COP29: No Surprise That New Climate Finance Deal Fell Short

Developing countries have declared COP29 a 'failure' due to the lack of climate leadership from the Global North.

Civil society members stage a silent march at the UN climate summit, condemning the developed nations' proposal to increase annual climate finance to a meagre $250 billion by 2035, in Baku, Azerbaijan.

(Photo: PTI)

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Developing countries, including India, have declared COP29 a failure, due to the lack of climate leadership from the Global North.

This is no surprise, given that the year was dubbed the ‘finance COP,’ where countries were expected to agree on a New Collective Quantified Goal (NCGC) – a commitment outlining how much the Global North will contribute to the Global South for climate action over the next decade.

Despite talks being extended by a day, fierce protests by climate activists, and a dramatic walkout by negotiators from the least developed countries and ocean states, the outcome was underwhelming, with just $300 billion allocated annually.

Civil society members stage a silent march at the UN climate summit, condemning the developed nations' proposal to increase annual climate finance to a meagre $250 billion by 2035, in Baku, Azerbaijan.

(Photo: PTI)

This is a far cry from the trillions that the Global South state will be needed in terms of mitigation, loss, and damage. Indian negotiators have called the goal "too little, and too distant", opposing the deal after it had been signed, claiming it to be mere posturing.

Global North’s Climate Finance Pledges Don’t Add Up

Gridlocks in finance are not new in climate negotiations.

At the 1992 Rio Conference, developed countries agreed to take the lead in championing decarbonisation, based on ‘common but differentiated responsibilities’ – which has been enshrined in ever since.

However, every COP has seen disputes between North-South blocs over the extent of financing commitments, resources that count towards these commitments and what mechanisms and institutions should be used to facilitate them.

In 2015, countries finally came together to agree on an annual $100 billion amount of climate finance.

However, tensions remained high throughout COP29, which began on 11 November with the central focus on setting a new global finance goal. Heated discussion, and bitter negotiations, continued until its conclusion on 23 November when the deal was ultimately made.

While OECD countries – 38 member nations focused on fostering economic growth and global trade – claim that they have met this goal, the Global South has raised a few concerns.

• First, there is no transparency in how these finances have been accounted for.

Oxfam estimates that the true value of climate finance is not more than $35 billion and highlights that funds meant for other development goals are now rebranded under a climate lens.

• Second, the majority of climate finance has been provided in terms of loans.

Protesters argue that his has led to more debt burden to the poorest countries. This then led to the Global South calling for more public finance grants through bilateral mechanisms.

• Lastly, the effects of climate change are already being felt across the Global South.

Estimates showing that less than 10 percent of global climate funds are channeled for adaptation. The urgency in tackling increasingly vulnerable populations has resulted in the creation of a loss and damage fund, however more is needed.

Activists participate in a demonstration for climate finance at the COP29 UN Climate Summit on 23 November in Baku.

(Photo: PTI)

Where Does India Stand on COP29’s Climate Finance Deal?

India has always been an important player calling for increased accountability from richer nations. The nation has advocated for a climate equity perspective that takes into consideration the development needs of the poorest.

At COP29, India, alongside groups for other developing countries like the African Group of Negotiators and the Alliance of Small Island States, led the charge for climate justice, advocating for a new climate finance target of $1.3 trillion annually.

Even as richer countries call on countries like India to contribute to the corpus for climate finance at Baku, India pushed back.

Given that North America and Europe account for two thirds of the world’s cumulative historical emissions, India is a drop in the ocean at three percent.

Civil society members stage a protest at the UN climate conference, condemning the draft deal on a new climate finance package for the developing world, in Baku, Azerbaijan.

(Photo: PTI)

India’s own climate needs are estimated to range between $170 billion and $350 billion annually till 2035, just to meet its energy transition goals. A Climate Policy Initiative report shows that India only managed to raise less than half of the required capital over the past few years.

Most of the funds to tackle climate change come from domestic sources, either public or private. The government claims that India already spends about 6 percent of its Gross Domestic Product on climate adaptation and these costs are going to keep increasing.

While the Global North stresses the importance of channelling private sources towards climate finance, foreign direct investments accounted for less than 3 percent in FY2020.

In light of the apparent gaps in climate funding for India and a lack of foreign capital being deployed to tackle the problem, it is logical for India to continue to stress that public financing from developed countries and reforms in multilateral development banks are the way forward.

Even as India emerges as a global leader, with a UK-based report from think tank ODI Global showing that the country contributed $1.28 billion through multilateral climate finance in 2022, the country will not be able to meet its climate goals without resources from the Global North.

The failure of COP29, perhaps shows that in today’s multipolar and fragmented world order multilateralism has reached its limit.

For India to meet its climate finance goals, the country needs to expand its climate diplomacy portfolio, through bilaterals, trilaterals and plurilaterals. This includes positioning itself as a global partner that can work along with the Global North by leveraging its technology and finance to provide effective, low-cost climate solutions domestically and in the Global South.

(Pooja Ramamurthi is Associate Fellow, Centre for Social and Economic Progress (CSEP). The views expressed are the writer’s own and not those of CSEP. This is an opinion piece and the views expressed are the author's own. The Quint neither endorses nor is responsible for her reported views.)