We need radical action on climate finance at COP29 | News | Eco-Business

Under the Paris Agreement, nations agreed to set a new climate finance target by 2025 – a New Collective Quantified Goal (NCQG). This will be a decisive issue at COP29.

The NCQG is designed to respond to the inevitable harm that climate change inflicts on LDCs (Least Developed Countries) and SIDS (Small Island Developing States). The Solomon Islands, for example, is ravaged by cyclones every year and threatened by rising sea levels, which could erase its identity, history and culture.

Negotiations over the NCQG have been taking place for months. The key pillars include:

• The mobilisation of climate finance for both mitigation and adaptation.
• Addressing the financial needs of developing nations.
• Ensuring that “new and additional” climate finance does not detract from existing development aid.
• Aligning financial resources with the Paris Agreement’s goals, focusing on low greenhouse gas emissions and climate resilience.
• Promoting inclusivity, equity, transparency and accountability.

Despite the importance of these measures, the failure of the symbolic US$100 billion goal has fostered political distrust between nations at recent UN climate talks. Disagreements are rife and progress is slow.

The debt burden and crumbling public support

The delay in meeting the agreed climate funding target has worsened the situation for nations most vulnerable to climate change impacts. This ties into broader debates on global priorities, as fossil fuel investments continue alongside growing clean energy investments.

According to the UN’s “Trade and Development Report 2023”, 61 per cent of fossil fuel companies’ credit comes from banks in developed countries. The report says most of this supports export-oriented projects, for global minority consumption. For example, Africa’s oil and gas is largely consumed by the EU and the profits flow to transnational companies.

Multilateral organisations like the International Monetary Fund and the World Bank are still pushing measures that charge the public for emissions reductions. This threatens to undermine public support for climate action.

Additionally, in 2022, 69 per cent of the US$91 billion in public climate finance was loaned, at market-based interest rates. According to new analysis by the International Institute for Environment and Development, 58 developing countries and SIDS spent half the climate finance they received during 2022 on debt repayment. Indebtedness can lead nations to cut public services, and every dollar spent on loan repayments is one dollar less for climate-resilient infrastructure to address loss and damage.

The wrong priorities

COP29 has been referred to as the “COP of peace” by host nation Azerbaijan. But one of the most pressing-yet-overlooked issues of loss and damage discourse remains militarism.

Military spending has surged as climate financing has lagged. As the economist Mariana Mazzucato puts it: “The urgency to win is why money is always available for wartime missions – whether in the world wars, Vietnam, or Iraq. Money seems to be created for this purpose. There is no reason why a ‘whatever it takes’ mentality cannot be used for social problems.”

By 2023, annual global military expenditure had reached a record high of US$2.24 trillion. This dwarfed the US$100 billion climate financing pledge. The US spent approximately US$916 billion on its military last year, five times more than it allocated for its climate finance pledge.

It is the largest military spender and historically the largest emitter of greenhouse gases. Of the US government’s greenhouse gas emissions, 70 per cent arise from its military operations. In 2021, they generated an estimated 100 million metric tonnes of emissions at least – more than, for example, Chile’s entire emissions that year.

And yet, military emissions were exempt from the international reporting requirements of the Kyoto Protocol. Reporting them under the Paris Agreement is voluntary.

A recent report outlining how rich countries could raise US$5 trillion a year for the NCQG suggested redistributing 20 per cent of public military spending and taxing arms sales.

The arms race is not only fuelling the stock prices of defence contractors and asset managers, but exacerbating the repression of climate-vulnerable countries, both socially and economically.

What can we dare to change?

Following the NCQG discussions in Baku, public hearings for an historic climate justice case take place at the International Court of Justice next month. It is essential that both adopt a rights-based approach to addressing loss and damage, which necessitates prioritising the quality and transparency of financing reforms.

Crucially, any loans categorised as “climate finance” must be spent on green projects, not fossil fuels. The disagreements over funding commitments and the growing finance gap must be resolved. Who will pay and who should be prioritised for support must be clarified, especially given the voluntary nature of these contributions.

These financial commitments should not be distanced from the responsibilities outlined in the UN Framework Convention on Climate Change and the Paris Agreement. Both vehemently consider loss and damage support from developed nations to be a critical priority.

Finally, the decarbonisation of key industries, including the military and arms sectors, must be placed firmly on the agenda, especially when considering how financial resources should be diverted and prioritised to support the loss and damage fund.

Only through such decisive actions can we hope to adequately address the urgent and growing challenges of climate-related loss and damage.

This article was originally published on Dialogue Earth under a Creative Commons licence.