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Talks on climate change financing have stalled in the run-up to the COP29 summit

With just five months to go until this year’s UN climate summit, countries cannot agree on the size of a global financing bill to help developing countries fight climate change – let alone how to distribute it.

The decision is expected to dominate the COP29 climate talks in Azerbaijan in November, where nearly 200 countries must agree on a new annual financing target to help poorer countries cut their emissions and protect their societies in a harsher, hotter world.

The new target will replace the annual $100 billion that rich countries had pledged in climate finance from 2020. That goal was achieved two years too late.

But preliminary talks this week in Bonn, Germany, have yielded no major breakthroughs. Instead, the talks that ended Thursday once again exposed lingering disagreements among the world’s largest economies over who should pay the most to fight climate change — and how much.

REUTERS

Representatives of climate-sensitive countries said it was difficult to watch wealthy countries fall behind on previous climate finance payments while quickly approving new funds for military responses to war or spending billions on subsidizing carbon-emitting energy sources.

“It seems like there is always money when it is a more ‘real’ national priority for the country,” Michai Robertson, negotiator for the Alliance of Small Island States, told reporters.

“It’s really hard to see that,” he said.

Getting the song right

The new financing target is the most important tool that global climate talks can provide to finance projects that reduce global warming emissions – such as renewable energy or low-carbon transport.

With all countries due to update their national climate targets next year, negotiators fear failure could lead to weaker efforts.

“How do you continue if there is no financing?” said South African climate negotiator Pemy Gasela. Her country is among many developing countries warning that they cannot afford to cut emissions faster without more financial support – in South Africa’s case, to trade off a heavy reliance on CO2-emitting coal for clean energy.

Still, rich countries are wary of setting too high a target and risking missing the target. The missed $100 billion target became politically symbolic in the recent UN climate talks, fueling distrust between countries as developing countries claimed the world’s economic powers were abandoning them.

Diplomats in Bonn have surrounded the question of how much money should be put on the table.

A drone shot shows houses flooded after heavy rain in Qingyuan, Guangdong Province, China, on April 22.

A drone shot shows houses flooded after heavy rain in Qingyuan, Guangdong Province, China, on April 22. | REUTERS

While countries agree that $100 billion is too low, they are unlikely to agree to raise the $2.4 trillion a year that the UN climate chief said in February was needed to meet the UN’s climate goals. keep the world within reach.

Neither the European Union nor the US have proposed a figure for the target, although both acknowledged this week that the amount should exceed $100 billion. The 27-country EU is currently the largest provider of climate finance.

The elephant in the negotiating rooms, some diplomats said, was the upcoming U.S. presidential election, in which Donald Trump seeks to return to office.

The previous Trump administration withdrew the world’s largest economy from the Paris climate agreement. Negotiators said they worry that a future Trump administration could cut off U.S. climate finance payments, leaving it up to other wealthy countries to meet the annual pledge.

But some countries in Bonn have made suggestions.

Climate activists protest after a draft negotiating agreement was released during the United Nations Climate Change Conference COP28 in Dubai on December 13, 2023.

Climate activists protest after a draft negotiating agreement was released during the United Nations Climate Change Conference COP28 in Dubai on December 13, 2023. | REUTERS

India, and a group of Arab countries including Saudi Arabia, the UAE and Egypt, have said the total financing target should exceed $1 trillion a year to reflect the rising needs of poorer countries as climate change worsens.

The Arab countries propose that rich countries provide $441 billion in public financing per year in subsidies, to raise a total of $1.1 trillion per year from broader sources.

Small island countries vulnerable to climate change have also pushed for stricter rules on what counts towards the target, suggesting that loans with interest rates above 1% should be avoided to avoid further increasing poor countries’ already high debts .

According to the OECD, most public climate funds provided by developed countries are loans.

Decide who should pay

Countries also disagree about who should contribute.

There are currently about twenty long-industrialized countries required to contribute to UN climate finance. That list was drawn up during UN climate talks in 1992, when China’s economy was still smaller than Italy’s.

The EU wants China – now the world’s largest CO2 emitter and second-largest economy – and Middle Eastern countries with high levels of per capita prosperity to contribute to the new target. The US has also advocated adding more countries to the donor base.

However, Arab countries and China were firmly against the idea, with Beijing reiterating China’s status as a “developing country” under the UN climate convention.

“We, the developing countries, have no intention of making your numbers look good or part of your responsibility as we do everything we can do to save the world,” the Chinese negotiator told other diplomats during the negotiations on the financial target in Bonn. on Tuesday.

Neither country has compromised on who should pay, said Joe Thwaites, who follows climate finance negotiations for the nonprofit Natural Resources Defense Council.

“The negotiations have been difficult and things are moving slowly,” he said.

As talks continue outside Bonn, some negotiators said ministers could raise the issue at higher-level meetings, such as the G20 ministers’ meetings in Brazil ahead of COP29.

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