Azerbaijan shifts strategy at COP29: Plans climate fund instead of fossil-fuel levy

Azerbaijan, the host of this year's UN COP29 climate summit, has abandoned plans to propose a levy on fossil-fuel producers for climate-change funding.

Instead, the country aims to launch a new fund at the summit to support green investments in poorer countries, Caliber.Az reports via Reuters quoting an anonymous COP29 source.

Initially, Azerbaijan considered a levy on fossil fuel production to raise climate-change funds, but the proposal faced resistance from some countries. "We had several rounds of engagements with the parties concerned - with the other potential contributors - and we needed to adjust the fund idea to make it also attractive for potential contributors," the source said.

Azerbaijan will be a major contributor to the new fund, which will also seek voluntary contributions from other fossil fuel-producing nations. Sources familiar with the discussions revealed that oil and gas-producing Gulf countries had opposed the initial levy proposal.

The revised plan aims to establish the fund during the COP29 summit in November, using public-private partnerships to de-risk investments and help developing countries reduce emissions and cope with climate change. Poorer nations face challenges in attracting clean energy investments due to high interest rates and domestic debt burdens. Over the past two decades, Africa has received only 2% of global investments in renewable energy, according to the International Renewable Energy Agency.

Finance will be a key issue at the COP29 climate talks in Baku in November, where countries will strive to agree on a new global target for climate finance, requiring rich nations to transfer funds to poorer countries annually from 2025.