The problems with climate justice and finance

The 29th Conference of the Parties (Cop29) opened this year in a subdued atmosphere in Baku, the capital of Azerbaijan. The recent re-election of Donald Trump—who, during his previous term, withdrew the United States from the Paris Agreement and repeatedly dismissed the climate crisis as a “hoax”—has cast uncertainty over the US’s role at this year’s conference. Adding to the subdued tone, several world leaders, including prominent EU figures such as French President Emmanuel Macron, German Chancellor Olaf Scholz, and Ursula von der Leyen, President of the European Commission, were conspicuously absent. This marked the first time European Commission President Ursula von der Leyen has missed a Cop since taking office in 2019. Brazilian President Lula da Silva, whose country will host Cop30 next year, was also notably absent.

Additionally, there is growing scepticism from some countries. Papua New Guinea has chosen to boycott the summit. “We are protesting against those who always come to these Cop meetings, making pronouncements and pledges, yet the financing of these pledges seems distant from the victims of climate change,” said Prime Minister James Marape.

A significant number of African leaders have also chosen to skip this year’s Cop, including most leaders from the Horn of Africa, despite the region being among the most vulnerable to the human-induced climate crisis and currently experiencing its worst environmental and climate-related challenges in decades. Ismail Omar Guelleh did not attend, nor did William Ruto; Abiy Ahmed and Hassan Sheikh Mohamud, who are busy feuding, also didn’t go to Baku. Isaias Afwerki, Eritrea’s reclusive leader, rarely gets involved in anything on an international level so his absence was less conspicuous.  

Despite these setbacks, this year’s conference has been dubbed the “finance Cop”. “Cop29 must tear down the walls of climate finance,” said UN secretary-general António Guterres in his opening remarks. While discussions have covered energy transitions, decarbonisation, and technology-driven green energy investments, much of the debate and negotiation at Cop29 has so far centered on urgent questions of climate finance: where the funds will come from, how much will be allocated, who the recipients will be, over what timeline, and how developing nations can access these finances at an accelerated scale.

The current stance of developing countries in climate negotiations reflects a pragmatic approach grounded in their direct and lived experiences with the escalating climate crisis. The G77 nations have proposed a dedicated climate finance package of at least $1.3 trillion, although different figures have been suggested by various parties. For example, in his address, Prime Minister Shehbaz Sharif of Pakistan remarked that “developing countries will need an estimated US$6.8 trillion” to achieve their climate objectives.

In a joint press release on the fifth day of the summit, Michai Robertson, climate finance adviser at the Alliance of Small Island States, an intergovernmental organisation of low-lying coastal and small island countries, emphasised that “Small Island States (SIDS) and Least Developed Countries (LDCs) have been calling for a minimum allocation of US$39 billion a year for SIDS and US$220 billion a year for LDCs, in grant-equivalent terms.”

Speaking at the Egypt International Cooperation Forum in 2022, Professor Kevin Chika Urama, chief economist at the African Development Bank, estimated that the African continent alone would require financial incentives of “$1.6 trillion between 2022 and 2030” to meet its climate action goals.

The central argument from developing nations and Least Developed Countries (LDCs), despite differences in the proposed amounts, is the need for a structured framework in which wealthier nations take the lead in climate financing. This position is rooted in historical emissions data, which demonstrates that industrialised countries are disproportionately responsible for the greenhouse gases driving the climate crisis.

A key point of contention in the negotiations is the EU’s proposal to include China—one of the world's largest greenhouse gas emitters and the second-largest economy—as a contributing country, despite China's current designation as a developing nation under UN guidelines. At the ministerial dialogue on climate finance, Swedish representatives stated: “There is an urgent need to increase the donor base,” a sentiment echoed by the EU representative, who added: “We need to broaden the contributing base; all countries in a position to do so, including emerging economies, should contribute.”

“That is an unequivocal no,” responded Michai Robertson when asked about expanding the list of contributing and donor countries. “Article 9 of the Paris Agreement is quite clear on who is obligated to provide. Any deviation would then undermine the entire Paris Agreement.”

The current list of contributors to climate finance is based on a 1992 agreement between countries that were members of the OECD at the time. As a result, only 23 countries—primarily from western Europe, North America, and Japan—are required to provide climate funding. This division is grounded in the principle of climate justice, as these countries have historically been the largest emitters and have developed their economies at the expense of others.

This had fed a growing perception in the Global North that climate finance obligations could unjustly shift financial responsibility onto their economies. This has led to significant pushback, with calls for “innovative financing mechanisms,” such as public-private partnerships and carbon markets, to distribute the burden more “evenly”—an ambiguity that has stalled the negotiations. Climate finance advocates, however, argue that these mechanisms represent a “recipe for climate injustice.” Mohamed Adow, a climate justice advocate and director of the climate and energy think tank Power Shift Africa, wrote: “If they [developed countries] dodge responsibility on finance in Baku, they will sow the seeds for devastating climate harm.”

What are the new collective quantified goal and the loss and damage fund, and why do they matter?

The New Collective Quantified Goal on Climate Finance (NCQG) and the Loss and Damage Fund represent two distinct initiatives within the global climate finance framework, each addressing different aspects of support for vulnerable countries.

The NCQG is an evolved financial target designed to replace the existing $100 billion annual climate finance commitment established in 2009. It aims to assist developing countries in mitigating and adapting to escalating climate-induced crises.

The primary objective of the NCQG is to fund the transition to low-carbon development, support energy transitions, enhance resilience against climate impacts, and, crucially, meet the financial needs of the Global South. It encompasses both mitigation efforts and adaptation measures. The NCQG is expected to set a more ambitious financial target that aligns with the urgent climate needs and the rising costs of addressing the climate crisis. This will require a financial package significantly exceeding the $100 billion commitment made in 2009.

The climate crisis increasingly threatens the lives of millions of people across the developing world, with a disproportionate impact on the most vulnerable communities.

In Somalia alone, the country has faced one of the worst climate crises since 2009. In 2011, it experienced one of the most severe droughts, which later transformed into a famine, claiming the lives of more than a quarter of a million people. In 2017, and again in 2022, another drought pushed tens of thousands of farmers and pastoralists into poverty. Today, nearly 3 million people in Somalia are internally displaced, mostly from farming and pastoral communities.

In his remarks at the Cop29 side event, the deputy prime minister, Salah Jama, and lead negotiator of Somalia’s delegation recounted the experience of his extended family. He described how these displaced individuals “are forced to live on the outskirts of large cities” due to the loss of their livelihoods from repeated climate shocks. These communities are now part of, as the deputy PM put it, an “unhealthy urbanisation pattern.” This anecdote echoes a remark he made at last year’s Cop28: “The poor people you see the world trying to help are not people who were poor to begin with, but who were forced to become poor overnight.”

On the other hand, the Loss and Damage Fund specifically focuses on providing financial assistance for losses and damages, referring to the irreversible and residual impacts of climate change that exceed the capacity of adaptation measures. These losses include extreme events, such as droughts and escalating climate shock-driven crises, which result in the loss of lives, property, and ecosystems.

One leader who highlighted the severity of the losses and damages caused by the climate crisis was Shehbaz Sharif, Pakistan’s prime minister, who emphasised that his country’s economy suffered “$30 billion in losses” due to severe floods in 2022 alone.

The financial impact of loss and damage in Africa is expected to reach between USD 290 billion and USD 440 billion from 2020 to 2030, depending on the levels of warming. In 2022, Africa incurred more than USD 8.5 billion in economic losses due to extreme weather, climate, and water-related incidents.

The Loss and Damage Fund does not cover mitigation and adaptation in the same way as the NCQG; rather, it is designed to provide recovery, reconstruction, and compensation funds to support particularly vulnerable communities that suffer disproportionately from climate impacts.

On the second day of the summit, the UN secretary-general noted, “The creation of the Loss and Damage Fund is a victory for developing countries, for multilateralism, and for justice. But its initial capitalisation of $700 million doesn’t come close to righting the wrongs inflicted on the vulnerable.” The Cop29 president, Mukhtar Babayev, added: “All countries that have pledged to the Fund for Responding to Loss and Damage must complete contributor agreements, and we call for more pledges to the Fund.”

Establishing the Loss and Damage Fund, operationalising it, and securing funding during Cop27 and Cop28 were among the most significant breakthroughs in recent Cop negotiations. However, the question of accelerating these efforts remains unresolved. Losses and damages are increasing across continents, with many poorer countries facing unprecedented climate-driven crises. Somalia, for instance, has seen tens of thousands of families severely impacted. During last year’s Cop28, the lead negotiator of Somalia’s team highlighted that the country needs $5 billion to cope with climate shocks, but noted that it had only received $300 million.

As of now, there are underlying issues that must be considered regarding why the climate finance negotiations remain stagnant and are likely to extend into the next Cop. One key factor is the growing reluctance of developed countries to accept their responsibilities and drive the negotiations forward by accommodating the demands of the Global South.

Another critical issue is the uncertain role of the United States in the coming years—specifically, whether it will maintain its leadership position as the world’s largest historical emitter. Additionally, there is rising competition within the green economy across Europe and the Global North in general, fueling protectionist policies that undermine the historical responsibilities of these countries.

These geopolitical dynamics, coupled with the vested interests of the fossil fuel industry, are expected to intensify. However, it will be imperative to maintain consistent pressure on developed countries, who are obliged to contribute under the Paris Agreement, to take meaningful action. Otherwise, the burden of the climate crisis will fall on the shoulders of communities that are not responsible yet disproportionately bear its consequences.

In the words of the United Nations secretary-general, the story of the climate crisis is “a story of avoidable injustice. The rich cause the problem; the poor pay the highest price.” How this historical crisis is challenged, addressed, and its future impacts proactively mitigated depends on whether the developed countries—those that have significantly contributed to this global catastrophe—accept their responsibilities and deliver the financial support required.