Cop29 could change the financial climate for the world’s wealthy polluters

About 50,000 government officials, policymakers, investors and campaigners will gather in Azerbaijan this week in the hope of answering a trillion-dollar question: how much money should go each year to helping developing countries cope with climate-related costs?

The aim of the UN’s Cop29 climate talks in Baku, which is being called the “climate finance Cop”, is to establish a new annual climate financing target to replace the current $100bn pledge, set in 2009, which expires at the end of this year. There is one clear consensus already: the existing climate finance available to developing countries is nowhere near enough to withstand worsening climate impacts. The ambition is too low, and in 15 years the annual target has been met in full only once, in 2022.

Campaigners have called for the governments of wealthier countries to contribute to a new collective quantified goal (NCQG) on climate finance. Forecasts of how much this will be vary but are typically $500bn to $1tn a year, or less than 1% of global GDP. Some estimates are as high as $5tn.

“Setting a more ambitious goal will be essential to helping vulnerable countries adopt clean energy and other low-carbon solutions and build resilience to worsening climate impacts,” said the World Resources Institute.

But who should pay? To date, the financial contributions that enable developing countries to pursue low-carbon growth and greater climate resilience have come from countries defined by the UN Framework Convention on Climate Change (UNFCCC) as “high income”. The list includes the UK, US, Japan and Germany. But in the 30 years since it was created, countries including China, India and South Korea have dramatically increased their economic might – and their carbon emissions.

It is likely that the talks will include calls to expand the list of countries contributing to climate financing. But even then the sums involved are too large for government spending ­budgets alone, according to delegates from many wealthy nations.

Instead, the talks aim to reform global climate lending to encourage more private capital to play a part. In an open letter last month, Stephanie Pfeifer, the head of the Institutional Investors Group on Climate Change, said many global investors were beginning to explore ways to unlock and mobilise capital.

“An ambitious finance goal that includes private capital can encourage greater ambition in developing countries’ targets [for helping to limit global warming] by building confidence in accessible funding for both mitigation and adaptation, with the latter being historically underfunded,” she said.

This approach is not without its critics. Climate and humanitarian NGOs have warned that loans, even on favourable term, place the financial burden of the climate crisis on already indebted developing nations, which bear the lowest responsibility for the climate crisis but face the greatest risks. These groups have called for polluting companies to pay their fair share.

“Climate finance is not about charity or generosity but responsibility and justice,” according to Debbie Hillier, a policy lead at the humanitarian NGO Mercy Corps. “It is based firmly on the principle of common but differentiated responsibilities and respective capabilities – those who contributed most to the climate crisis must bear the brunt of the solution.”

To this end, a new Climate Finance Action Fund (CFAF) will be under consideration. It aims to draw on voluntary contributions from fossil-fuel-producing countries and companies to support developing nations’ climate projects.

For polluters who would rather not pay, campaigners are calling for climate taxes. Billionaires and fossil fuel giants are in the crosshairs of environmental NGO 350.org, which plans to hold them accountable for their outsize impact on the planet in a new campaign. The group argues that funds generated through taxing the ultra-rich could be used both for domestic policies and programmes to lower carbon emissions, and for international climate finance to ensure “those most responsible for the climate crisis contribute to its solution”.

This approach is likely to prove popular with the public. Oxfam is scheduled to publish a report suggesting that the majority of the British public support higher taxes on private jets and superyachts to help tackle the climate crisis.

The survey, by YouGov, is also expected to show strong public support for increasing taxes on the wealthiest UK individuals to fund action, and hiking taxes on businesses in sectors that produce the most emissions.

The key to whatever form climate finance takes will be accountability – a meaningful climate finance target will mean nothing if the annual goal is never reached.