In his first major speech in government, after the Labour Party won power in July, Foreign Secretary David Lammy told journalists, diplomats and green campaigners at London’s Kew botanical gardens that, at COP29, the UK will “push for the ambition needed to keep 1.5 alive”. That refers to a global warming limit of 1.5 degrees Celsius agreed by governments, which is set to be exceeded unless climate action is ramped up dramatically.

However, when asked by Climate Home, Lammy declined to say how high the UK government thinks the new global finance goal should be – or when it will put forward its proposal. “I can’t make announcements here because if I did, I’d go back to a storm with [UK finance minister] Rachel Reeves,” he said.

The new collective quantified goal (NCQG) will determine how much finance should be mobilised for developing countries each year starting from 2025. It is the main outcome expected from COP29 in Baku in November. The current goal of $100 billion per year is widely viewed as inadequate and was only met two years late in 2022.

Developing-country negotiators have complained that rich nations are refusing to discuss the size (or quantum) of the NCQG. Developed countries have instead pushed to expand the list of contributors to the goal to include wealthier, higher-emitting developing countries like China and Saudi Arabia.

Developing-country “frustration”

“It’s been frustrating for most of the developing-country negotiators,” Kenyan climate finance negotiator Julius Mbatia told journalists on Monday. He accused developed countries of trying to “dodge” their mandates and responsibilities and “avoid committing to a scale that they are actually not committed to deliver politically”. “It’s a tactic,” Mbatia said. “Unfortunately, it’s being played at the worst moment when we are talking about meeting the needs and priorities of vulnerable countries.”

Melanie Robinson, global climate director at the World Resources Institute, said on Tuesday the context has changed since the current finance goal was set 15 years ago, as the impacts of climate change have worsened. All countries now need to get onto a net-zero, climate-resilient economic development pathway that benefits everyone and restores nature, she said.

“We know just how huge that challenge is for all countries,” she added. “But while developed countries and China can probably find the finance to make that transition themselves, we know that developing countries will need international finance.”

Slow progress in Baku risks derailing talks on new climate finance goal at COP29

Asked about developing countries’ frustrations, Lammy said: “I recognise the disjunct between rhetoric sometimes in the Global North and the real pressing needs that exist in the Global South as they look to see is that rhetoric going to be actually matched with funds.”

He said it remains the government’s “ambition” to deliver on the promise made by the former ruling party to provide £11.6bn ($14.7bn) in climate finance between 2021 and 2026, while Labour undertakes a regular review of spending plans. It had inherited from the Conservatives a £22bn ($29bn) “black hole” in Britain’s annual budget and a “tough fiscal environment”, he added.

The previous government cut the UK’s overseas aid target from 0.7% to 0.5% of gross national income. The new one has repeated the Conservatives’ pledge to reverse this when “fiscal circumstances allow”. Lammy said on Tuesday he wants to restore it “as quickly as possible, and of course that’s a discussion that I’m continuing to have with colleagues in the [finance ministry]”.

He added that the UK government will propose to Parliament a guarantee for the Asian Development Bank which will “unlock $1.2 billion in climate finance for developing countries in the region”. He repeated the previous government’s support for a capital increase for the International Bank for Reconstruction and Development “subject to reforms”.

Clean Power Alliance

In addition, Lammy announced that the UK will appoint two new envoys for climate and nature, reporting to climate minister Ed Miliband and environment minister Steve Reed respectively. It will also launch a Clean Power Alliance that aims to help countries leapfrog fossil fuels and transition to energy systems based on clean power.  The UK itself aims to get all its electricity from clean sources by 2030.

“Of course, there are different obstacles from different countries but, despite several other valuable initiatives pushing forward the energy transition, there is no equivalent grouping of countries at the vanguard of the transition,” Lammy said.

He added that the alliance would “focus on diversifying the production and supply of copper, cobalt, lithium and nickel – the lifeblood of the new economy”. These minerals are key to the global energy transition because they are needed for things like electric cables and batteries – and their processing is largely dominated by China, something that is a concern for Western politicians.

Lammy stressed the need to “bring these commodities to market faster while avoiding the mistakes of the past”, and said the UK would help developing countries “secure economic benefits while promoting the highest environmental standards for mineral extraction”.

Human rights must be “at the core” of mining for transition minerals, UN panel says

Climate Home has reported on how mining of these minerals has hurt local communities in Indonesia and Argentina – and may fail to bring fair benefits to local communities in Zimbabwe. A United Nations panel said last week that supply chains for critical minerals should not harm the local environment or human rights.

Lammy said the UK would restore its international credibility on climate action – after perceived indifference from former Conservative prime minister, Rishi Sunak – by ending new licenses for oil and gas production and overturning an effective ban on onshore wind power.

“We’re bringing an end to our climate diplomacy of being ‘do as I say, not as I do’,” he said.

(Reporting by Joe Lo; editing by Megan Rowling)

This article was amended after publication to clarify Lammy’s comments on the UK’s existing £11.6bn climate finance commitment.

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The commitment to provide £11.6 billion ($14.7bn) between 2021 and 2026 was first made by former prime minister Boris Johnson in 2019. It was repeated again by prime minister Rishi Sunak at Cop27, where he said it was “morally right to honour our promises”.

But, according to an internal government document seen by The Guardian, the UK has constantly underspent and would now find it a “huge challenge” to respect that pledge.

A government spokesperson refuted the claims, saying the UK is still committed to the pledge and delivering on it.

They said the UK spent £1.4 billion on international climate finance over the course of the 2021-22 financial year. This is less than the average £2.32 billion a year which would need to be provided up to 2026 in order to respect the pledge.

‘Sad’ climb down

A source within the African Group of Negotiators told Climate Home News “the news is disappointing, especially since the UK, while Cop26 president, took up a very promising leadership role and breathed hope and trust in the process”. They added that “to climb down from the pledge is unfortunate and sad, especially for developing countries bearing the brunt of the climate crisis”. 

The sentiment was echoed by Madeleine Diouf Sarr, chair of the Least Developed Nations group, who said climate finance “must be scaled up, not back”, highlighting rich countries’ ongoing failure to provide $100 billion a year in climate finance by 2020. Originally made in 2009, that pledge has not yet been respected.

Our people bear the brunt of the climate crisis & need support more than ever to address its escalating impacts. Already not meeting the $100 bn/yr goal, #ClimateFinance must be scaled up, not back. Global solidarity and cooperation remain critical for tackling #ClimateChange https://t.co/djfl3JMbrN

— LDC Chair (@LDCChairUNFCCC) July 5, 2023

“[Our people] need support more than ever to address its escalating impacts,” Diouf Sarr added in a tweet. “Global solidarity and cooperation remain critical for tackling climate change”.

Aid cuts

Former prime minister Boris Johnson vowed in 2019 to double the amount of international climate finance destined for projects to cut emissions in developing countries and help them adapt to the effects of climate change. The UK spent £5.8 billion on the programme in the five years up to 2021. 

But, since the pledge was made, the UK cut aid spending to 0.5% of GDP, down from 0.7%. Some climate initiatives immediately felt the impact of the budget cuts. A programme protecting poor communities around the world from floods and fires had its budget slashed by 70%. At the time, its lead in Nairobi, Joanes Atela, warned this would “directly harm the life chances of the most vulnerable”.

In order to meet the £11.6 billion pledge, government officials have calculated that it would have to spend 83% of the total overseas aid budget on the international climate fund and “squeeze out room for other commitments”, the Guardian reported.

Shipping set to boost climate targets

Another government document reported on by the British newspaper suggests underspending is set to continue. A civil servant from the department in charge of the programme wrote in a note that spending for 2022-23 was £1.3 billion and initial analysis of business plans put the figure for 2023-24 at £1.58 billion. This is below the trajectory set by the government, according to the report.

The publication of the documents’ content follows the resignation last Friday of Zac Goldsmith, a foreign office minister, over what he described as prime minister Rishi Sunak’s “apathy” towards climate change.

Broken trust

Bolivia’s Diego Pacheco, who represents the Like-Minded Developing Country coalition, told Climate Home News the news “will continue undermining the trust in the UNFCCC process”. He also claimed this is “part of the same behavior not aligned with the respect of the Convention and its Paris Agreement”, pointing to disappointment with the UK’s role in securing a Glasgow Climate Pact he described as “without equity”.

Identifying loss and damage is tough – we need a pragmatic but science-based approach

The looming threat of a broken pledge is likely to sow further divisions between developed and developing nations at a time when tension is already running high at climate talks.

In Bonn last month negotiations teetered on the brink as the two camps fought for nine days over the inclusion of emissions reduction measures and climate finance in the agenda. In the end, they reached a compromise rescuing the talks but leaving many disappointed. 

Future implications

A row back on the previous pledges could also stoke fears over rich nations’ future commitments under current considerations. Countries are discussing how the loss and damage fund, secured at Cop27 last year, should be filled. A future climate finance pledge, building on the $100 billion a year one, is also being talked about. 

Laetitia Pettinotti, an economist at Overseas Development Institute (ODI), says the UK’s breaking its promise would have “really stark implications” as it sends the wrong signals to the ongoing negotiations. “The UK is already among the laggards in climate finance,” she added, “this would be the final straw after years of distrust”.

The UK has so far only provided 55% of its “fair share” under a calculation done by the ODI that includes the size of its economy and historical emissions.

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Under a “flexibility mechanism” approved by members of the energy investment treaty, the EU and UK will end protection for new fossil fuel investments from August 2023. However, most existing fossil fuel investments will continue to be protected for 10 years from the date the modernised treaty is officially ratified.

The ECT, which has members spanning Europe and Asia, has been used by fossil fuel companies to sue governments over climate policies which hurt their profits. For example, German energy company Uniper is suing the Dutch government over its coal phase-out plans.

In 2020, a study found that ECT member countries faced up to €1.3 trillion ($1.4trn) by 2050 of compensation claims by fossil fuel investors.

The EU initiated “modernisation” talks to try and end these lawsuits but its attempts to remove fossil fuels from the treaty’s protection clause were thwarted by some Asian nations led by Japan.

At an ad-hoc conference, which was disrupted by protesters yesterday, members to the treaty reached a compromise which gives them some flexibility to choose what energy investment they want to continue to protect.

STOP PROTECTING FOSSIL FUELS! Extinction Rebellion & @wemoveEU have blocked the entrances to the toxic fossil fuel treaty (the ECT) building with a climate crime scene.
4 years of talks on the ECT must end today with the only viable conclusion: end the ECT now! #NoECT #ExitECT pic.twitter.com/iGFaA9Tx9L

— Extinction Rebellion Belgium (@XR_Belgium) June 23, 2022

Members like Japan, a staunch defender of the ECT, is likely to keep protecting fossil fuel investments in the country indefinitely. But the EU and the UK have said they will use the flexibility mechanism to limit them.

When the EU and UK end protections for fossil fuel investments for fossil fuel investors from ECT states like Japan then those states are likely to reciprocate, meaning European and British fossil fuel investments will no longer be protected in countries like Japan.

In Europe, environmental campaigners, who have repeatedly called on the EU to leave the treaty, reacted angrily, calling on ECT members to stage an on-mass exit from the treaty despite the reforms.

Former ECT employee turned anti-ECT campaigner Yamina Saheb told Climate Home the agreement was “a disaster from a climate change perspective”. Friends of the Earth’s Paul De Klerck said it would “lock the EU in fossil fuel investment protection” for a decade.

“This means countries will continue to spend taxpayers’ money in compensating fossil fuel companies rather than fighting climate change and moving to a renewable energy system,” added Cornelia Maarfield, trade and investment policy expert at Climate Action Network Europe. “This disastrous agreement must not be ratified,” she said.

Japanese and Korean industry push gas on Vietnam amid campaigner crackdown

The ten year protection for existing coal, oil and gas investments was a compromise reached between EU member states, which diverged on the best way forward, according to sources familiar with the negotiations. France, Spain and Luxembourg wanted to end the protection of fossil fuel investments that allows countries to be sued for damages by polluting companies. But several Eastern European states resisted change.

Under the agreement reached, some gas-fired power plants will continue to receive investor protection beyond the 10-year deadline and until the end of 2040. That applies to gas power plants whose emissions are under a certain level and which replace more polluting infrastructure.

The flexibility mechanism would have allowed the UK to end all fossil fuel protection immediately. But it hasn’t done so. Asked why, an energy ministry spokesperson declined to comment.

In a statement published Friday, the UK said protection for existing coal investments in the country will end in October 2024. But, in line with the EU, it will wait 10 years to end protection for oil and gas investments. It will continue to protect abated gas, which uses carbon capture technology, beyond those 10 years.

“Our success in negotiating a modernised treaty will boost our move to cheaper and cleaner energy by providing greater confidence to the private sector investors and risk takers we need for this transition,” said UK energy secretary Greg Hands.

Colombia’s new president Gustavo Petro pledges to keep fossil fuels in the ground

Campaigners’ call to leave the treaty found some sympathy in EU member states. A Spanish government representative told an EU council meeting in April that Spain “did not see how the ECT could be adapted to the Paris Agreement” and deputy prime-minister Teresa Ribera recently told Politico: “It is time that the EU and its member states initiate a coordinated withdrawal from the ECT”.

But the treaty’s ‘sunset clause’ makes leaving difficult as its rules continue to apply for 20 years after a member decides to leave. Campaigners say the impact of this sunset clause can be greatly reduced if members withdraw on mass and refuse to implement the treaty against each other during that time.

But as well as protecting fossil fuels, the treaty protects renewable investments. Under its rules, renewable companies have claimed compensation for anti-renewable measures. The modernisation talks have led to the addition of protection for carbon capture and storage technology, hydrogen, , ammonia, biomass and biogas.

This article was updated to include the UK government’s decision not to comment.

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