The UN 29th Conference of the Parties (COP29) started its two-week session on November 11, 2024, in Baku, Azerbaijan, with finance issues a top priority as the existing $100 billion annual goal for emerging economies expires in 2025. New finance targets—the amount that rich countries agree to pay poorer countries–are expected to be in the trillions, reflecting the alleged increasing costs of climate change mitigation. Other issues include the distribution of funds, potential contributions from China, and the impact of Donald Trump’s Presidential election. The single-mindedness of the organizers and advocates to make countries reduce the use of fossil fuels regardless of the cost and suffering they produce is mind-boggling. But that is precisely the intent of the UN and the Western countries pushing for climate policies and the associated funding.
The $100 billion annual target was established in 2009, with the aim of wealthy countries providing this amount to low- and middle-income nations to help reduce carbon emissions through green technologies. This target was reached in 2022, two years later than planned, and is set to expire in 2025. The United Nations now seeks to increase this amount to $1 trillion, based on findings that the costs of climate mitigation are significantly higher than initially anticipated. For instance, a UN-supported report last year estimated that the climate finance needs for developing countries, excluding China, stand at $2.4 trillion annually. Of this, around $1.4 trillion would need to be raised through domestic efforts, while the remaining $1 trillion would come from international support, through a mix of public and private funding.
The $1 trillion figure is roughly one-seventh of the total U.S. federal spending for fiscal year 2024 and significantly less than the $7 trillion that the IMF reports was spent globally on fossil fuel subsidies in 2022. Of that $7 trillion, however, only $1.3 trillion directly subsidized fossil fuels, with the remaining 80% or more considered “implicit subsidies.” The IMF defines these implicit costs as damages resulting from the use of fossil fuels, a concept similar to the “Social Cost of Carbon” used by the Biden administration to justify stringent regulations on fossil energy. Fossil fuels, however, are essential for powering the global economy and sustaining life.
A significant portion of the climate funding provided has been in the form of loans. In 2022, 58 low-income countries paid back $59 billion in debt, more than double the $28 billion they received in climate assistance, according to the International Institute for Environment and Development. As a result, many developing countries are calling for more funding in the form of grants. There is also increasing pressure to reform institutions like the World Bank and other development banks to allocate more resources toward climate mitigation. Additionally, there is growing interest in establishing robust monitoring systems to ensure that wealthy nations honor their financial pledges and that developing countries use the funds effectively. These initiatives, however, drive up the costs of UN climate programs, making them appealing to UN officials who may seek to expand their influence, budgets, and administrative reach.
Some countries such as the United States and those within the European Union want China to participate in providing mitigation funds. China is considered a developing country based on a 1992 UN treaty that determined which countries qualify as “developed.” China tends to provide financial aid directly, rather than channeling funds through the United Nations, enabling it to extend its influence globally—particularly through initiatives like the “Belt and Road Initiative.” According to the World Resources Institute (WRI), China contributed around 6% of global climate funding to developing countries between 2013 and 2022. While WRI has praised China’s climate efforts, it does so despite China being the largest emitter of carbon dioxide worldwide. Additionally, WRI maintains that it is not funded by China, even though it operates an office in Beijing.
China is pursuing a different agenda at the upcoming climate talks, focusing on trade issues. This push for trade discussions, supported by India, Brazil, and South Africa, is largely a response to President-Elect Trump’s pledge to use tariffs and the implementation of new European trade regulations. These include a carbon border tax on imports from countries with high emissions and new rules on deforestation. As part of its strategy to revive its economy, China aims to become the world’s top exporter of clean energy and clean energy technologies, and it is keen to expand its markets without facing tariffs, taxes, or other trade barriers.
The return of Donald Trump as U.S. president could have a significant impact on the negotiations, as he previously withdrew the U.S. from the Paris Climate Agreement and pledged to do so again during his campaign. Trump also suggested he might pull the U.S. out of the UN Framework Convention on Climate Change, which forms the foundation for global climate talks. A formal request to exit the Paris Agreement would take a year to be processed, meaning the withdrawal could only occur after he is inaugurated in January. However, if China succeeds in shifting the focus of COP29 to trade issues, Trump may decide that it is in the U.S. interest to remain involved in the negotiations.
So far, the money spent on mitigation efforts has not been successful in reducing global emissions as carbon dioxide emissions rose by 1.3% in 2023 and are expected to increase by 0.6% this year. To meet the goals in the Paris Agreement, global carbon dioxide emissions would need to fall by more than five percent per year.
Conclusion
COP29 is in full swing in another petrol country. Chief among the issues to be discussed is the financial commitment of rich countries towards helping poor countries to meet climate goals and the distribution of those funds. The United States and the European Union want China to participate in providing funds through the UN despite being considered a developing country by a 1992 UN treaty. China, however, wants to discuss trade as the United States and the European Union are expected to use tariffs, taxes, and regulations to slow China’s dominance of clean technologies and the materials that go into them in the global marketplace.
