COP29 president urges same urgency in tackling climate change as COVID-19 response Article on The Guardian

British newspaper The Guardian has published an article by COP29 President Mukhtar Babayev. Caliber.Az reprints the piece.

To avert climate catastrophe, the world needs more climate finance. At COP29, the UN climate summit in Baku that begins today, agreeing a new climate finance goal is the top priority of Azerbaijan’s COP presidency.

Developing countries require assistance to tackle their emissions and build resilience against growing climate threats. The $100 billion annual target, set in 2009, was intended to be fulfilled by 2020. It is now outdated and falls far short of what is needed for countries at the sharp end of the climate crisis.

As the convener of these negotiations, we have been pushing for a fair and ambitious figure. Yet with any consensus process involving 198 parties, each wielding an effective veto, disagreements are inevitable: nothing is settled until it’s settled. Some countries argue for single-digit trillions, some say double-digit trillions, and others argue for hundreds of billions. To what extent this will be covered by public money is a central question. Of course, the global outlook remains uncertain and many nations are facing fiscal strain. However, delaying action today only guarantees a greater bill tomorrow.

To prevent the gravest human, ecological and economic toll, it is crucial to cut emissions before it’s too late. Without investing in adaptation measures that fortify nations against the impacts of climate-driven events such as hurricanes and droughts, widespread damage becomes inevitable. The greater the damage, the more it will cost countries to rebuild. Prevention is preferable to cure, but our planet is already ailing. Immediate action is crucial to halt further decline.

Not only is such funding necessary, it is possible. This has been done before: when struck with another crisis, COVID-19, advanced economies marshalled $8 trillion over the course of just 48 months to support their citizens and businesses. The challenge of the day was met. We must treat climate change with the same urgency.

But the onus cannot fall entirely on government purses. Unleashing private finance for developing countries’ transition has long been an ambition of climate talks. Bullish predictions touted that each $1 in public money could mobilise a further $5, $7, or even $10 in private finance. However, the inverse has occurred: in 2022, developed countries spent $94 billion on climate aid; it drew in just $21.9 billion from the private sector.

So the proof of concept isn’t there yet. But with competing priorities, there simply isn’t enough money in the world to fund developing countries’ transition to clean energy solely through grants or concessional financing – let alone cover adaptation and loss and damage. At the risk of stating the obvious, without the private sector, there is no climate solution.

According to the International Energy Agency, most emerging market and developing countries receive a mere 15% of global clean energy spending. The difference is the private sector. In developed countries, it funds more than 80% of green projects. In developing economies, the figure stands at just 14%. That is a problem when the latter create 60% of emissions released today (though developed economies still account for more than 80% of the stock of greenhouse gas emissions in the atmosphere). Without investment, as the countries grow and energy demands surge, the ratio will change and the volume will grow.

Renewables generate profits, which should lure private finance. However, risk premiums associated with developing countries often make the cost of capital unaffordable. If rates for projects in Africa, the world’s least-developed continent, are higher than in Europe, the world’s most-developed continent, why would an investor choose the former? We need sharper tools – guarantees against non-payments, breach of contract, or macroeconomic risks such as currency volatility – to level the investment playing field.

We must target more public money to coaxing out the private sector in these ways. This is crucial not only for financing the developing world’s transition, but also to free up public funds for adaptation, loss and damage.

There are bound to be other key discussions at Cop29 about how we finance loss and damage from climate change, as well as reforms to international financial architecture to better address the climate crisis. What is certain is that the world needs more funds, and it needs them faster. History shows we can mobilise the resources required; it’s now a matter of political will.

By Khagan Isayev