There is still much disagreement on climate change finance.

What is being discussed?

Climate finance is money that major economies provide to help poor countries invest in projects to curb greenhouse gas emissions and cope with increasingly severe weather caused by climate change.

Houses submerged in floodwaters after heavy rains in a village in Guangdong province, China, April 22. Photo: Reuters

In 2009, developed countries agreed to transfer $100 billion a year to these funds, from 2020 to 2025. And the task for negotiators at this year's UN climate talks is to set new targets beyond 2025.

How much is enough?

Worsening climate change and lagging clean energy investment in developing countries mean estimated costs have risen sharply since countries agreed the first climate finance targets.

According to a report by the United Nations, from 2023 to 2030, developing countries are estimated to need to invest $2.4 trillion per year (excluding China) to meet climate goals and protect their societies from extreme weather.

That would be a four-fold increase from current levels. This includes public finance, as well as private finance and funding including from development banks.

Ahead of COP29, several countries have proposed numbers for the new target. The Arab Group, which includes Saudi Arabia, the UAE and Egypt, proposed a UN target of $1.1 trillion a year, with $441 billion coming directly from developed countries in the form of grants.

India, African countries and small island states also say they need to raise more than $1 trillion a year, but there are differing views on how much of this should come from government coffers.

Discussions are swirling around the idea of ​​a two-tier target: combining a larger external target that covers all global climate finance, from development bank loans to private funding, and a smaller, core target of public money from rich-country governments.

Developed countries are expected to take the lead in providing funding, although the US and EU each said the new target must exceed the previous $100 billion target.

Who has to pay?

Currently, only a few dozen rich countries are obligated to provide climate finance. That list of donor countries was decided at the UN climate talks in 1992 and has not changed since.

The EU and the US say that list is outdated and want to add new donors including China, the world's second-largest economy, and countries with high GDP per capita such as Qatar, Singapore and the United Arab Emirates.

Beijing has firmly opposed this. The question of which country should pay is expected to be a core issue at COP29.

The United Nations climate talks make decisions by consensus, meaning none of the nearly 200 participating countries can oppose an agreement.

Define what climate finance is?

OECD data show that today, most public climate finance is in the form of loans, with a smaller share of grants. Other types of finance included include private finance mobilized by governments, export credits and support from development banks.

Some countries have proposed defining what does not count as climate finance. At talks in Bonn this week, negotiators from small island states argued for loans provided at market rates and export credits to be excluded. They worry that climate finance given as loans is pushing poorer countries into debt.

Countries also discussed whether commitments to cut fossil fuel subsidies could be reflected in climate finance targets – a proposal opposed by oil and gas producers including Oman.

With public budgets strained, countries are looking for new sources of funding. Ideas to be discussed at COP29 later this year in Baku, Azerbaijan, include taxes on fossil fuels and the defense sector, as well as debt swaps (where a country’s debt is written off in exchange for more investment in tackling climate change).

Ngoc Anh (according to Reuters)

Source: https://www.congluan.vn/cop29-con-nhieu-bat-dong-ve-tai-chinh-bien-doi-khi-hau-post299164.html