Negotiators at the COP29 climate talks in Azerbaijan were warned on Thursday that failing to invest now in climate action for poorer nations could lead to significantly higher costs in the future.
Experts estimate that developing countries will need at least $1 trillion annually by the end of the decade to transition to greener energy sources and protect against extreme weather events.
Financial commitments are a pivotal topic at the ongoing COP29 climate talks in Azerbaijan, the success of the summit will largely hinge on whether nations can establish a new funding target for how much wealthier countries, development lenders, and the private sector must contribute each year to support climate initiatives in developing nations.
A previous commitment of $100 billion per year, which is set to expire in 2025, was met two years late, according to the OECD.
However, much of this funding came in the form of loans rather than grants, a shift that recipient countries argue is necessary for effective climate action.Setting a serious tone at the start of discussions, a report from the Independent High-Level Expert Group on Climate Finance indicated that the annual funding target must increase to $1.3 trillion by 2035, or potentially more if progress is delayed.
The report warned, “Any shortfall in investment before 2030 will place added pressure on the years that follow, creating a steeper and potentially more costly path to climate stability. The less the world achieves now, the more we will need to invest later.”
Negotiators are currently drafting potential agreements; however, initial documents released by the United Nations climate body reveal a wide array of conflicting perspectives among participating nations, leaving uncertainty about the outcome of the talks.
Some negotiators have expressed concerns that the latest financial text is too lengthy and are awaiting a more concise version before substantive discussions can commence.Securing an agreement is expected to be challenging due to hesitance among many Western governments—who have been obligated to contribute since the Paris Agreement in 2015—to increase their commitments without similar participation from countries like China.
Additionally, speculation surrounding an impending withdrawal of U.S. funding under an incoming administration has intensified pressure on delegates to identify alternative funding sources.
Multilateral development banks, including the World Bank—which are primarily funded by wealthier nations—are undergoing reforms aimed at increasing their lending capacity.
A coalition of ten major banks has already announced plans to boost their climate financing by approximately 60%, targeting $120 billion annually by 2030, with at least an additional $65 billion expected from private sector contributions.
Efforts to generate new revenue through taxes on polluting industries such as aviation, fossil fuels, and shipping, or through financial transactions, have gained traction as more countries express interest. However, any consensus on these measures appears unlikely during this conference.
On Thursday, Zakir Nuriyev, head of Azerbaijan’s Association of Banks, announced that the country’s 22 banks would collectively commit nearly $1.2 billion to finance projects aimed at transitioning Azerbaijan to a low-carbon economy.
As discussions progress, tensions have already surfaced.
French Climate Minister Agnès Pannier-Runacher canceled her attendance at COP29 following remarks from Azerbaijan’s President Ilham Aliyev, who accused France of “crimes” in its overseas territories in the Caribbean. Aliyev criticized France for its historical treatment of marginalized communities within its territories.
The relationship between France and Azerbaijan has been strained due to France’s support for Armenia in their long-standing conflict. In response to these tensions, European Union Climate Commissioner Wopke Hoekstra emphasized that COP should be a forum for all parties to engage freely in climate negotiations and urged the COP Presidency to facilitate this process.
Aliyev’s opening speech also included accusations against the United States and EU for hypocrisy regarding their fossil fuel consumption while urging other nations to combat climate change.In a separate development, Argentina’s government has withdrawn its negotiators from COP29 talks, although reasons for this decision remain unclear as officials from Argentina’s embassy in Baku declined to comment.
Notably, Argentina’s President Javier Milei has previously dismissed global warming as a hoax.
