming projections for the year 2100 based on current policies set the world on a path toward 2.7°C of warming – far higher than the agreed aims of the Paris Agreement. 

Lead author of the report, Sofia Gonzales-Zuniga of Climate Analytics, a partner organisation of Climate Action Tracker or CAT, said that the current policy warming of 2.7° C was a median estimate with a 50% chance of being higher or lower.

“But our knowledge of the climate system tells us that there is a 33% chance of our projection being 3.0°C – or higher – and a 10% chance of being 3.6°C or higher, an absolutely catastrophic level of warming,” she said in a press release.

The report found that while the deployment of renewable energy showed “record-breaking progress” over the past three years, fossil fuel subsidies still remain “at an all-time high” and funding for projects that prolong the use of fossil fuel quadrupled between 2021 and 2022. And despite the increasing emissions that the world is currently witnessing, the “exponential growth” of renewable energy means that emissions will decline faster after 2030.

“As the world edges closer to these dangerous climate thresholds, the need for immediate, stronger action to reverse this trend becomes ever more urgent…We have come to a critical point and COP29 is our last chance to keep 1.5°C alive,” the report said. “If countries fail to substantially increase the ambition of current 2030 targets and action, limiting peak global warming to 1.5°C will not be possible and would likely lead to a multidecadal, high overshoot of this limit, even if followed by strong post-2030 action and large-scale permanent removal of CO2 from the atmosphere.”

Regarding India, the update noted that the country’s progress towards achieving 50% non-fossil capacity ahead of schedule “shows potential for even more ambitious targets”. 

“However, the challenge of meeting peak demand during non-solar hours, especially with excessive cooling demand due to extreme heat, underscores the need for significant investments in grid infrastructure and storage capacity, which are far below what is required,” it added. “International support will be crucial to help India access advanced technologies and accelerate its clean energy transition.”

India needs to propose new NDCs that drastically cut emissions: Report

Over the next few months, countries are also expected to update their NDCs for 2035, which are a set of long-term goals to cut carbon emissions and adapt to climate impacts that every country signatory to the Paris Agreement has to provide to the UNFCCC. The NDCs are updated every five years. Countries have already begun submitting their updated NDCs for 2035. The UAE’s NDC came in last week, and Brazil’s on November 13. The United Kingdom’s NDC released on November 12 is ambitious and pledges to cut its greenhouse gas emissions by 81% by 2035, compared to 1990 levels.

A second report released by CAT on November 14 looked at what 10 countries could do to align their new 2035 NDC targets with the 1.5°C Paris Agreement goal. The 10 countries – China, the United States, the European Union, Indonesia, Japan, Australia, UAE, Azerbaijan, Brazil and India – together accounted for a staggering 63% of global greenhouse gas emissions in 2022.

India will have to set a 2035 target that will drastically cut down its emissions if it hopes to achieve the 1.5°C goal. That’s because India is still expanding its fossil fuel energy sources despite doing well in investing in renewable energy, the report noted.

“Despite substantial progress in rolling out renewables, India’s current policies support coal and its production, and imports reached a record high in the first half of 2024,” the report said. 

Such continued expansion of coal-fired power is “a major driving force behind the upward trend of India’s current policy projections”, per the report. It predicts given India’s current conditional NDCs, India’s emissions will reach 4,273-4,529 million tonnes of carbon dioxide equivalent or MtCO2e, by 2035 (when you exclude the changes to land use and forests brought about by human activity that also play a role in releasing emissions). This amounts to 135-150% above 2005 levels. Per the report, India would have to curb these emissions to 2,100 MtCO2e in 2035 (or bring it down to 18% above 2005 levels) to meet the CAT’s models to limit warming within 1.5°C.

India still remains in the “highly insufficient” category when it comes to climate targets and action, per the CAT. Climate policies and commitments of countries under this category are, per the CAT, not consistent with the Paris Agreement’s mandate to limit warming to 1.5°C above pre-industrial times.

“Despite achieving substantial progress in installing renewable energy capacity and continuous decline in its tariff, India’s fossil fuel demand remains unchanged,” the India overview by the CAT reads. “Indeed, coal production and imports reached a record high in the first half of 2024 to meet the rise in seasonal electricity demand brought on by another year of record summer heat. This could be mitigated with faster rollout of renewables plus storage, both of which are cost-effective compared to fossil fuels in India.”

“Developed countries need to continue to supplement their domestic action with significant financial and other support for developing countries to constitute an equitable contribution to the 1.5°C limit,” Ana Missirliu of the NewClimate Institute, one of the authors of the CAT report, said in a press release. “Many developing countries can only achieve sufficient climate action with significant financial and other support. COP29 is where we need to see this financial commitment.”

Debates, and the finance goal framework

Developed countries must commit to providing at least US $ 1.3 trillion each year until 2030 to developing nations, India said on Thursday at COP29, at the sixth High-Level Dialogue on Climate Finance. Speaking on behalf of Like-Minded Developing Countries (LMDC), Indian negotiator Naresh Pal Gangwar said that the new climate finance package – the New Collective Quantified Goal (NCQG) – which is currently under negotiation, cannot become an “investment goal”, PTI reported. 

In the initial discussions regarding the framework for the NCQG, the G77 and China had called for funds from developed to developing countries and that new, additional, adequate, and affordable finance must address mitigation, adaptation, and loss and damage. While the US opposed the inclusion of loss and damage, many developed countries also objected to including “new principles,” such as burden sharing among developed countries, the IISD Earth Negotiations Bulletin reported. On November 12, the previously nine-page draft of the framework for the New Collective Quantified Goal (NCQG) increased to 34 pages after chairs included all written comments from negotiators.

“After three years of preliminary talks, we had hoped to see a more streamlined text at this point, so this is frustrating…The good side is that a few stronger options were included. Now we need to see countries quickly building consensus over the next few days and streamline the text towards a final agreement that will deliver the scale of finance needed,” Fernanda Carvalho, WWF Global Climate and Energy Policy Lead, said in a statement.

On Tuesday, the G77 and China (the largest bloc representing around 130 countries) rejected the draft text of the framework, and other groups of developing countries, including the Like-Minded Developing Countries (LMDCs) and Least Developed Countries (LDCs) also backed them. On Wednesday, November 13, the COP29 released a new draft of the framework; COP29 President Mukhtar Babayev called it “a significant step” but pointed out that there are “still many options to be resolved”. For instance, the minimum funds that different blocs want each year for climate action vary greatly.

“We now want to hear everyone’s views and we will create spaces for them to provide their inputs throughout COP29. But the parties must remember that the clock is ticking and we only have 10 days left,” he said. 

A revised draft also dropped on November 14 and is still under discussion. Also on November 14, BASIC countries including India said that developed countries should honour their commitments to provide climate finance rather than “diluting obligations”. The bloc also underscored that it was time to fully and effectively implement the Paris Agreement, and rejected attempts by developed countries to weaken their responsibility to provide finance.

A “robust NCQG that addresses climate insecurity while building strong, sustainable economies” is one of the “key negotiated outcomes” that needs to be concluded at the COP, US climate envoy for COP29 John Podesta had said on November 13 at COP29.

“It should be multi-layered with an ambitious, realistically achievable support layer involving new contributors…underpinned by a set of qualitative elements that evolve the international financial architecture, enhance access to finance for developing countries, and improve debt sustainability,” he had said.

Podesta also said in his speech that the US was on track to meet former president Joe Biden’s “ambitious international public finance commitment” of US $ 11 billion per year by the end of 2024. 

On Tuesday, November 12, Chinese vice-premier, Ding Xuexiang, said that China has spent RMB 177 billion (USD 24.5 billion) to support other countries’ climate clean energy transitions since 2016.

“Gifts of God”

On Tuesday, Azerbaijan president Aliyev had also said that Oil and gas are a “gift of god”. He said that countries “should not be blamed” for having resources including oil and gas, and that they “should not be blamed for bringing the resources to the market, because the market needs them”.

Azerbaijan has already been under the scanner after a senior official linked with COP29 seemed to have used his role at the COP to arrange a meeting to discuss potential fossil fuel deals, the BBC reported last week. It reported that the chief executive of Azerbaijan’s COP29 team, Elnur Soltanov, had discussed “investment opportunities” in the state oil and gas company with a person posing as a potential investor, and was additionally quoted as saying that Azerbaijan had a “lot of gas fields that are to be developed”.

Aliyev on Tuesday at COP29 blamed “Western media” for spreading “fake news”, and claimed that after Azerbaijan was elected as the host of COP29, they “became a target of a coordinated, well-orchestrated campaign of slander and blackmail”.

COP29 exits

Meanwhile, the past two days have also witnessed Argentina exiting from attending the COP, and the French ecology minister deciding not to come at all. 

On November 13, France’s minister for ecology Agnes Pannier-Runacher – who was supposed to travel to Baku to attend COP29 – announced that she was canceling her visit, after she called Azerbaijan president Ilham Aliyev’s comments at the opening of COP29 in Baku against France and Europe as being “unacceptable.”

Apart from his comment that oil and gas were ‘gifts from God’, Aliyev had also hit out at France for its reaction to protests in New Caledonia in May this year, in his speech. Le Monde reported that Aliyev had alleged that France’s handling of protests in the French overseas territory constituted “crimes” and “human rights violations”. 

Aliyev’s comments were a “flagrant violation of the code of conduct” for the UN climate talks, Pannier-Runacher said, as she canceled her visit to Baku.

On November 13, Argentinian negotiators were told to return from COP29 by the Argentina government. 

However, the Argentina government has withdrawn from the COP29 negotiations, not the treaty, Argentinian-born Anabella Rosemberg, senior advisor at the NGO Climate Action Network-International, told sources on the ground.

“So it is largely symbolic and all it does is remove the country from critical conversations going on climate finance. It’s difficult to understand how a climate vulnerable country like Argentina would cut itself from critical support being negotiated here at COP29,” she said.