Brother, Can You Spare $300 Billion?
Why the COP29 Climate Finance Conference Pleased Nobody
The COP29 climate conference in Baku finished on Sunday morning (November 24, 2024) and although the organizers tried to play up the agreement with fanfare and tepid applause, it was evident that no one was pleased with the results.
The event was dubbed the climate finance COP (Conference of the Parties) where the world was expected to come together and unanimously agree on how to finance the expected costs and burdens of climate change on the developing countries (which somehow still includes China). The money is intended to help emerging economies adapt to the projected effects of a warming planet (like building sea walls, floodplains, resilient agriculture…), help transition to what the UN considers as greener technologies (like renewable energy and EVs) and a curious thing called the UN Fund for Responding to Loss and Damage to aid developing countries recover from supposed climate-based disasters.
How much were the emerging markets expecting to raise during this global UN climate conference? Given that the affluent Western countries caused climate change (allegedly), the numbers bandied about were in the trillions. The UNFCCC started with a number of $1.3 trillion needed to be raised by 2030 (although the date seemed to alternate with 2035). But a group called the Independent High-Level Expert Group on Climate Finance (IHLEG) upped the bounty. In their third report, the IHLEG claims the developing world ex-China needs closer to $2.4 trillion. But if we really want the developing world to have a “just transition”, the IHLEG report fixed the price tag closer to $7 to 8.1 trillion by 2035 (per year). I suppose a “just transition” means everyone in emerging economies gets a Tesla.
If this sounds a little bereft of reality, it should be noted that one of the “high-level experts” involved in the IHLEG report was Nicholas Stern. Recall that his famous Stern Review on the Economics of Climate Change in 2006 where the academic told the great and the good that the cost of fixing climate change might seem expensive but it was going to be far cheaper than the consequences of climate change. He argued that climate change would cost the planet between 5-20% of global GDP and that the world would have to spend 1% of GDP to fight climate change. Back then a warming of 5-6°C was forecast for the 2020s. Two years later, Stern upped the burden to 2% of global GDP. This 2% solution was recently echoed by Yuval Noah Harari in 2022. But if 2% of global GDP is $1.7 trillion, as Harari estimates, and Stern’s IHLEG report now wants us to pony up $8.1 trillion (a year), somehow these calculations have elevated.
Once you pass a trillion dollars, people become numb to the reality of numbers and our high-level climate finance experts can literally pull whatever total they want out of a hat.
So expectations in the developing world were obviously high as tens of thousands of climate experts boarded their flights to Baku for two weeks of negotiations, Shirvanshahi and activism. Recall that a definition of happiness is where expectation meets experience. How could people ever be unhappy with the final results?
“More than our Fair Share”
The COP29 negotiators from the developed world agreed, after almost 40 hours of extended negotiations, to a climate financing program of $300 billion by 2030. Hardly what the developing countries had been expecting and what the UN bean counters had declared was needed, but much more than the rich nations were planning to give.
Just watch the virtue contortions from the European Council president, Charles Michel, in his opening speech on behalf of the European Union (as European Commission president, Ursula von der Leyen, chose to boycott the event on moral grounds).
“You can count on the European Union. We are stepping up to the plate with financing. $31 billion!!! That is more than our fair share and we are calling on everyone to follow our example, including the G7. … You can count on the European Union!”
But Charles, the UN’s Independent High-Level Expert Group on climate finance determined that the developing world needs $8.1 trillion. I am not sure that $31 billion, no matter how proudly presented, is really what you could call “stepping up to the plate”. Unless, once again, those imperialist Europeans plan to eat everything off of the plate.
It didn’t take long after COP29’s closing gavel for the developing countries to express their outrage at what only could be considered as nothing less than a betrayal. The Indian representative, Chandni Raina, was the first to speak after the conference was officially closed (“gaveled”).
Apparently the developing countries were not given a chance to speak before the final draft text was adopted and kudos to the organizers that they allowed the angriest person on earth to rip into the UNFCCC for 14 minutes for their selfish incompetence. Or maybe COP29 was not as “stage managed” as the Indian representative had assumed. The representative vociferates:
“The amount that was proposed to be mobilized is abysmally poor. It was a paltry sum. It is not something that will enable (or be) conducive (to) climate action that is necessary for the survival of our country and the growth of our people and their livelihoods and I am sorry to say that we cannot accept it. … This document is nothing more than an optical illusion”
Taking the bare minimum required ($1.3 trillion) according to the UNFCCC, minus the “fair share” provided by the wealthy developed nations ($300 billion), that still leaves a cool trillion to be found (annually). The Indian representative stated the obvious: the developing countries would have to fund the rest.
This was not the United Nations Framework Convention on Climate Change’s finest moment. In fact, COP29 ranks among the worst (and that says a lot). But it raises an important question: Why are the wealthy Western countries refusing to pay anything more than lip service to help developing countries cope with their predicted consequences from climate change?
It comes down to trust, but not the lack of trust that the Indian representative, Chandni Raina, was speaking of. It is clear that the developing world cannot trust the UN with any serious amount of funding. Western nations are only providing what they could afford to lose.
Hey??? Where’s my $41 Billion?
A month before the COP29 conference began, the British NGO, Oxfam, released a report showing that the World Bank is unable to account for a $41 billion that has gone missing from their climate finance fund. If an international bank can’t manage funds earmarked for climate actions, how much more problematic would the fiscal accountability at the UN be? Oxfam states:
“There is no clear public record showing where this money went or how it was used, which makes any assessment of its impacts impossible. It also remains unclear whether these funds were even spent on climate-related initiatives intended to help low- and middle-income countries protect people from the impacts of the climate crisis and invest in clean energy.”
This is the World Bank, an organization tasked with distributing large loans to distressed nations in the developing world. If they can’t account for billions in climate finance, how will the novices at the UNFCCC manage? Maybe they’ll hire consultants.
It beggars belief that the UN offices would expect trillions to be given to a body with no scrutiny, no accountability and no plan for how the funds would be spent. The Oxfam press release states the obvious:
“Climate activists are demanding the Global North provide at least $5 trillion a year in public finance to the Global South "as a down payment towards their climate debt" to the countries, people and communities of the Global South who are the least responsible for climate breakdown but are the most affected. Oxfam warns that the lack of traceable spending could undermine trust in global climate finance efforts at this critical juncture.”
Quite frankly, there is no trust, and thus no significant commitments. I don’t see the UN cleaning up its act any time soon so there is really no point taking this COP pantomime process seriously.
The developed world is already giving them $300 billion without any clear guidance on how the funds would be allocated, if they would be provided as interest-free loans or as grants. Then again, there was no indication how and where these funds would be coming from (national development programs, multilateral funds or the private sector). Western nations were merely offering a tithe to an internationally-endorsed ecological cult to keep things quiet until the next COP. This game could go on for another 29 years.
COP29 was a joke and the only eventful moment of those two weeks in Baku was that, during the event (perhaps it was on “Cynics Day”), a group of UN elders and influential dignitaries wrote a letter demanding that the COP changes their process.
Maybe they should just stop these pointless, costly annual conferences. It could not get any worse at the COP conference that pleased nobody.