Developing countries have yet to agree on the draft of the new climate finance goal last released on Wednesday at the United Nations summit on climate change.
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Government negotiators have been asking the co-chairs of the talks to revise the text, after it was rejected by least developed countries for not outright indicating the required amount they have been calling for.
A new climate finance target known as the new collective quantified goal (NCQG) is meant to replace a US$100 billion annual funding target by 2020 that poor countries were promised by wealthy nations 15 years ago.
“The NCQG must be ambitious, informed by the evolving needs and priorities of developing countries. We need to see an amount of at least US$1.3 trillion per year from developed to developing countries with a significant provision component for adaptation, mitigation, and loss and damage,” the Group of 77 (G77) and China, the biggest negotiating bloc of low-income countries at the conference, said in a statement.
G77 and China also called for the text to state that the funds must transfer from developed countries to developing countries only. China is not classified as a developed country under international standards and has provided consistent support to the G77 on climate issues. China remains a developing country and recipient of climate finance, although it has been providing billions in climate support to lower-income nations.
In pre-COP conferences, the United States previously proposed a “global investment goal” where developing countries, along with private investors and financial institutions, would also contribute to the fund. Similarly, European countries France, Germany, and Italy discussed an “investment layer for developing countries” alongside public finance.
“The NCQG is not an investment goal. A global investment goal does not fit the mandate and is not a subject of negotiation neither does it reflect the evolving needs and priorities of developing countries,” G77 and China added.
The amount put forward by developing states is attainable, said Bronwen Tucker, global public finance manager at nonprofit, Oil Change International.
She cited a study by her organisation in September which found that rich countries can raise five times the money that poor countries are demanding in climate finance, through windfall taxes on fossil fuels, ending harmful subsidies and from a wealth tax on billionaires.
“The US$1 trillion is not as eye-watering a sum as the US and other rich countries are making it out to be. There really is no shortage of public money available. It really is just a lack of political will,” said Tucker in a press conference at COP29 on Wednesday.
“Rich countries have a legal and moral obligation to do this. It is not charity.”
OECD says climate finance underwent its “largest year-on-year increase observed to date” in 2022 reaching $115.9 billion. Image: OECD
The quality of the amount is just as important as the quantity, said Harjeet Singh, global engagement director of Fossil Fuel Non-Proliferation Treaty at the same media briefing.
He noted how meeting the previous US$100 billion annual funding target was “tragic”, given that 69 per cent of it was provided in loans. This has raised concerns, given the number of climate-vulnerable countries that are already struggling with debt.
The Organisation for Economic Cooperation and Development (OECD), a group of mostly rich countries, published an analysis in May confirming that the US$100 billion goal was met, but with the bulk of it coming with interest rates resulting in hefty price tags for poor nations.
NCQG: not a magic number
The NCQG is not a “singular magic number” that can solve the climate crisis, said Lawrence Loh, director for the centre for governance and sustainability at the National University of Singapore.
Countries should instead focus on how the funds will be dispersed, he told Eco-Business. If no agreement will be made in Baku, Singapore can “continue to participate and contribute in principled ways” towards its climate target such as assisting poorer nations to cope with loss and damage.
It is the same for Malaysia which will “not be significantly impacted” if countries do not finalise an amount to help developing nations fight global warming, said Nithi Nesadurai, director and regional coordinator of Climate Action Network Southeast Asia.
Nesadurai noted how the Southeast Asian nation is already committed to developing a climate change act, which includes a domestic emissions trading scheme. It set a 70 per cent target for renewable energy and net zero goal by 2050. Its third version of nationally determined contributions (NDC) to the Paris climate accord is due for 2026.
“These activities will carry on [with or without the NCQG]”, he told Eco-Business.
For developing countries like Indonesia, it is relying on climate funds to carry out climate adaptation and mitigation measures, said Uli Siagian, national forest and big plantation campaign manager of environmental organisation WALHI.
Indonesia’s latest NDC commits to a greenhouse gas reduction targets, almost half of which will only be met through funding and assistance from the international community.
It is the same scenario for the Philippines, which has committed to reduce harmful greenhouse gases by 75 per cent by 2030, if it can secure sufficient international aid.
“It is too early to make any conclusions in the first week of COP and that has been the case in past conferences,” said Yeb Sano, a former chief climate negotiator for the Philippines and now executive director of Greenpeace Southeast Asia, in a briefing on Thursday. “But if we do not have a good outcome for NCQG in Baku, it will mean delay in the provision for finances for countries like the Philippines, which will worsen our already dire situation due to climate impacts.”
