During the recent COP29 climate summit, member states agreed to triple financing to the developing world to $300 billion a year by 2035 under the New Collective Quantified Goal on Climate Finance (NCQG) framework. The agreement also established a goal of at least $1 trillion a year in climate finance for poorer countries by 2035. Despite the significant increase in funding outlined in the deal, many low-income country leaders and environmentalists have criticized the agreed-upon quantity for being too little to truly make a difference.
The funds are aimed at helping poorer countries develop their renewable energy capacity to reduce emissions and boost energy security, as well as help prepare countries for the effects of climate change over the coming decade.
“This new finance goal is an insurance policy for humanity, amid worsening climate impacts hitting every country,” said Simon Stiell, Executive Secretary of UN Climate Change. “But like any insurance policy – it only works – if premiums are paid in full, and on time. Promises must be kept, to protect billions of lives.”
Nearer $1 Trillion a Year Needed in Developing World
Poorer countries could need as much as $1 trillion a year in climate financing to tackle the effects of climate change, according to a report by an independent panel of experts at a United Nations climate summit.
The report from the Independent High-Level Expert Group on Climate Finance (IHLEG) predicted that financing of $6.5 trillion a year will be required across all countries by 2030 to meet climate targets, $1 trillion of which is allocated to developing countries. The report said, any shortfall “will place added pressure on the years that follow, creating a steeper and potentially more costly path to climate stability”.
The research is based on a 2022 IHLEG analysis that found developing countries will likely need $2.4 trillion a year in climate funding by 2030. The authors suggested that at least half of the funding could come from the budgets of the countries themselves, leaving a deficit of around $1 trillion.
The deadline for $1 trillion by 2035 established at COP29 could, therefore, have a significantly detrimental effect on progress in the developing world by being five years too late at providing the necessary funds, according to climate analysts.
Responses from the Developing World
Several leaders from low and middle-income countries responded by criticizing the new funding announcement.
“I regret to say that this document is nothing more than an optical illusion,” Chandni Raina, the Indian delegation’s representative at COP29, stated during the closing session of the summit. “This, in our opinion, will not address the enormity of the challenge we all face. Therefore, we oppose the adoption of this document.”
Tina Stege, Marshall Islands climate envoy, stated, “We are leaving with a small portion of the funding climate-vulnerable countries urgently need. It isn’t nearly enough, but it’s a start.”
Cedric Schuster, the chair of the Alliance of Small Island States, stated, “Our islands are sinking. How can you expect us to go back to the women, men, and children of our countries with a poor deal?”.
Too Little Too Late
Many environmentalists have criticized the funding decision for being too little too late. This year, which is expected to be the warmest on record, has seen widespread heatwaves, deadly storms, severe floods, and strong hurricanes. Several climate organizations say that we are already facing a clear funding deficit as poorer countries worldwide battle the worsening effects of climate change.
Jasper Inventor, the head of Greenpeace’s COP29 delegation, said the deal was “woefully inadequate” and that “reckless nature destroyers” were being protected by “every government’s low climate ambition”. Meanwhile, WaterAid called the deal a “death sentence for millions.”
Developing Countries Around the Globe have Sought Funding for Years
Representatives across the developing world have been calling for greater funding for several years. Many low-income countries are those worst affected by the effects of climate change, and they do not have the money to prepare for the potential damage caused by severe weather events. Several country leaders have repeatedly asked for greater funding from high-income countries to help them develop their renewable energy capacity and transition away from heavy reliance on fossil fuels to help reduce emissions and support a global green transition.
Many low-income countries are only now undergoing industrialization, around 200 years after their Western counterparts. The growing reliance on fossil fuels to power industry could lead to a significant increase in emissions in several parts of the world unless greater funding is provided for clean energy to power operations.
In 2023, around 81% of green investment was financed by the private sector in high-income countries, compared to just 14% in emerging and developing countries. Meanwhile, the national budgets of most low-income countries cannot stretch to afford investment in green energy. This demonstrates the dire need for rich countries to support a global transition to green and help mitigate the effects of climate change to counter the growing demand for fossil fuels that could lead to higher emissions in the developing world.
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