It was only on the last scheduled day of two weeks of negotiations at the UN Cop29 climate summit that developed countries put a financial commitment on the table for the first time.
In reality, this offer took not just two weeks of talks to prepare, but nine years – since article 9 of the Paris agreement in 2015 made it clear that the rich industrialised world would be obliged to supply cash to developing countries to help them tackle the climate crisis.
When it finally arrived on Friday, the initial offer of $250bn (£200bn) a year by 2035 was widely derided as too low. Early the following morning, the countries upped the figure to $300bn, which ended up being accepted, albeit amid acrimony and cries of “betrayal”.
Even in signing the deal, rich countries prevaricated – the money could come not just in the form of the grants and very low-interest loans that developing countries need, but some could also come from a “wide variety of sources, public and private, bilateral and multilateral and alternative sources”. Money will be “mobilised” rather than provided – a nice distinction that allows for the inclusion of private sector co-investing to be counted alongside public money from government budgets and development banks.
Plus, rich countries will only have to “lead” in supplying this – some of the cash could come from big emerging economies, such as China or South Korea, or even petrostates such as the United Arab Emirates. And the headline figure of $1.3tn a year for developing countries by 2035 relies on the $300bn being supplemented with a much higher amount of private sector investment, and “innovative” forms of finance such as new taxes on fossil fuels and frequent flyers, none of which are even close to being in place.
Yet signing even such a loose arrangement was “a stretch”, developed countries underlined repeatedly, in corridors and negotiating rooms, to anyone who would listen. What many failed to address, throughout the intense and crammed days of negotiating, was that supplying this money – which will go towards shifting low-income countries to a low-carbon economy, and helping them cope with the impacts of extreme weather – is very much in the interests of rich countries themselves.
Developing countries face economic losses of more than $500bn a year from the effects of extreme weather, which is likely to push at least an extra 100 million people into poverty by 2030, according to estimates from the World Bank.
In that context, $1.3tn a year – that will not only stem those losses and prevent decades of progress in lifting people out of poverty to be reversed, but also reduce future greenhouse gas emissions and help the world limit global heating to 1.5C above preindustrial levels – represents something of a bargain.
“This number is not of an irrational order of magnitude,” Achim Steiner, the administrator of the UN Development Programme, told the Guardian. “To give a little bit of context, $3tn will be invested globally in energy infrastructure this year. So when we say $1.3tn, that is not something out of this world, when it would allow a world of 8 billion people to accelerate and raise their levels of ambition in decarbonising their economies.”
The goal of $1.3tn comes from estimates made by leading economists in the Independent High Level Expert Group (IHLEG). They found that about $2.4tn would be needed each year by 2035 to enable developing countries, excluding China, to cut their greenhouse gases and adapt their infrastructure to the impacts of extreme weather. But most of this will come from developing countries’ existing domestic budgets.
“Developing countries are actually investing hundreds of billions of dollars a year already from their own taxpayers’ revenue, in climate action,” Steiner told the Guardian in an interview at Cop29 before the developed country offer was put on the table. “It wouldn’t hurt or harm anyone on the other side of the table to acknowledge that.”
The IHLEG also suggested that about half of the $1.3tn could come from the private sector, with about $300bn needed from developed country budgets. Amar Bhattacharya, the group’s executive secretary, said developed countries could find this money from their budgets without difficulty. “Is it feasible? The answer is absolutely yes. Is it politically challenging? The answer is also yes. But I do believe it can be done.”
Why, then, was setting a goal of $1.3tn so hard, and why did it take so long?
Although it was the 29th Cop (“conference of the parties”, under the UN framework convention on climate change) in a near-annual series stretching back to 1992, this summit was set a task that no other previous meeting had attempted.
Negotiating on money has never been a Cop issue. Previous meetings have focused on cuts to greenhouse gases, and meeting scientific goals. The previous finance goal, of delivering $100bn a year by 2020 – not met until 2022 – was set without real negotiation at the Copenhagen Cop in 2009.
There is not even any clearcut definition of what constitutes appropriate forms or uses for this finance, within the UN process. “If we tried to define climate finance, we would be here until 2100,” one negotiator joked.
This meant there was no clear template for how the negotiations should proceed. The fact that the offer of finance from the developed world came so late in the process partly reflected that difficulty – developed countries said it was because they needed to have the right framework assured before they could make promises of cash.
Some explained why the “new collective quantified goal” on climate finance was in rich countries’ interests. This is not charity, civil society groups said – it only begins to repay the damage rich countries have caused in burning fossil fuels, and real restitution would come to at least $5tn to $7tn a year.
Mia Mottley, the prime minister of Barbados, said: “If I can’t live because I can’t farm because I don’t have access to water … I’m going to shift where I’m living from. So the volume of climate migration will wake up those who have been slow to see that this must be a win-win.”
Though the sums might seem large, the money promised is not even all that it seems. On paper, $300bn appears to be a tripling of the current finance pledge of $100bn a year by 2020. But that pledge was made in 2009 and inflation has since eroded the buying power of the dollar.
Developed countries made clear that updating the $300bn pledge with inflation was not part of the plan. The offer was made on the same terms as the $100bn goal, the Guardian was told.
If Cop29 was hard, it is only the beginning of the process. In the coming years, developed countries will be expected to make individual pledges of climate finance to show they are ramping up their efforts to meet the goal. Getting those proposals to add up is likely to be a whole series of equally bitter battles.
