Half a loaf, at best, from the climate talks

THE SENSE that the COP29 climate talks were outstaying their welcome in Baku was tangible through growing absences. Over the 30 hours between the scheduled end on Friday November 22nd and the final gavel in the early hours of Sunday morning first food, then water, then toilet paper ran out; finally fire extinguishers were slowly removed. A few dozen countries walked out, too—but they came back in time for a conclusion which, if far from inspiring, was at least better than the total breakdown that threatened.

The main purpose of the meeting was to put to bed a couple of issues left over from COPs past. In 2015, the Paris agreement struck at COP21 said the UN system needed new rules for trading carbon credits. In 2021 in Glasgow the attendees committed themselves to a “New Collective Quantified Goal” for climate finance that would go beyond Paris’s $100bn a year from north to south.

When it came to the first goal, called for by the Paris agreement, the COP approved rules that will let countries identify and authorise carbon credits (specifically Internationally Transferred Mitigation Outcomes) that can then be traded. But the timelines involved are not well defined, the transparency such systems need is not assured and countries that do things badly will not necessarily face consequences beyond having the fact pointed out.

The conference also set up an offputtingly complicated system for trading other credits as part of the Paris agreement. It includes a 5% levy on such trades that would be put to adaptation projects in developing countries. It also includes new safeguards for indigenous people. But some useful parts of previous drafts were cut, such as one meant to ensure that carbon removed from the atmosphere is locked away for centuries, if not forever.

As for climate finance, all agreed that $100bn is not enough. The most frequently cited estimate of what it would cost for developing countries (excluding China) to both end their use of fossil fuels and adapt to climate change comes from Amar Bhattacharya, Vera Songwe and Nicholas Stern of the Independent High-Level Expert Group on Climate Finance. The three economists see a need for investments of $2.3-2.5trn a year by 2030, rising to $3.1-3.5trn by 2035. Of that, they think, first $1trn and then $1.3trn will have to come from private and public sources beyond those countries.

The latter figure worked its way into the final decision, which “calls on”—a fairly weak encouragement, in UN-speak—parties to try and increase all forms of climate funding to meet it. Somewhat more forcefully, the document “decides to set a goal…of at least $300bn per year by 2035” for finance to developing countries, a number that applies to public and private money and to money from development banks. It does not explicitly say that this money should come from what the system treats as developed countries; it separately “encourages” countries in the global south to help each other.

Rich countries say the $300bn will do the vital work of unlocking the private money required to reach the larger goal by making borrowing cheaper and reducing some of the risks that make investors wary. It is in line with, though less than, the amount which the expert group says is necessary to that end: Dr Bhattacharya and his colleagues put the need at $300bn a year by 2030, and $390bn a year five years later. Wopke Hoekstra, the EU’s climate commissioner, spoke of it ushering in a “new era for climate finance”.

Poor countries were less impressed. They say that the amounts they need are much greater than those under discussion and that the degree to which the new money will encourage other investment is greatly overstated. Chandni Raina, the Indian negotiator, railed at the final plenary against both the manner in which the text on finance had been pushed through—against India’s strenuous objections—and the “paltry sum” it contained. Some bristled at the idea that contributions from countries like China could count towards the total, which they see as an attempt by the richest countries to wriggle off the hook. In the end, though, the agreement on the table was better than none at all, and nothing better seems in prospect over the years ahead.

In the end, the difference between a $300bn and a $390bn goal is small compared with how quickly the goal is reached and how efficiently the money is spent. (The previous $100bn goal took more than a decade to be met.) It is now up to all countries to manage the tricky task of integrating climate goals into their economic planning.

This is a huge task, especially for the countries with the shallowest pockets. These are also often those with the greatest need for measures to cope with hotter temperatures and more extreme weather. These are the areas where rich countries and multilateral development banks can do the most good, and where they should concentrate on channelling their funds. Shortly before dawn in Baku on Sunday Tina Stege, the Marshall Islands’ climate envoy, addressed an exhausted audience. “We are leaving with a small portion of the funding climate-vulnerable countries urgently need,” she said. “It isn’t nearly enough. But it’s a start.” 

© 2024, The Economist Newspaper Limited. All rights reserved. From The Economist, published under licence. The original content can be found on www.economist.com