The LEAF coalition, an initiative launched in 2021 seeking to mobilise finance for forest protection, announced the agreement this week with the Brazilian state of Pará.

The state, which will host the COP30 climate summit next year in the city of Belém, last year recorded the highest Amazonian deforestation rate in the country. Around 170,000 sq. km, an area the size of Uruguay, was destroyed.

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Announcing the carbon credit initiative in New York, Pará State Governor Helder Barbalho told international press that the deal – which allocates a portion of the funds to indigenous and local communities – is “extraordinary”.

“It will be the largest carbon credit sale in history,” Barbalho said in a statement. “We dream of making living forests valuable, turning what dead forests need into a reality when the forest gains value.”

Funds for rainforests

Around 30 multinational corporations including Amazon, Bayer, BCG and H&M Group will purchase the credits from the project at $15 per tonne. The governments of the UK, US, Norway and South Korea will also back the deal with purchase guarantees, promising to buy a chunk of the credits at $15 per tonne if no private-sector buyer offers more than that.

LEAF expects to generate around 12 million forest credits by reducing deforestation in Pará from 2023 to 2026. The coalition has already established smaller projects in Costa Rica and Ghana, which sold credits at a lower price of $10 per tonne.

“The LEAF approach represents the best, and perhaps last, chance to halt and reverse tropical deforestation by 2030, channelling billions in climate finance to the Global South,” said Eron Bloomgarden, CEO of Emergent, coordinator of the LEAF coalition.

The Canadian city betting on recycling rare earths for the energy transition

Ahead of climate finance talks at COP29 in Baku, developed countries have insisted on highlighting the role of private finance such as the one featured in the LEAF coalition to move funds from Global North to South.

Bilateral purchases of carbon credits have also become more common, but the rules governing these agreements are yet to be finalised at COP29 – leading to controversial deals.

Close monitoring

If successful, the LEAF deal could become a “role model” for forest protection in the Amazon, but this will require evidence of the interventions changing Pará’s emissions trajectory, said Mariana Oliveira, manager of the Forests, Land Use and Agriculture Program at WRI Brasil.

“Given the nature and structure of the transaction, it will be necessary to closely watch the interventions to be sure that there is a link between the revenue from carbon credits and the interventions,” Oliveira told Climate Home News.

Since 2020, Pará state – the second-largest in the Brazilian Amazon – has committed to an emissions reductions strategy aiming to restore around 5 million hectares of forests and achieving net-zero forest emissions by 2036. The state has also put in place a mandatory tracking of all cattle and buffalo supply chains. After a slight rise in 2021, Pará’s deforestation fell in 2022 and 2023.

Senegalese banker Ibrahima Cheikh Diong picked to lead new loss and damage fund

While the state is already making efforts to combat deforestation, Oliveira said the information available on the LEAF deal suggests the efforts will be additional and with a separate source of funding – which are critical elements of high-integrity carbon credits.

“From now on, it is important for civil society to closely monitor how this program will develop, demanding real and effective participation from traditional peoples,” she added.

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Simon Stiell told investors at an event in New York that the efforts of many developing countries to adopt more renewables like solar and wind power “are hamstrung by sky-high costs of capital… or mired in spiralling debt crises”.

Because the “mega-trend” in clean energy is occurring unevenly, most investors are missing out on “gigantic, unrealised opportunities” outside of wealthy countries, he added, warning that this also poses a major threat to global action to curb climate change and avoid its worst impacts.

“I’ll be blunt: if more developing economies don’t see more of this growing deluge of climate investment, we will quickly entrench a dangerous two-speed global transition,” Stiell said.

UN climate chief calls for “exponential changes” to boost investment in Africa

Such an imbalance is both “unacceptable” and “self-defeating” for all economies, he emphasised. It would make halving global emissions by 2030 to keep warming in check “near impossible”, he explained, as well as causing havoc in international supply chains as extreme weather bites.

The disruptions experienced by businesses during the COVID19 pandemic “will seem like a minor hiccup compared to what an unchecked climate crisis will inflict” in an interdependent world economy, Stiell warned. “If a two-speed global transition sets in, ultimately everyone loses, and loses badly,” he added.

IEA weighs in

A report issued on Tuesday by the International Energy Agency (IEA), showing how to meet the energy transition goals agreed at last year’s COP28 climate summit, noted that advanced economies and China account for more than four out of every five dollars invested in clean energy since the Paris Agreement was signed in late 2015.

The IEA called for stronger and more stable policies to attract private investment in clean energy in other regions, together with larger, better-targeted international support spurred partly by a new climate finance goal due to be agreed at COP29 this November.

The agency also pointed out that, although governments are worried about how to make the energy transition socially acceptable, globally they are still spending nine times more making fossil fuels cheaper than on subsidising clean energy for consumers.

COP29 aims to boost battery storage and grids for renewables, as pledges proliferate

The report said that the COP28 goal of tripling global renewable energy capacity by 2030 is within reach – but meeting it will not automatically mean that more renewable electricity will clean up power systems, lower costs for consumers and slash fossil fuel use.

Achieving those aims will require complementary efforts to enable clean electrification – including building and modernising 25 million kilometres of electricity grids by 2030 and adding 1,500 gigawatts (GW) of energy storage capacity by that year, largely with batteries.

Fast-tracking a green future

With businesses and financiers gathered in New York for the annual Climate Week NYC, alongside leaders attending the United Nations General Assembly (UNGA), international agencies and green groups emphasised the need for concerted action by the public and private sectors to put internationally agreed energy targets into practice.

Fatih Birol, the IEA’s executive director, said the goals set at COP28 could put the global energy sector “on a fast track towards a more secure, affordable and sustainable future”. “To ensure the world doesn’t miss this huge opportunity, the focus must shift rapidly to implementation,” he added.

Other organisations also outlined key ways to make this happen. Mission 2025 – a coalition of businesses, sub-national governments and researchers, among others – appealed to governments to set “investment-positive policies” that can provide confidence to mobilise large-scale finance for the energy transition.

Using data from the Energy Transitions Commission, an international think-tank, Mission 2025 identified three such policies that have already worked in industralised countries and some large developing economies to help boost finance for renewables and electric vehicles.

It recommended fixing gigawatt targets for renewable energy deployment at the national level as the UK and India have done for example; derisking investment in renewable energy – by offering support such as competitive long-term contracts or tax credits – as in Europe, the India, China and the United States; and setting a date of 2035 or earlier to end sales of petrol and diesel passenger vehicles, as the European Union has done.

Global push to triple renewables requires responsible mining of minerals

Mission 2025 said these policies should be extended to other places, and could roughly double today’s investment in clean power and electric vehicles to $1 trillion of the $3.5 trillion needed annually for the energy sector to play its part in limiting warming to 1.5C.

Mike Hemsley, deputy director of the Energy Transitions Commission, told Climate Home these policies are as cheap as their fossil fuel equivalents, so there is no net cost to countries from implementing them as part of the updated national climate plans governments are now preparing – including for lower-income and emerging economies.

“We hope that this can give them some confidence to say if we set ambitious policy, we can attract private investment, realise some of our own goals and not necessarily cost ourselves anything – all for the good of the climate,” he said, adding that strong policies can also help lower investment risk in developing countries.

Renewables cheaper than fossil fuels

Research released on Tuesday by the International Renewable Energy Agency (IRENA) at the Global Renewables Summit during UNGA showed that with renewable power capacity additions setting a record of 473 gigawatts in 2023, four-fifths of newly commissioned, utility-scale renewable projects had lower costs than their fossil fuel-fired alternatives.

Power from solar photovoltaic (PV) panels, it found, has seen its cost plummet to around $0.04 per kilowatt hour in just one year, making it 56% cheaper than fossil fuel and nuclear options in 2023. Overall, the renewable power deployed globally since 2000 has saved up to $409 billion in fuel costs in the power sector, IRENA added.

“Thanks to low-cost renewables in the global market, policy makers have an immediate solution at hand to reduce fossil fuels dependency, limit the economic and social damage of carbon-intensive energy use, drive economic development and harness energy security benefits,” IRENA’s Director-General Francesco La Camera said in a statement.

(Reporting by Megan Rowling, editing by Joe Lo)

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The government officials who make up the fund’s board selected Diong – who has worked in insurance, private and public banks and government – during a meeting in Azerbaijan’s capital Baku last week. His appointment was announced on Saturday.

The board’s co-chair Richard Sherman said the selection “reflects the seriousness of the multilateral resolve to address the urgent impacts of loss and damage in countries that are particularly vulnerable to the adverse effects of climate change”.

Diong, who also has American nationality, said he was “honoured” to take up the role and looked forward to providing “crucial support to low-income developing countries most affected by climate change”.

Global push to triple renewables requires responsible mining of minerals

Diong’s career spans China, the United States, the UK and much of Africa and the Arab world. He is fluent in English, French, Mandarin and Wolof.

He has long experience in raising money for infrastructure projects – including airports and power plants – in Senegal, and has more recently led efforts to expand insurance for climate disasters in Africa and advised governments on how to deal with and prevent them.

Globe-trotting career

As a young man in the 1980s, Diong studied civil engineering at Hohai University in the Chinese city of Nanjing, writing a thesis on the design of a hydropower dam on the Wuhan river.

In 1989, he returned to Senegal to design projects to improve access to drinking water and irrigation in rural areas. From 1993, he worked as a freelance management consultant before joining consulting firm Booz Allen Hamilton in Virginia.

In the early 2000s, he worked for the World Bank, the organisation that has been selected to host the loss and damage fund on an interim basis, despite some resistance from civil society and developing countries.

In 2007, Diong became an adviser to the president of Senegal on the country’s relationship with China and raising funds for investment from emerging markets.

COP29 aims to boost battery storage and grids for renewables, as pledges proliferate

According to his LinkedIn profile, he also worked with Senegal’s infrastructure minister on development and fundraising for large projects including a new airport and coordinated the establishment of Senegal Airlines, a publicly-owned airline which quickly folded after accumulating too much debt.

In 2011, he spent six months as permanent secretary at the energy ministry and tried to tackle the country’s energy crisis by boosting supply through building new power plants and rehabilitating old ones.

He then moved to London to become senior Africa banker with French bank BNP Paribas, raising finance for key infrastructure projects, including power plants, roads and convention centres.

After another spell as a consultant, the United Nations appointed Diong to lead the African Risk Capacity (ARC) group in 2020. The ARC arranges insurance against extreme weather for African countries and advises governments on how to prepare for and respond to severe droughts, floods and storms.

Developing countries denounce rich nations’ disregard for just transition talks

Diong left ARC about a month ago to take up a role as an adviser on environmental, social and governance issues to the president of the Arab Bank for Economic Development in Africa. The bank is co-owned by 18 Arab countries, and channels money to African nations for development projects as well as financing Arab exports and investments to the continent.

In a video with farewell messages posted a month ago on Youtube, Diong’s former employees at ARC describe him as humble, inspirational and a good singer of ‘Wonderful World’ by Louis Armstrong. “We have been doing loss and damage since before loss and damage became mainstream,” says one.

Diong will take up his role with the Fund for responding to Loss and Damage (FRLD) on November 1, with the fund likely to start distributing money for the first projects it approves next year.

A former member of the fund’s transitional board, Avinash Persaud, said he wished Diong well but feared the fund “will remain tiny”. At COP28 last year,  wealthy governments pledged around $660 million to the fund and no further announcements have been made since.

The Azerbaijan government, which hosted last week’s FRLD board meeting, said it would work at November’s COP29 UN climate summit to convert the pledges received so far into tangible funding ready for disbursement “to the communities who particularly need it”, and seek further contributions to the fund.

UK calls for “ambition” on COP29 climate finance goal but won’t talk numbers

Persaud said he feared too many people still think that one of the main solutions to loss and damage is that those at risk should take out more insurance, despite insurers becoming increasingly reluctant to provide cover against climate-related catastrophes.

The finance expert from Barbados added that, rather than relying on wealthy countries to pledge money to the fund, a “systemic global mechanism” is needed to fill it more reliably, such as a tax on oil production.

Correction 23/9/2024: This article originally incorrectly stated that Avinash Persaud was a member of the fund’s board. It has been corrected to say that he is a former member of the fund’s transitional board.

(Reporting by Joe Lo; editing by Megan Rowling)

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The OECD report, which analysed the period from 2015 to 2022, shows that funding for efforts to protect and restore nature grew from $11.1 billion in 2021 to $15.4 billion in 2022.

The increase came largely from multilateral institutions – mainly development banks – which increased their funding from $2.7 billion in 2021 to $5.7 billion in 2022, mostly by offering concessional loans, which are cheaper than borrowing on commercial terms.

The issue of whether loan finance should be provided to already debt-strapped developing countries for action on climate and nature is hotly debated, with poorer countries and climate justice activists calling for more money to be disbursed as grants.

Multilateral funding for biodiversity (in green) saw the biggest increase between 2021 and 2022, mostly in the form of loans. (Photo: OECD)

Boosting funds for biodiversity protection will be a key issue at the COP16 UN conference in Colombia late next month, as countries face the challenge of meeting a goal to mobilise $20 billion by 2025 – a sum agreed two years ago at COP15 in Montreal. This, in turn, will influence the creation of new national biodiversity plans, experts say, which could also help curb rising carbon emissions.

To channel some of this money, governments agreed at COP15 to set up a new international biodiversity fund established under the Global Environmental Facility (GEF). It has struggled to get off the ground, receiving a scant $200 million so far.

“It is critical that historic and new donors arrive at COP16 with substantial new funding announcements for developing countries – primarily in public grants, not loans,” said Brian O’Donnell, director of the advocacy group Campaign for Nature.

Causes for concern

While it is “certainly good news” that biodiversity funding has increased in the years leading up to 2022, there are some concerning trends, O’Donnell told Climate Home News.

For example, he pointed to a disparity between funding for projects marked as “biodiversity-specific”, which has the principal goal of reversing biodiversity loss, and funding marked as “biodiversity-related”, which is mainly aimed at tackling a different problem but yields some benefits for biodiversity.

The OECD report shows that, while overall biodiversity funding increased, the amount with the principal goal of tackling biodiversity loss decreased, falling from $4.6 billion in 2015 to $3.8 billion in 2022.

“We can’t safeguard nature and the planet just by making it a tangential approach to other funding endeavours,” said O’Donnell. “The majority of the funding has to be with the true desire to safeguard nature.”

Oscar Soria, a veteran biodiversity campaigner and CEO of The Common Initiative, an environmental think-tank, agreed that the lack of funding dedicated directly to biodiversity could limit efforts to protect conservation areas and restore nature.

The prevalence of loans over grants also poses a challenge for developing countries, the two experts said. “With development budgets shrinking in key donor countries, the future of real biodiversity protection hangs in the balance,” Soria added.

The OECD report shows that most direct public funding came in the form of grants, but this type of finance has grown very slowly in the last decade, creeping up from $6.6 billion in 2015 to $7.1 billion in 2022.

Asia and Latin America were the top recipient regions for biodiversity finance from multilateral institutions, but most of it came in the form of loans. (Photo: OECD).

Funding gap

Based on the trends shown in the OECD report, Soria noted that governments “should be able to deliver” the $20-billion goal for international public finance by 2025.

O’Donnell agreed that the goal should be within reach, but said that implementing the Global Biodiversity Framework agreed in Montreal – which includes a target to protect at least 30% of the planet’s land and sea by 2030 – will require major additional financing. 

“Countries should look at this and say ‘we need to aim higher’,” he added.

The gap on a longer-term finance goal that includes all sources – for $200 billion by 2030 – is much wider, as the report shows that currently governments have mobilised only around $25.8 billion in total for biodiversity, including from the private sector.

In the case of multilateral institutions, the funds committed for biodiversity between 2015 and 2022 represent just 3% of all development finance disbursed in those years. Top recipients included China ($750m), Colombia ($338m) and Mexico ($207m).

Donor countries, meanwhile, remain small in number, with only five governments responsible for nearly three-quarters of the biodiversity funding provided between 2015 and 2022.

“This cannot be just an accounting exercise,” O’Donnell told Climate Home. “Ultimately, this needs to be an impact exercise – one that is focused on halting and reversing biodiversity loss.”

(Reporting by Sebastián Rodriguez; editing by Megan Rowling)

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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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About 30 developing countries sent civil servants to a five-star hotel in Ghana for official UN discussions on “response measures” that are meant to tackle how to maximise the benefits and minimise the negative impacts of a green transition.

All nations agreed at last year’s COP28 climate conference to hold the latest round of talks in a hybrid format. There were no officials present from wealthy governments – and while the US, the European Union and the UK did log on virtually, they kept their cameras largely off during the two-day meeting. Their rare contributions were received badly by developing countries.

The UN negotiations on response measures to climate change have been going on for more than 20 years. The 2015 Paris Agreement reinforced a commitment by governments to consider the concerns of countries “with economies most affected by the impacts of response measures”, particularly developing ones.

In a video message introducing this month’s talks, UN climate chief Simon Stiell said national climate action plans “will have profound societal implications – both good and bad”, adding “it’s crucial that we ensure more people benefit and that harms are mitigated”.

Participants then swapped their experiences on issues such as electric motorcycles with dead batteries being dumped on the roadside in the Maldives and the effects of EU deforestation regulations on Ghana’s cocoa industry.

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

Towards the end of the first day, Egyptian negotiator Khaled Aly Hashem Hussein observed that “it’s very unfortunate that in this room we don’t have a single representative from the developed countries”. This, he said, made it a monologue rather than a dialogue.

Brazil’s negotiator Vitor Mattos Vaz echoed those concerns, saying that no interventions had been heard from developed countries, including contributions via video.

He said governments “can not cherry-pick only the commitments and the tracks [of the Paris Agreement] that they are interested in”. When they do so, “they are eroding the spirit of mutual trust and reciprocal commitment,” he added, calling for the “absence of their comments”  to be formally noted.

Don’t mention CBAM

The next day, representatives from the US, EU and UK did speak up. Sewek Gasiorek from the British government said he regretted not being there in person as “it is a very busy time”, with G20 meetings and the United Nations General Assembly running concurrently.

He then clashed with negotiators from South Africa and Saudi Arabia over the extent to which the talks should focus on how measures taken by developed countries affect poorer nations. Gasiorek said “there is no agreement, as has been suggested earlier” that the discussions should be limited to that – which led South Africa’s Mahendra Shunmoogam to accuse him of “revisionist agenda-setting”.

Shunmoogam then asked the EU’s representative, Belgian government official Catherine Windey, how the EU’s carbon border adjustment mechanism (CBAM) – a tax system that is due to be fully in place by 2026 and is regarded by some emerging economies like South Africa as a protectionist measure that will damage their economies – was compatible with the “do no significant harm principle.”

Windey responded that the dialogue “isn’t supposed to address any individual policies of parties, so I’m not going to enter that discussion here”.

One developing-country official at the meeting told Climate Home they had left Ghana feeling they had wasted their time. “It was getting us into the discussion about nothing really of value,” the bureaucrat said.

Talks will continue at COP29 in Baku in November on whether and how to hold a further year’s worth of workshops and dialogue on response measures.

At COP28, governments agreed that “measures taken to combat climate change, including unilateral ones, should not constitute a means of arbitrary or unjustifiable discrimination or a disguised restriction on international trade”. Developing countries are likely to push at COP29 for agreement on more explicit criticism of policies like the EU’s carbon border tax.

(Reporting by Joe Loe; editing by Megan Rowling)

This article was updated on Sept. 18 to add that the talks were planned in a hybrid format and to clarify a comment from the UK’s negotiator.

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Negotiators gathered in Azerbaijan this week for the last round of technical talks before COP29, after mid-year discussions in Bonn ended in stalemate on several crunch issues.

Countries have yet to define critical aspects of the new collective quantified goal (NCQG) for climate finance, including who should pay – the so-called “contributor base” – and how much money they will mobilise – known as the “quantum”.

Commenting on this week’s talks, COP29 President-Designate Mukhtar Babayev said negotiations had come “a long way” but still risk “falling short”.

“Determination and leadership is needed from all parties to bridge the gaps that still divide us in this critical final phase,” Babayev said. “Sticking to set positions and failing to move towards each other will leave too much ground to be covered at COP29,” he added.

Bigger share of COP29 badges for Global South NGOs upsets rich-country groups

Civil society groups belonging to Climate Action Network (CAN), an international climate justice coalition, said in a joint statement they were disappointed at what they described as a lack of preparation by delegations from rich governments.

“The failure to achieve any clear outcome also means developing countries face uncertainty as they draw up their national climate plans, known as NDCs, because their ambition is necessarily dependent upon the availability of climate finance,” the statement said.

All countries are scheduled to submit more ambitious NDCs with stronger goals to cut planet-heating emissions and adapt to climate change impacts by February next year.

Contributor controversy

During this week’s Baku talks, sharp divisions remained over who should provide finance for vulnerable countries, as developing nations rejected rich governments’ proposals to elicit contributions from high-emitting emerging economies like China and wealthy developing states in the Gulf.

On behalf of the G77 group of developing countries, India’s negotiator told the final session that developed nations must provide “affordable, accessible and adequate” climate finance to avoid repeating the problems of the $100-billion goal, which was met two years late and mostly delivered in the form of loans.

“Instead we’re being asked to change the policy environment, divert our domestic resources away from the goal and even contribute to the goal,” said the Indian negotiator. “These are huge concerns for developing countries.”

The G77 group advocated for the inclusion of loss and damage finance in the NCQG – as the previous $100-billion goal covered only adaptation and mitigation – as well as pressing for funding to be delivered through “public finance in a grants-based or concessional manner”.

Green Climate Fund restructures, aiming to become donors’ “partner of choice”

Developed countries, meanwhile, held their ground and insisted that some developing nations should also pay up for the new goal, with the UK’s negotiator saying it cannot be argued the world has not changed since climate negotiations started in 1992, when the current country groupings were defined.

Global North governments also defended the role of private finance in the NCQG, with New Zealand claiming that, since trillions of dollars will be required, “we need to be speaking the same language” and “to do that we need structural transformation which can only happen by including [the] private sector”.

“Silence on finance”

Climate finance experts following the talks criticised developed countries for acting in “bad faith”, accusing them in the CAN statement of being “silent on future climate finance”.

“Just weeks before COP29 and after three years of process and engagements, we don’t even have an inkling of what developed countries will bring to the table for the NCQG,” said Liane Schalatek, associate director of the Heinrich Böll Foundation Washington.

Campaigners noted the time constraints as COP29 approaches fast, and expressed concern that ministers have been left with too many issues to resolve.

“It is shameful how developed countries have been undermining these finance negotiations. With less than two months to go until COP29, they should be scaling up their ambition and delivering their fair share of public finance through grants,” said Mariana Paoli, global advocacy lead at Christian Aid.

“If we get a weak finance outcome at COP29, it will be their fault – and devastating for communities in the Global South,” she added.

(Reporting by Sebastián Rodríguez, editing by Megan Rowling)

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Mafalda Duarte, the Portuguese climate finance specialist who heads the fund’s South Korea-based secretariat, says that after her first year in the job, she’s still discovering gems in the portfolio.

The GCF “is delivering many interesting things that are actually not known”, she told Climate Home – from its large equity investments that support entrepreneurs to a pioneering green credit guarantee company and a blended finance platform to lend to local governments.

“Because we haven’t placed enough focus on impact – and assessing the impact and assessing results – we are not able to have that information and communicate it,” she said in an exclusive interview setting out her plans to thrust the world’s biggest multilateral climate fund into the spotlight with the launch of a new organisational strategy.

Operations at the GCF’s head office in the city of Songdo are being overhauled to better track the benefits of its support for people on the frontlines of the climate crisis, to strengthen its investment partnerships, and to offer a more efficient service to the organisations that deploy its money on the ground.

The fund now has a network of around 250 partners – ranging from large UN agencies to environment ministries, banks and green NGOs – that are implementing climate programmes in some 130 countries, mainly in the Global South.

Cheaper and faster

Ever since the GCF – set up under the UN climate process – started operating about a decade ago, a key ask from these partners has been reducing the costs and the time it takes to do business with the fund, especially those based in the poorest countries with limited administrative capacity.

“That is always the primary topic of debate,” noted Duarte, who previously ran the multilateral Climate Investment Funds.

It’s an issue the GCF has made some progress in addressing. It now takes a median of four and a half months from getting a project approved by the board to the first pay-out of cash for the work to start – down from 14 months in 2022.

UN climate chief calls for “exponential changes” to boost investment in Africa

This July, the fund set a new record with a locally-led adaptation project for mountain farmers in Bhutan and another to strengthen watershed ecosystem management and food security in Malawi receiving money 15 days after being greenlit by the board.

Duarte told Climate Home the fund is now looking at whittling down the period from a project’s concept note to its approval from over two years to nine months by next year.

Speeding up the project process is one pillar of the executive director’s new vision which she launched last September during the UN Climate Ambition Summit in New York, just weeks after starting the job.

“50 by 30” vision

Dubbed “50 by 30”, the strategy aims to enable the GCF to efficiently manage $50 billion by 2030. Since 2014, the fund has secured total pledges of $33.1 billion – of which it has so far received $18.5 billion.

Other key goals of Duarte’s vision include boosting help for the most vulnerable countries like Somalia, increasing participation by the private sector, and shifting emphasis from one-off projects to programmes that secure wider change.

“I think there was a general understanding in the organisation that there was a need for change and for reform,” its executive director told Climate Home.

When Duarte took over, the GCF was merging from a rocky few years under previous management which led to whistleblowers exposing a range of problems – from a lack of integrity in vetting projects to a toxic workplace culture marred by sexism and racism. The fund responded by strengthening its internal procedures for handling grievances.

In Somalia, Green Climate Fund tests new approach for left-out communities

With those problems behind it, the GCF is now concentrating on getting more bang for its buck at the community level where climate finance needs are rising fast in line with the effects of extreme weather and rising seas.

To that end, the fund is reorganising its 300 staff into four regional teams – covering Africa, Asia-Pacific, Latin America and the Caribbean, and Eastern Europe, the Middle East and Central Asia – which will offer an integrated service to countries, from programme design to delivery.

GCF Executive Director Mafalda Duarte (right) visits a GCF-supported coffee farm in Kenya, September 2023. (Photo: Green Climate Fund / Andy Ball)

From this month, 14 management-level hires are coming on board to lead Duarte’s twin drives to deliver greater real-world impact and win more co-investment from the private sector.

It’s an approach, she said, that’s needed to position the GCF as a “partner of choice” in a troubled world where international climate funds must compete for scarce resources from donor governments juggling multiple pressures.

“With the geopolitical context that we are facing globally, unless we see some shifts, it’s a challenging task to mobilise significant money,” said Duarte.

Bigger share of COP29 badges for Global South NGOs upsets rich-country groups

She has ideas for how to do that – whether it’s working more strategically with philanthropies like the Rockefeller Foundation or securing a share of new global climate levies being considered on activities such as fossil fuel production, aviation and financial trading.

“What I do want is GCF to be an institution that can deliver at scale, efficiently and with impact so that it becomes clear that it’s a key mechanism to deliver resources – whether they come from those [new] fiscal tools or they continue to come from state budgets,” Duarte said.

The GCF estimates that its projects to date will help 1 billion people become more resilient to climate change and avoid emissions equivalent to 3 billion tonnes of carbon dioxide.

Trump risk

For its second replenishment in 2023, the Green Climate Fund secured commitments of $12.8 billion from predominantly wealthy governments – its largest fundraising round to date – but that includes $3 billion from the United States, which has yet to deliver $1 billion of an earlier $3 billion pledge.

The White House struggles to persuade a Republican-led Congress to stump up money for the GCF at the best of times – but should Donald Trump be elected as its next inhabitant in November, all bets are off. During his first stint as president, the climate-sceptic Republican criticised the GCF harshly and delivered nothing.

Duarte admits the outcome of the US election could be a threat to the GCF’s bank balance – and stressed the importance of being prepared for any donors ducking their promises.

“It is a risk; it is a risk that we have seen before as well – and to be honest, it’s a risk that I don’t know if we will not see more of given political dynamics,” she added.

Donor priorities

That means Duarte’s new management team have a major task on their hands to persuade both existing contributors and new ones – which could include richer emerging economies, private foundations or venture capitalists – to pour billions more into its coffers this decade.

Its boss argues that wealthy governments should raise their ambition in backing the GCF – but believes the onus is on the climate community to show why putting money into efforts to cut planet-heating emissions and protect people from global warming in vulnerable parts of the world is a wise investment.

“There are significant macroeconomic and geopolitical constraints that countries are facing – but we also know that they mobilise funding for what they consider to be priorities,” Duarte said. “So I think the goal is for all of us to continue to make the case that [climate] needs to be more of a priority when countries think of allocating public resources.”

(Reporting by Megan Rowling; editing by Matteo Civillini)

This article was updated after publication to clarify comments on the US election, philanthropies and GCF disbursement timing.

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Speaking at a conference of African environment ministers on Thursday in Abidjan, Côte d’Ivoire, Stiell said investments in renewable energy and climate resilience “can and should be the single greatest opportunity for Africa, to lift up people, communities, and economies”.

African countries face a disproportionately heavy burden from climate change, with temperatures across the continent rising slightly faster than the global average, according to the World Meteorological Organization (WMO). Deadly floods, droughts and extreme heatwaves are becoming more frequent and severe, with increasing knock-on effects on economies and societies.

African countries are losing between 2 and 5 percent of their gross domestic product (GDP) every year as a result of climate-related hazards, according to a new WMO report cited by Stiell in his speech.

The UNFCCC chief cautioned world leaders – especially those from the G20 group of the largest economies – against dismissing climate impacts across Africa as someone else’s problem. “It is African nations and people who pay the heaviest price,” he said. But, he added, “the economic and political reality – in an interdependent world – is we are all in this crisis together”.

Green investment pleas

Stiell went on to call for “exponential changes in business, investments, and growth” that would strengthen Africa’s role in climate solutions, including renewables such as solar and wind power, energy efficiency, clean cooking and adaptation measures.

African countries need an estimated $277 billion a year to bankroll plans outlined in their nationally determined contributions (NDCs) – governments’ climate action blueprints –  but they can currently count on a fraction of that sum.

Belém’s electric bus controversy: a cautionary tale for COP30

Investments in clean energy and related electricity grid upgrades amounted to $39 billion across the African continent in 2023, just 2% of the global total, according to the International Energy Agency (IEA). Fossil fuel supply and power generation still attract the bulk of energy investments in Africa.

Efforts to prepare for, and adjust to, the escalating impacts of climate change are similarly underfunded.

Climate adaptation in sub-Saharan Africa is forecast to cost between $30 billion and $50 billion a year over the next decade, according to the WMO report. But the region only received an estimated $10.8 billion in adaptation finance between 2021 and 2022,  according to the latest data published by the non-profit Climate Policy Initiative, which tracks adaptation finance flows.

Youssef Nassef, the UNFCCC’s director for adaptation, told journalists on Wednesday that climate change is exacerbating poverty, undermining food security and harming children’s development on the African continent.

Yet only 21 out of 54 African countries have so far submitted National Adaptation Plans, which are a key tool for mapping out and funding climate resilience measures – mainly due to the limited ability of the poorest nations to prepare them, he said. That, he added, is “a cause for concern”.

Climate finance focus at COP29

At the COP29 UN climate summit in Baku, Azerbaijan, this November, countries are set to agree on a new collective quantified goal (NCQG) for finance that should channel more money into both adaptation and clean energy in developing nations. But governments remain deeply divided over many of the fundamental issues, including the size of the goal, what it should fund and, crucially, who should contribute.

Rich countries want high-emitting emerging economies, like China and the Gulf states, to pitch in. While hitting back at attempts to include them in the NCQG donor base, some of those countries are already providing climate finance bilaterally, outside the UN process.

China’s President Xi Jinping and African leaders stand for a group photo during the Forum on China-Africa Cooperation (FOCAC) on September 5, 2024. ADEK BERRY/Pool via REUTERS

Beijing pledged on Thursday to step up its financial support to Africa with a fresh $51-billion funding offer to develop infrastructure, agriculture and trade across the continent. That should include 30 clean energy and green development projects, according to China’s Ministry of Foreign Affairs, which did not provide further details.

Stiell said on Thursday that COP29 “must signal that the climate crisis is core business for every government, with finance solutions to match”.

He called for progress on a range of finance sources besides the NCQG, from getting a global carbon market up and running to making the new loss and damage fund operational – all of which would help drive climate progress in Africa and beyond.

“An Africa ascending, an Africa empowered to take bolder climate actions is in every nation’s interests,” the UN climate boss emphasised.

(Reporting by Matteo Civillini; editing by Megan Rowling)

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Dear COP29 President-Designate Babayev, 

My name is Joseph Sikulu, and I am Tongan. Last week you visited my home island, where your team witnessed torrential rains and an earthquake. You witnessed how susceptible our people are to disasters, and how prepared we must be to meet them.

The escalating climate crisis exacerbates already destructive disasters and last week, as COP29 President-Designate, you met with the UN Secretary-General here in Tonga and acknowledged our realities. You made a commitment to amplify the voices of the Pacific Islands and build a more resilient, sustainable future ahead of COP29.

But the time for amplifying our voices is over. We need action. Fossil fuels are at the root of this crisis, fossil fuels threaten our islands.

Despite being confronted with devastating climate impacts, and the prospects of many more, we gathered in solidarity for the Pacific Islands Forum Leaders Meeting. We fight. And if we fight, we expect the same from you.

Fossil fuel transition back in draft pact for UN Summit of the Future after outcry

The Pacific has done the least to contribute to the climate crisis, yet we are fighting it the hardest. Pacific island countries have committed to achieving net zero by 2050 and 100% renewable energy targets. A transition to renewables means hope and survival.

If we can do it, so can you. As the next COP President, it is your duty to demonstrate leadership. In a letter to country delegations you called on them to deliver 1.5C-aligned NDCs and committed Azerbaijan to doing the same. But keeping 1.5 alive means no fossil fuel expansion.

Yet, this year, your president, Ilham Aliyev, called fossil fuels “a gift from the gods”. For us in the Pacific, such words aren’t just careless — they’re cruel. Our very homes are at risk, and keeping our Pacific homes means no fossil fuel expansion.

‘No more empty words’

Currently, Azerbaijan does not lead. Azerbaijan is nowhere near 1.5-aligned. Your climate goal uses accounting tricks to continue business as usual. You speak of “reducing emissions by 40% compared to 1990 levels by 2050”. However, your emissions were much higher in 1990 than they are in the twenty-first century. We need to completely phase out fossil fuels by 2050. Your climate goal is to do nothing while you plan to expand fossil fuels for exports.

Instead of holding the fossil fuel industry to account, you have presented a greenwashing fund to allow industry to continue with business as usual. The fund masks the ongoing expansion of fossil fuel production by SOCAR, your state oil company which is set to be the first to contribute. The $1-billion fund will operate at market rates instead of concessional finance, a pitiful gesture when set against the colossal sums needed for genuine climate action and reparations – a cynical attempt to distract from your country’s destructive environmental practices.

Leaders are cutting fossil fuel finance – next comes unlocking clean energy for all

We can’t afford any more empty words. The world needs you to lead it towards an ambitious and fair new collective finance goal at COP29 to facilitate the global energy transition. We need real, new and transparent finance, coupled with a global effort, particularly on behalf of countries in the Global North and those, like yours and Brazil, that will host international climate summits. It’s your responsibility to make sure that COP29 results in meaningful climate finance commitments and the financial resources to swiftly transition away from fossil fuels for good, with justice, equity and respect at the forefront.

We have neither the time nor the patience for more scams, or games of smoke and mirrors like your greenwashing fund. To keep global warming below 1.5C, we need a full and immediate phase-out of fossil fuels – period.

Azerbaijan must step up with ambitious climate goals before November, especially if it seeks to be seen as a respected climate host. Real climate leadership is not optional; it’s a prerequisite for hosting climate summits – and so should be respecting and upholding human rights and civic space. Now is the time to make real commitments – and to deliver on them.

The post As Pacific Islanders, we need climate action – not greenwashing – from Azerbaijan appeared first on Climate Home News.

The activities were meant to slash climate-heating emissions of methane – a potent greenhouse gas – caused by the decomposition of plants in rice fields by changing irrigation methods. But, in a 17-month review, Verra found a string of failures in the projects’ practices, resulting in the production of credits in excess of actual emission reductions.

Verra said this week it had, for the first time, imposed “significant sanctions” on the project proponents and the auditing firms tasked with certifying their operations, spurring calls from carbon market watchers for wider reforms.

In March 2023, Climate Home revealed Shell’s role in the rice farming schemes and their risk of generating worthless offsets due to integrity problems such as over-counting emissions reductions and accounting tricks used in their development.

The fossil fuel giant is directly involved in ten such projects and counted over a million credits from them towards its climate targets earlier this year, which are intended to reduce the “carbon intensity” of its fossil fuel products. Shell used those offsets while Verra was conducting its investigation, drawing condemnation from campaigners and carbon market experts.

Shell’s projects are among a total of 37 rice cultivation schemes revoked by Verra on Wednesday after the registry identified “serious issues”. These included insufficient evidence that the activities directly contributed to the reduction of methane emissions and a lack of justification for the use of simplified procedures that allowed project developers to dodge stricter compliance checks.

Late cancellation

Verra said it first suspended the projects in February 2023 after it became aware of concerns over how their rules were being applied. By then, however, they had been active on Verra’s register for nearly two years and had issued millions of credits. The project developers calculated the equivalent tonnes of carbon dioxide companies could offset based on the amount of methane emissions they estimated to have been avoided through the projects’ activities.

Asked why it originally approved the projects, a Verra spokesperson told Climate Home the organisation’s processes “evolve as new information and evidence comes in”. They added that “during that period, China’s COVID travel restrictions made it impossible to travel and perform on-site investigations”.

Fahran Ahmed, Verra’s chief program management officer, said in a statement that the standard’s announcement of sanctions showed its “commitment to ensuring greater integrity, transparency, and quality in the voluntary carbon market”.

“There are consequences for failing to follow the rules and requirements in place,” he added.

Fossil fuel transition back in draft pact for UN Summit of the Future after outcry

A Shell spokesperson told Climate Home the company was “disappointed to learn of the issues Verra identified with these projects during their recent review” and said Shell would “work closely with Verra to understand the impact of their findings”.

The spokesperson also said the projects “are not managed or operated by Shell”, although it became the “authorised representative” for them in late 2021 when it struck a series of agreements with the Chinese company that originally set up the schemes and listed them on the Verra registry.

The contracts seen by Climate Home granted Shell “full agency” over the projects, including all “applicable rights and responsibilities” equivalent to those of the project proponent. Shell declined to comment on how it carried out its responsibilities in relation to the projects.

Compensation claim

In a letter sent to a Shell subsidiary in China on Wednesday, Verra warned the company that it reserved all rights to take action, including seeking compensation for any carbon credits issued in excess of the correct amount.

In addition to using credits issued by the rice projects directly, Shell also offered them for sale to other companies for offsetting purposes. Chinese state-owned oil and gas firm Petrochina used over 300,000 of those credits before Verra’s decision to suspend the projects.

A farmer works on transplanting rice seedlings following days of heavy rainfall in China. REUTERS/Tingshu Wang

Prior to Climate Home’s 2023 investigation, the projects were listed by Shell on a dedicated webpage illustrating its carbon credits portfolio, which said the company employed “a rigorous internal screening process” to ensure it invests in activities with clear climate and environmental benefits. They were removed after the publication of the article.

Gilles Dufrasne, lead expert on carbon markets at Carbon Market Watch, said it was no surprise that Shell had been involved in carbon offsetting projects with no real climate impact. “They don’t have any credibility as an organisation in trying to do anything meaningful on climate change,” he told Climate Home.

Auditors’ failures

Washington-based Verra also identified “serious failures” in the work of four auditing firms responsible for checking the projects’ adherence to its rules and the correct measurement of emission reductions.

Verra has given the auditors 15 days to present a “strong” action plan to prevent the same issues occurring in future. Failure to do so will lead to a temporary suspension of their work with the registry.

Leaders are cutting fossil fuel finance – next comes unlocking clean energy for all

Dufrasne welcomed Verra’s decision to cancel the Chinese rice projects – but said it raises deeper questions about the agency’s overall functioning.

“There is a more systemic problem when something like this happens in the first place with 37 projects issuing bogus credits for years while auditors turn a blind eye,” he told Climate Home. “There is an excessive reliance on checks and balances that are not working properly.”

Conflicts of interest

Voluntary carbon market standards like Verra rely heavily on external auditors to independently assess projects and their compliance with the rules. The registry only gives the final stamp of approval. But auditors are picked and paid directly by project developers, raising the risk of conflicts of interest.

Dufrasne said Verra should completely reform its system of third-party certifications “with more urgency and seriousness”.

When its rice scheme investigation was launched last year, Verra also banned any further use of the rice farming methodology used by the projects.

The registry has been developing a new rulebook for rice offset projects that it said would enable proponents to “credibly achieve emission reductions” and generate high-quality credits.

To advise them on this, Verra appointed an Indian company which is part of Shell, raising concerns about conflicts of interest.

(Reporting by Matteo Civillini; editing by Megan Rowling)

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It’s a quiet climate success story: over 40 countries and public finance institutions have cut their international public finance to fossil fuels by two-thirds over the past three years.  

At the COP 26 climate talks in Glasgow, UK, 39 countries and public finance institutions launched the Clean Energy Transition Partnership (CETP). They committed to end their overseas public support for fossil fuels and instead scale up their support for clean energy. Joined by Norway and Australia at COP 28, the partnership now numbers 41. 

Our research finds that countries are largely delivering on their promise. Signatories’ collective fossil fuel financing in 2023 amounted to $5.2 billion, a decrease of two-thirds from the pre-CETP baseline. This is a historic achievement. 

There are a few laggards, such as the United States, Italy, Switzerland and Germany, which either still need to change their policies or have passed substandard policies that leave large loopholes for fossil fuel financing. However, even among these signatories fossil fuel finance is falling. 

Clean energy for the rich?

Source: IISD report, August 2024: Out With the Old, Slow With the New

Source: IISD report, August 2024: Out With the Old, Slow With the New

This is symptomatic of a larger issue. In 2023, China and advanced economies accounted for 90% of new solar PV and wind capacity installations, and 85% of investment in renewable energy. The lack of clean energy investment going to emerging and developing economies (EMDEs) outside of China is a worrying trend. 

Crowding in private investment 

Public finance is critical to bridge the gap in clean energy investment. It can lower risk for other investors because it is often provided at preferential below-market rates and longer time horizons. This can crowd in much larger flows of private investment for proposed projects. 

The International Energy Agency estimates that for the world to stay on a 1.5°C pathway, annual concessional funding in EMDEs from developed economies and development finance institutions would need to reach $80-100 billion annually by 2030. 

EU hit with lawsuit over green labelling of aviation and shipping investments

CETP signatories, and other high-income countries and public financial institutions, have an important role to play in scaling up concessional finance for the energy transition in EMDEs. They need to adopt ambitious and quantitative targets for rapidly scaling up good-quality public finance for clean energy. 

To meet the CETP’s clean energy commitment, signatories should, at the very least, aim to provide as much clean energy finance per year as their average pre-CETP fossil fuel support. Ideally, policies should stipulate much larger amounts. 

Avoiding more debt stress 

Policies should target low-income countries for finance to achieve universal energy access. The cost of capital is often higher in these countries due to a range of fiscal, socioeconomic and climate risks. But that should not be an excuse for public development finance institutions not to invest, since they are not driven by the profit motive. 

To be effective, financing needs to be high-quality. From 2020 to 2022, 83% of signatories’ international clean energy finance to low- and lower-middle-income countries was delivered through loans.  

Clean energy finance must not further burden Global South countries, which are spending almost half their budgets servicing debts. Policies must ensure a much larger portion will be delivered through grants and highly concessional instruments.  

Switzerland and Canada propose ways to expand climate finance donors 

The story is not over in terms of shifting public money away from fossil fuels. China, Republic of Korea and Japan are not CETP members, and together they continue to provide an average of $21 billion annually in international public finance for fossil fuels. The next step is to bring these countries along with G20 countries and multilateral development banks on board with the CETP initiative. 

Domestic public finance for fossil fuels persists, as well as fossil fuel subsidies. Globally, fossil fuel subsidies alone exceeded $1.5 trillion in 2022. Ending these subsidies can free up even more public money to invest in solutions for people and planet. 

In the year of the new climate finance goal to be agreed at COP 29 in Baku, Azerbaijan, every penny counts.

The post Leaders are cutting fossil fuel finance – next comes unlocking clean energy for all appeared first on Climate Home News.

The European Commission should review “flawed” sustainable finance criteria for the aviation and shipping sectors in the EU Taxonomy, a guide designed to funnel private investment towards net zero-aligned activities, according to a coalition of NGOs behind a legal challenge lodged at the European Court of Justice in Luxembourg on Tuesday.

The green groups claim the EU acted unlawfully in late 2023 when it introduced “loose” rules allowing a green label to be put on fossil fuel-powered planes and ships if they meet “weak” efficiency standards.

“The aviation and shipping criteria send completely the wrong signal to investors – directing investments to planes and ships that will pollute the climate for decades to come,” said David Kay, legal director at Opportunity Green, which filed the complaint alongside CLAW-Initiative for Climate Justice, Dryade and Dutch NGO Fossielvrij.

String of lawsuits

The EU introduced its “taxonomy for environmentally sustainable economic activities” in 2020 with the goals of preventing greenwashing and driving private capital into green technologies most needed for the transition to net zero emissions. Investments in “taxonomy-aligned activities” amounted to 440 billion euros between January 2023 – when the initial rules came into force – and May 2024, according to EU data.

How can governments tackle loss and damage at the national level?

But in a string of legal challenges, the rulebook has been accused of greenwashing highly polluting industries. Environmental campaigners at Greenpeace and a coalition including Client Earth and WWF filed two separate complaints at the European Court of Justice (ECJ) last year over the inclusion of fossil gas – under specific conditions and for a limited period of time – and nuclear energy in the list of green investments. The cases still need to be heard and a judgement is not expected before 2025.

The latest legal challenge filed on Tuesday takes issue with the criteria adopted in November 2023 for labelling certain aviation and shipping activities as sustainable.

“Marginal” emissions savings

In its rulebook, the EU Commission classed aviation and shipping as “transitional” activities because, it said, aircraft and ships with zero CO2 emissions are not yet technologically and economically feasible. The Commission introduced screening criteria to allow the inclusion of existing technologies when they comply with a series of efficiency standards which, the legislative body said, would help the world reach the Paris Agreement’s goal of limiting global warming to 1.5C.

But the NGOs argue that those thresholds are too broad and fail that scientific test. For example, giant cruise liners running on liquefied natural gas (LNG) and more than 7,000 new Airbus aircraft powered almost exclusively by fossil fuels – equivalent to 90% of the firm’s future orders – qualify as sustainable under the EU classification, analysis by the NGO Transport and Environment shows.

London airport expansion spotlights danger of “false hope” Jet Zero strategy

That is because, according to the regulations, their greenhouse gas emissions are lower than the older and more polluting ships and planes they would be replacing. But the NGOs argue those emissions savings are “marginal” and warn that promoting investments in those technologies will lock in carbon-intensive assets for decades.

Opportunity Green’s Kay said the Commission has “not put forward any evidence that these standards support a 1.5C pathway”.

“Given the long lifespan of these ships and planes, they will still be in the skies and the seas in 20-25 years’ time. That’s a dangerous thing for the taxonomy to be driving investment towards,” he added.

Aviation and shipping account for 8% of the EU’s total greenhouse gas emissions, but their share has risen rapidly over the last decade in line with continuing growth in air passengers and maritime trade.

The EU Commission did not respond to a request for comment.

The post EU hit with lawsuit over green labelling of aviation and shipping investments appeared first on Climate Home News.

The Philippines now finds itself in a position to once more shape the global direction of addressing loss and damage (L&D). 

More than a decade after the landfall of super-typhoon Haiyan changed how the world responded to the climate crisis, the country will host the board of the Fund for responding to Loss and Damage (FLD) for the next few years. This gives it a leadership role in determining how the Fund will run and function to provide much-needed support to those most affected by typhoons, sea level rise, and other impacts.     

This also puts pressure on the national government to not just set the tone for the administration of the Fund, but to prove it can match its global calls for climate justice with policies and solutions at the national level.  

Climate accountability 

The “Climate Accountability (CLIMA) Bill”, currently filed in the Philippines Congress, aims to accomplish two goals. The first is to hold big businesses accountable for their pollutive actions through stronger integration of the UN Guiding Principles on Business and Human Rights into legal and policy frameworks.  

The legislation also seeks to further empower citizens to seek redress against these businesses for harmful practices that cause violations of their human rights, aligned with the “polluter pays” principle.  

The second objective is the establishment of a national fund for those seeking support after being hit by extreme climate change impacts. It can be seen as a domestic counterpart to the FLD, which makes how it is structured and operationalized just as important to the country’s strategies at the international scale. 

In Hurricane Beryl’s shadow, loss and damage fund makes progress on set-up

If enacted, the proposed legislation would be the first of its kind in the world, serving as a testing ground for some of the critical issues associated with responding to L&D that the rest of the world can follow. One such issue is determining which cases and claims would qualify as “loss and damage” – which is currently a subject of debate at the global level. 

Another issue is putting into practice attribution science, which looks at how climate change and the emissions that worsen it trigger and intensify specific extreme weather events. While still an evolving discipline, this will play an important role in determining just how liable polluters are for causing disastrous storms like Haiyan. 

Adapting current policies 

At the moment, there is no primary climate-related L&D policy in the Philippines. While mechanisms do exist for accounting for losses and damages, these largely cover the impacts and costs of extreme weather events, especially from typhoons and flooding. 
These mechanisms are also more oriented for assessing disasters that are not always climate-related and may not be suitable for assessing the impacts of slow onset events like sea level rise. Furthermore, they are not able to fully capture non-economic costs, such as loss of ecosystem services, impacts on mental health, and loss of cultural heritage. 

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Along with the CLIMA Bill, the time for a national L&D policy to respond to the climate crisis has never been better than in the next few months. The Philippine government has been actively updating its climate strategies, such as the National Adaptation Plan and an implementation plan for its Nationally Determined Contribution (NDC) under the Paris Agreement.  

Any new law or policy responding to L&D must be in sync with strategies for adaptation and reducing emissions, along with the country’s positions at the Fund’s board and in other global decision-making processes. It must also effectively translate the global urgency of addressing L&D into potential interventions at the national level. 

Widening the responsibility net 

The L&D narrative has been largely anchored on developed countries and fossil fuel corporations needing to be held accountable for causing the climate crisis. Moving forward, this must continue to be upheld in global decision-making processes as the most vulnerable continue to seek and obtain justice. 

In a world first, Grenada activates debt pause after Hurricane Beryl destruction

Nonetheless, as L&D can be interpreted as climate risks and impacts that are beyond existing capacities for adaptation and mitigation, it means that accountability could also be applied to national and local governments, financiers of fossil fuel-related operations, entities spreading climate disinformation, and others that are enhancing these climate risks, impacts, and vulnerabilities. 

Through its statements at the global level and its new policies at the national level, the Philippines could pave the way for a new era in L&D governance. The process will not be easy. Big businesses, local or global, could insinuate that a new climate policy would hurt the economy. Finding enough funding or setting the criteria for who receives support will be difficult.  

Whatever it does, the world will be watching.

The post How can governments tackle loss and damage at the national level? appeared first on Climate Home News.

In 2023, the figure reached 26.4 million worldwide as a result of floods, storms, wildfires and other disasters, according to the Internal Displacement Monitoring Centre (IDMC).

Climate change is not solely responsible, but the frequency and intensity of extreme weather is increasing as global temperatures continue to rise. As a result we can expect that more and more people will face losing their homes and their livelihoods.

It is commonplace to see people boarding up their homes and literally battening down the hatches before a major hurricane is predicted to make landfall. For those facing extreme weather, this mentality is no longer confined to one-off events, but a regular mindset as the climate crisis continues to bite. Many communities around the world know that building resilience against intense storms, floods and heat waves is now essential to daily life.

“No country is immune to disaster displacement,” Alexandra Bilak, IDMC’s director, said in a recent press statement. “But we can see a difference in how displacement affects people in countries that prepare and plan for its impacts and those that don’t. Those that look at the data and make prevention, response and long-term development plans that consider displacement fare far better.”

This kind of planning is happening in countries on the front line of the climate crisis. Some small island nations, for example – many of them low-lying – are seeing their homes permanently washed into the Pacific Ocean.

Paradise lost

According to Fiji’s government, disaster events in the Pacific island state over the past 40 years have led to annual economic damages of around US$16 million, with 40,000 people impacted each year. This is due to increase to an average of US$85 million per year in losses, as a result of cyclones and earthquakes. These figures are high for a country with a population of under 1 million people.

Many of the people most impacted by climate disasters live in informal urban settlements. Their homes are extremely vulnerable to the regular cyclones that hit the island nation, especially as they are often located near riverbanks or around the coast.

The subtle art of scaling up climate adaptation

A recent Adaptation Fund project in Fiji was designed to build resilience against regular extreme weather events and “climate proof” housing for the foreseeable future. The project, implemented by UN-Habitat, looked at ways to protect thousands of homes when storm surges overwhelm local water and sanitation infrastructure. The settlements were located across four main urban areas on the island: Lautoka, Sigatoka, Nadi and Lami.

Low-cost, high-impact

Constructing cyclone-resilient buildings was essential to the work.

Moving new homes away from vulnerable hot spots, such as foreshores, floodplains and riverbanks, was a first step. As many settlements are self-built, training local people in new construction methods ensures future homes can be built with extreme weather in mind. An innovative element from the project was so-called ‘stilted safe rooms’ – low-cost and simple raised structures intended to provide refuge during periods of intense flooding.

Flood control is a vital component of climate-proofing infrastructure. In Fiji, priorities included building upgraded site drainage to reduce runoff; upgrading water sources and storage; and improving access ways, to ensure people can respond when cyclones put pressure on local infrastructure.

School’s out

In Haiti, a conflict-torn country beset with repeated natural disasters, climate-proofing infrastructure is still at an early stage. The country’s education sector, for example, has been repeatedly hit by extreme weather, including in 2016 when Hurricane Matthew damaged a quarter of its schools. Rebuilding after such frequent turmoil now requires new ways of thinking.

With the help of around US$10 million of funding from the Adaptation Fund, UNESCO is currently supporting the restoration of 620 schools across the country. Their work has included raising awareness of disaster risk reduction, improving knowledge of safety levels, and retrofitting existing buildings.

As climate disasters grow, early warning systems become essential

Panaroty Ferdinand Prophete, UNESCO’s national coordinator, told Climate Home that “nearly 200 technicians, students and experts received training on new construction techniques, an early warning system and the management of temporary shelters.” This training included working directly with the Ministry of Education to develop new construction standards for schools.

Over 150,000 students have so far benefited from the project, a success Prophete attributes to “very good synergy” between the different stakeholders. “This makes it easy to put in place a community emergency plan as well as the execution of the national action plan for resilient school infrastructure,” he added.

Best defence

Experts agree that we need to change the way we live in response to climate disasters. Moving settlements away from major water sources is, if possible, a simple solution. More projects supported by the Adaptation Fund – from Indonesia to Antigua and Barbuda – are focusing on blocking, redirecting or draining excess water as it comes in, to keep homes intact and habitable. These responses will remain some of our best defence against more unpredictable and extreme weather.

“A key sector for the Adaptation Fund is averting and reducing loss and damage through disaster risk reduction and early warning systems, which account for about 16% of the Fund’s current portfolio. Many additional multi-sector projects also include elements that are building resilience to disasters,” said Mikko Ollikainen, head of the Adaptation Fund.

“From climate-proofing homes and community centres to making informal settlements resilient to floods, it’s a vital aspect of the Fund’s work. Many of the projects are replicable and scalable so we hope they will also serve as models to create a larger positive impact on additional vulnerable communities beyond those served by the projects,” he added.

There is only so much adaptation can achieve if the flood waters get too high, or if cyclones increase in intensity and destructive force. But there are many cost-effective solutions to offer people a better chance of keeping their homes intact when extreme weather hits.

These investments can’t come soon enough for communities living in climate hot-spots and can serve to tackle long standing poverty issues at the same time. Fast-tracking these solutions will become ever more important if we want to reduce the millions of newly displaced people each year.

Sponsored by the Adaptation Fund. See our supporters page for what this means.

Adam Wentworth is a freelance writer based in Brighton, UK.

The post Climate disasters challenge right to safe and adequate housing appeared first on Climate Home News.

Winds of up to 240 kilometres per hour flattened entire neighbourhoods and toppled power and communication lines, causing damage equivalent to a third of the country’s annual economic output, according to early government estimates.

Many Grenadians cast their minds back 20 years when a similarly powerful storm – Hurricane Ivan – brought the island state to its knees, triggering a vicious circle of financial distress that eventually led to a debt default.

But, unlike in 2004, officials this time could deploy a tool that has been widely discussed in climate circles to provide financial help in the wake of fierce storms: hurricane clauses built into its agreements with international creditors.

Grenada last week became the first country in the world to use such a provision in a government bond which will allow it to postpone debt repayments to private investors, including US investment firms Franklin Templeton and T. Rowe Price.

Switzerland and Canada propose ways to expand climate finance donors

The move will save the Caribbean island nation a total of around $30 million in payments due this November and in May next year. While the money owed will be added to future bills, in the meantime the cash injection will help fund immediate recovery efforts and keep essential services like healthcare and education running, a senior official in Grenada’s Ministry of Finance told Climate Home.

The government is now “in talks” about triggering similar clauses with other creditors.

Fighting the debt trap

Grenada’s use of debt suspension clauses will be seen as a litmus test for their effectiveness in shoring up disaster-hit economies, as major international financial institutions like the World Bank promise to offer them more widely to climate-vulnerable countries.

Mike Sylvester, permanent secretary at Grenada’s Ministry of Finance, told Climate Home the debt repayment pause can have a “significant” impact in the short term, giving “some breathing space to the government to be able to properly and adequately respond to the crisis”.

Without this option and other relief measures, the government may have struggled to meet basic needs without making painful cuts to services, he added.

Simon Stiell, the head of the UN Climate Change body (UNFCCC), told Climate Home that “mechanisms such as this will be increasingly important as the scale, frequency and impacts of climate disasters continue to worsen”. Last month Stiell saw first hand the scale the devastation Hurricane Beryl inflicted on his home island of Carriacou – part of Grenada – where 98% of homes and buildings had been destroyed or severely damaged.

Like Grenada, many developing nations are finding it hard to deal with the combined effect of rising debt and worsening climate impacts.

Nearly half of low-income countries currently experiencing or at high risk of debt distress are also highly vulnerable to the effects of climate change, according to a March 2023 report by the UN Trade and Development agency (UNCTAD).

A separate analysis by charity Debt Justice found that debt payments for the most climate-vulnerable countries have reached their highest level in at least 30 years.

Emily Wilkinson, a senior research fellow at think-tank ODI, said that when a natural disaster hits a highly debt-distressed country, the impact on the economy is likely to prompt a default unless there are safeguards in place or the debt can be renegotiated quickly.

Disaster clauses in spotlight

Debt suspension clauses have risen to the top of the agenda since they were featured among the key recommendations put forward by Barbados Prime Minister Mia Mottley in her Bridgetown Agenda, a vision for reforming the global financial architecture and making it fit for a world grappling with rising climate pressures.

The World Bank expanded the scope of its climate-resilient debt clauses last year. Pauses on repayments of all new and existing loans, and related interest payments, are now being offered to 45 states it classes as “small” including island nations.

Other international development lenders, like the African Development Bank, the Inter American Development Bank and the UK Export Finance, have introduced similar options.

The UN can set a new course on “critical” transition minerals

For Marina Zucker-Marques, an economist and senior researcher with the Boston University Global Development Policy Center, temporary debt suspensions are an important tool that gives disaster-hit countries “some breathing space, allowing them to prioritise social spending, which is critical in the immediate aftermath of a natural disaster”.

But while these clauses have become more popular, they are still “a tiny fraction of debt contracts,” she added.

The lesson of 2004

Grenada is among a handful of countries that have pioneered the inclusion of hurricane clauses in their loan agreements dating back nearly a decade.

After the devastating experience of Hurricane Ivan in 2004 and a subsequent default, the island nation insisted on including such provisions in 2015 when it restructured debt with its main creditors, international private bondholders and the Exim Bank of the Republic of China (Taiwan).

One of the main challenges during the extended negotiations was to settle on specific parameters that would allow Grenada to trigger the clause in the event of a severe storm. These could be the wind-speed or the size of the economic losses caused by the disaster.

In the end, Grenada and its creditors agreed that a payout from the Caribbean Catastrophe Risk Insurance Facility (CCRIF), a regional disaster insurance fund Grenada is part of, for losses over $15 million would be the trigger.

After the passage of Hurricane Beryl, CCRIF has made a record $44 million insurance payout to Grenada as a result of the extensive damages to the islands. This enabled the government to activate its debt suspension clauses.

The aftermath of the devastating passage of Hurricane Beryl on the island of Petite Martinique, Grenada in July 2024. REUTERS/Arthur Daniel

Sylvester from Grenada’s Ministry of Finance said the country is now much better prepared to deal with the financial aftershocks of a hurricane, having learned the lesson of the events in 2004 – but more needs to be done.

“The money that we’ve received so far is still a drop in the bucket, given our significant needs,” he added. “We need to continue to build our resilience with the right financial tools, because we don’t want to pile up our debt just to reconstruct damaged infrastructure.”

Grants and debt relief

To that end, the government has set up a disaster relief fund, while looking to repurpose some of its loans and obtain new financial help from multilateral banks.

Boston University’s Zucker-Marques said support from rich countries, which are major contributors to climate change through their historically high greenhouse gas emissions, is fundamental to prevent financial crisis in developing countries on the frontline of extreme weather.

“Climate vulnerable countries need access to more grants and affordable long-term finance to invest in resilient infrastructure and economies,” she said. “Otherwise, the vicious cycle of natural disasters and financial instability will only worsen in the years to come.”

ODI’s Wilkinson said pausing countries’ debt is helpful, but she called for further action from creditors. “In the case of a qualifying disaster, they should offer some form of debt relief on repayments rather than just delaying them – which only kicks the can down the road,” she added.

The article was updated on 23/8 to add a comment from UNFCCC chief Simon Stiell received after publication.

(Reporting by Matteo Civillini; editing by Megan Rowling)

The post In a world first, Grenada activates debt pause after Hurricane Beryl destruction appeared first on Climate Home News.

Most developing countries offer a straightforward answer: keep the status quo, meaning only the countries classified as industrialised when the UN climate treaty was adopted in 1992.

But this club of developed nations, vocally led by the European Union and the United States, argues that the world has changed dramatically over the past three decades.

They now want other countries that have become wealthier – and more polluting – to pitch in for the post-2025 New Collective Quantified Goal (NCQG), set to be agreed at the COP29 climate summit in Baku this November.

China targeted

The EU wrote this week, in a document submitted as part of the NCQG negotiations, that “the collective goal can only be reached if parties with high [greenhouse gas]-emissions and economic capabilities join the effort”.

The US echoed that position in its latest submission, arguing that “those with the capacity to support others” in pursuing action to cut emissions and boost climate resilience “must also be accountable” for delivering on the climate finance target.

But, as governments polish their arguments ahead of the next round of talks in mid-September, climate finance experts warn of an uphill battle to get everyone to agree to a fair and accurate way to broaden the donor base.

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For instance, as the world’s top polluter and the second-largest economy, China is the primary target of the finger-pointing. But, when the country’s emissions and wealth are divided by its enormous population, China does not rank among the main candidates for an expanded contributors’ pool, according to climate finance studies.

At annual climate talks in the German city of Bonn in June, China’s negotiator reacted angrily at suggestions his country should become a donor. “We have no intention to make your number look good or be part of your responsibility as we are doing all we can to save the world,” he said.

Who pays?

Switzerland and Canada have been the first nations to propose precise criteria to expand the list of contributors beyond developed countries.

The Swiss negotiators pitched two detailed metrics in their latest submission early this month.

The first would target the ten largest current emitters of carbon dioxide that also have a gross national income (GNI) per capita – adjusted for purchasing power parity – of more than $22,000.

Under this measure, Saudi Arabia and Russia would be included. China would too if it is calculated based on current international dollars, which Climate Home understands would be the Swiss intention, even though the proposal does not specify.

But China would be excluded if GNI per capita were based on constant 2021 international dollars, highlighting the ambiguity of the proposals at this point.

Populous nations with large absolute emissions like India, Indonesia, Brazil and Iran would be left out because the average wealth of their residents falls below the threshold, according to World Bank data.

Similarly, Canada’s proposal – released last Friday after this article was first published – singles out the top ten emitters but with a slightly lower GNI per capita threshold of $20,000. In this case, China would be included whichever GNI calculation is used.

The second category in the Swiss proposal targets countries that have cumulative past and current CO2 emissions per capita of at least 250 tonnes and a purchasing power parity-adjusted gross national income per capita of more than $40,000.

Assuming the Swiss proposal means emissions starting in 1990, then fossil fuel-producers in the Gulf like Qatar, the United Arab Emirates and Bahrain would be included, alongside South Korea, Singapore, Israel, Czechia and Poland.

But climate finance experts told Climate Home they are sceptical such strict criteria will work at the negotiating table and make it into a final decision.

“Discussing thresholds and indicators is a technical and politically charged issue, and it will be very difficult to get everyone to agree on them,” Laetitia Pettinotti, a research fellow at ODI, told Climate Home. She added that countries need to be encouraged to consider whether their emissions and GNI per capita are similar to those of developed countries, while also taking into account their climate vulnerability.

Pieter Pauw, assistant professor at the Eindhoven University of Technology, said the current system is “outdated and increasingly dysfunctional”, but the focus should be on making it less rigid rather than finding “arbitrary” ways to add more countries to a list.

Pauw is the co-author of a new study looking at options to increase the number of climate finance providers.

New “net recipients” category

The paper found that several developing countries, including China, Saudi Arabia and Russia, have shown appetite to finance multilateral development funds, such as the Global Fund to Fight AIDS, Tuberculosis and Malaria, but not those dedicated to climate action.

“It’s because the climate discourse is so politicised now,” Pauw said. “They are afraid that agreeing to contribute to a climate finance goal would set a precedent and burden them with more responsibilities.”

“It is important to find a way to have them join the ‘contributors club’ without putting a stamp on them and saying ‘OK, now you’re on the same level as developed countries’,” he added.

The study suggests one way out of the deadlock: instead of labelling countries rigidly as pure providers or recipients of climate aid, a third category of “net recipients” could be created. These would be nations that make financial contributions of any amount, while also being able to receive money at the same time.

“This compromise would allow countries to maintain their ‘developing’ status that gives them a right to receive finance where it is needed,” said Pauw. “But it also incentivises them to play a more proactive role that better reflects their new capabilities and responsibilities.”

Better transparency

A separate study by UK think-tank ODI suggests that many developing countries are voluntarily providing climate aid to fellow developing states, but their contributions go unrecognised at the moment because of a lack of transparency.

For example, China contributed over $10 billion in climate finance through its contributions to multilateral development banks and funds between 2015 and 2022, according to a newly updated ODI analysis shared with Climate Home and due to be released in early September.

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Pettinotti thinks that the donor base could be expanded by recognising these contributions and bringing them to the surface through a better reporting system.

“There is not going to be coercion – that is just not going to work,” she told Climate Home. “Making space for a bottom-up, self-determined position is all we can do to encourage more countries to contribute.”

Developing-world opposition

Many developing countries have opposed any official discussion over an expansion of the donor base in the talks so far, claiming that is not part of the NCQG working group’s mandate. They have also complained that, while fixating on this issue, developed countries have failed to put forward proposals on other key elements of the NCQG, such as the size of the funding target.

Avantika Goswami, climate lead at the Delhi-based Centre for Science and Environment, told Climate Home that developed countries have “a moral imperative” to provide climate finance because of their historically high emissions over the past century.

“The contributor-base expansion debate cannot be resolved within the narrow timeline of November 2024 when the NCQG is due to be decided”, she added. “Pushing for this expansion as a bargaining chip will only derail constructive discussions.”

This article was updated on 19/8 to include a proposal by Canada released after the article had been first published. It was also updated to remove a reference to Bermuda as a potential donor, as it is a British overseas territory. 

(Reporting by Matteo Civillini; editing by Joe Lo and Megan Rowling)

The post Switzerland and Canada propose ways to expand climate finance donors appeared first on Climate Home News.

The Integrity Council for the Voluntary Carbon Market (ICVCM) announced on Tuesday that eight renewable energy methodologies, which cover about a third of the carbon credits available on the voluntary market, cannot use its “Core Carbon Principles” (CCP) seal of approval.

The ICVCM, an independent watchdog, aims to address widespread concerns over the quality of carbon credits after many projects have been accused of overstating their climate and societal benefits. It is assessing groups of offsetting projects to determine whether they comply with the CCP criteria, which are designed to identify and encourage high-integrity carbon credits that meet requirements on governance, emissions reduction and sustainable development.

The body said existing standards are not strict enough on judging whether renewable energy projects need the funding generated by selling carbon offsets in order to go ahead – a concept known as “additionality”. But it emphasised that renewables like solar, wind and hydropower are key to tackling climate change and carbon credits “still have a role to play” in financing them.

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Since the eight methodologies were designed as long as 20 years ago, the cost of renewables has collapsed, and their profitability in many parts of the world has rocketed, meaning they are more likely to make money without needing extra revenue from selling carbon offsets.

The ICVCM said that “for several years, carbon market experts have noted concerns about the additionality of many renewable energy activities and the difficulties in transparently demonstrating the additionality of these activities approved under existing methodologies”.

Major carbon-credit registries like Verra and Gold Standard stopped accepting new grid-connected projects in 2019, with the exception of those located in least-developed countries (LDCs).

But pre-existing renewable energy activities continue to generate a sizeable chunk of all the offsets available on the registries.

According to a recent analysis by Carbon Market Watch, over 280 million renewable energy credits are available in the voluntary carbon market. If companies and individuals used all those credits, that would compensate on paper for emissions equivalent to the amount of carbon dioxide Thailand released into the atmosphere last year.

Inigo Wyburd, a policy expert at Carbon Market Watch, called the ICVCM’s decision “a positive step”. “It sends a clear message to tackle the issue of the many low-quality credits still in circulation and undermining the market,” he told Climate Home.

Despite long being written off as largely worthless by climate experts, renewable energy credits are still popular among corporate buyers.

Fossil fuel majors like Shell and Total, automakers and cruise operators were among the biggest purchasers of renewable energy credits over the last 12 months, an analysis of Verra’s database shows.

In one transaction last year, German carmaker Audi used nearly 100,000 carbon credits generated in 2021 from an Indian solar project to claim that its handover of electric vehicles in Europe and the United States was “CO2 neutral” despite the emissions involved in producing them.

Japanese parcel delivery service Yamato Transport Company and public entities like Australia’s Brisbane City Council and Western Sydney University also relied on renewable offsets to claim carbon neutrality in 2023.

A spokesperson for Audi told Climate Home: “We ourselves are not only dependent on the standards established in the market but depend on them being viewed critically too”, adding that the company is “convinced that constructive criticism leads to higher-quality projects and general transparency”.

The spokesperson said the automaker also increasingly relies on “on-site inspections, thorough due diligence and audit processes” and wants “to act independently of external providers in the medium term”. It founded a joint venture with ClimatePartner in 2022 to develop its own carbon offset projects.

Because of earlier concerns about whether carbon offsets generated by renewable energy deliver the emissions reductions they claim, their price has been falling over the last two years.

According to data provider MSCI, the average price is just $2 per tonne of carbon dioxide equivalent reduced – less than half the price of offsets derived from projects aiming to protect forests, tackle methane emissions or promote energy efficiency. Renewable energy credits are likely to see further falls in price after the ICVCM’s rejection.

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But Amy Merrill, CEO of the ICVCM, left the door open to better renewables methodologies obtaining CCP approval. She called on carbon crediting programmes to develop methodologies “that better reflect the rapidly changing and variable circumstances around renewable energy deployment”.

“While renewable energy costs have fallen dramatically around the globe over the past decade,” she said, “they have not fallen evenly across all countries and high up-front expenses and other barriers mean that there are still many places where it is difficult to deploy renewable capacity.”

The cost of renewables is particularly high in remote rural parts of developing countries without access to the electricity grid, on islands with small populations and in areas where the authorities are hostile to renewable energy for ideological reasons, particularly in parts of the US. Methodologies enabling projects in these places would have the best case to get CCP approval, market experts told Climate Home.

IPCC’s input into key UN climate review at risk as countries clash over timeline

Verra has announced that it will revise some of its additionality requirements “to address the deficiencies noted by the ICVCM”.

The registry plans to submit its new rulebook to the watchdog and give existing projects the possibility of updating their quantification of credits accordingly. “This is part of our commitment to providing a path for all VCS [voluntary carbon standard] projects that wish pursue a path to CCP labelling,” Verra said in a statement.

A Gold Standard spokesperson said ICVCM’s rejection of the methodologies was “ambiguous and potentially harmful to high-quality renewable energy carbon credits on the market today” as different regions across the world still face various financial and technical barriers making carbon finance necessary.

They added that Gold Standard would consider the ICVCM assessment framework among other inputs in its next review of relevant methodologies.

The ICVCM’s negative assessment of existing renewable energy credits could also have repercussions for the new United Nations carbon mechanism currently under development.

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Renewable energy projects make up four-fifths of all projects seeking a transfer from the old Kyoto-era Clean Development Mechanism (CDM) into the new market system being set up under Article 6 of the Paris Agreement, Climate Home revealed last January.

The projects need formal authorisation to proceed from the countries where their activities are located.

Carbon Market Watch’s Wyburd said ICVCM’s rejection of the renewable energy methodologies “will hopefully send a few shock waves” to the countries having to make those decisions. “Given their profound shortcomings, these credits should not be given a new lease of life under the future UN mechanism,” he added.

At the same time, the ICVCM approved other methodologies to capture methane from landfills and to detect and repair methane leaks in the gas industry. That means 3.6% of unretired carbon credits have now been approved to use the CCP label.

Shell, Norwegian Cruise Lines, Western Sydney University and Aviva did not respond to a request for comment on the impact of the ICVCM’s renewables decision. Total declined to comment.

The article was updated on 9/8 to add a comment received from Audi after publication.

(Reporting by Joe Lo and Matteo Civillini, editing by Megan Rowling)

The post Renewable-energy carbon credits rejected by high-integrity scheme appeared first on Climate Home News.

ALTÉRRA was billed as the world’s largest private investment vehicle to “focus entirely on climate solutions”. COP28 President Sultan Al-Jaber hailed its launch as “a defining moment” for creating a new era of international climate finance.

Yet four months later, one of the initial funds ALTÉRRA backed with a $300-million commitment agreed to buy a major fossil gas pipeline in North America, Climate Home has discovered.

In March, BlackRock’s “Global Infrastructure Fund IV” acquired half of the 475 km-long Portland Natural Gas Transmission System, with Morgan Stanley taking the rest in a deal worth $1.14 billion overall.

That acquisition would not have come as a surprise to the fund’s investors.

When US-based BlackRock pitched it to the State of Connecticut’s Investment Advisory Council back in 2022, the world’s biggest asset manager gave a flavour of where their money would likely end up. Its presentation – seen by Climate Home – featured a list of “indicative investments” including highly-polluting sectors such as gas power plants and transportation networks, liquefied natural gas (LNG), airports, terminals and shipping.

Climate Home does not know whether ALTÉRRA saw the same presentation, nor did the UAE firm respond directly to a question asking if it was aware before the COP28 announcement that the BlackRock fund might invest in those sectors.

An ALTÉRRA spokesperson told Climate Home its “investments seek to build the energy systems of tomorrow, while supporting the transition of existing energy infrastructure towards a just and managed clean energy ecosystem”.

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In addition to the gas pipeline, BlackRock’s infrastructure fund has so far invested in carbon capture, waste management, utilities maintenance services, telecom infrastructure, data centres and the production of industrial gases, according to regulatory filings, a BlackRock job advertisement and press reports accessed by Climate Home.

A BlackRock spokesperson said its global infrastructure fund franchise “targets investments in solutions across the energy transition value chain, driven by the long-term trends of decarbonization, decentralization, and digitalization to support the stability and affordability of energy supply around the world”.

Andreas Sieber, associate director of global policy and campaigns at climate advocacy group 350.org, said Climate Home’s findings “confirm our worst fears”. “The ALTÉRRA fund uses a masquerade of green progress while funnelling investment into fossil fuel pipelines and gas projects, which are the biggest causes of the climate crisis,” he told Climate Home.

Climate finance is a hot topic at UN negotiations, with countries expected to set a new global goal at COP29 in Baku, Azerbaijan, this November, amid persistent calls for higher amounts to help poorer nations boost clean energy production.

The COP28 presidency said last year that ALTÉRRA would “drive forward international efforts to create a fairer climate finance system, with an emphasis on improving access to funding for the Global South”. Al-Jaber added that “its launch reflects… the UAE’s efforts to make climate finance available, accessible and affordable”.

But the sparse details provided at the time prompted climate justice activists to question the real impact it would have in countries that most need financial support to adopt clean energy and adapt to a warming world. Only about a sixth of the fund – $5 billion – was earmarked as “capital to incentivize investment into the Global South”.

Follow the money

ALTÉRRA is a so-called ‘fund of funds’. Instead of directly investing money in individual companies or assets, it puts its cash into a series of funds run by other investment firms. At COP28, it committed a total of $6.5 billion to funds managed by BlackRock, Brookfield and TPG, without setting out how the remaining $23.5 billion would be spent.

Since then, ALTÉRRA has not announced any further investments. Its chief executive, Majid Al Suwaidi, told Bloomberg this month that the fund is “actively planning the next phase of allocations”, without giving further details.

The launch of #ALTÉRRA marks the start of three unique alliances with global asset managers, @Brookfield, @BlackRock, and @tpg.

Together, we share the same vision, to bridge the climate investment gap and finance a new climate economy. pic.twitter.com/7yEXOyZqpK

— ALTÉRRA (@Alterrafund) December 1, 2023

Most of the funds picked by ALTÉRRA remain at an early stage and have yet to announce completed transactions or are still trying to raise more capital from investors. The most notable exception is BlackRock’s fourth Global Infrastructure Fund. By the time it won the $300-million commitment from ALTÉRRA in Dubai, the vehicle was ready to deploy its money.

ALTÉRRA told Climate Home its investment in the BlackRock vehicle is in line with its goals of getting climate finance “flowing quickly and at scale” and of partnering “with funds that invest in the energy transition and accelerate pathways to net-zero”.

Announcing its first $4.5-billion closing in October 2022, BlackRock said the fund would “continue to target investments in climate solutions, while also supporting the infrastructure needed to ensure a stable, affordable energy supply during the transition”.

In private conversations with potential investors, the asset manager spelled out more clearly what that meant.

Its presentation to the State of Connecticut in December 2022 showed that the fund would not only invest in things like renewable energy, electrification and battery storage, but also in fossil gas power plants and pipelines, LNG and transportation infrastructure like airports, shipping and terminals.

A slide from BlackRock’s presentation of the Global Infrastructure Fund IV to investors

In line with this strategy, BlackRock agreed a deal this March for its Global Infrastructure Fund IV to acquire half of the Portland Natural Gas Transmission System (PNGT), a fossil gas pipeline stretching from the Canadian border across New England in the United States to Maine and Massachusetts.

When it began operations in 1999, the pipeline helped shift New England’s power generation away from coal and oil, but it has also created a stronger dependency on fossil gas, leaving citizens vulnerable to price spikes. The region is now planning to accelerate the rollout of renewable energy sources.

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The PNGT was not the first fossil fuel infrastructure the BlackRock team behind the Global Infrastructure Fund had snapped up. In a written testimony submitted this March to the State of New Hampshire, a senior executive listed a dozen oil and gas pipelines backed by earlier rounds of the fund. They included one operated by ADNOC, the UAE state-owned oil company whose CEO is Sultan Al-Jaber, COP28 president and chair of ALTÉRRA’s board.

Responding to Climate Home’s findings on where ALTÉRRA’s money is going, Mohamed Adow, director of Nairobi-based think-tank Power Shift Africa, said it is “extremely concerning to see a fund hailed by a COP president as a solution to the climate crisis investing in fossil fuels”.

“This needs to be a wake-up call to the world that these funds created by COP hosts are little more than PR stunts designed to greenwash the activities of fossil fuel-producing nations,” he added.

Oil-backed carbon capture

BlackRock does not disclose the infrastructure fund’s complete portfolio, but it has invested another $550 million in Stratos, the world’s biggest direct air capture (DAC) project being developed in a joint venture with oil giant Occidental. The plant under construction in Texas promises to suck as much as 500,000 tonnes of carbon dioxide out of the atmosphere annually and bury it underground.

Its proponents see DAC as a key technology to balance out emissions in the race to achieve net zero by 2050, although so far it remains expensive and largely unproven at scale. Stratos won a grant from the US government to fast-track the construction of the facility, and it has struck deals to sell carbon offsets generated in future from the plant with corporate giants like Amazon.

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When the DAC partnership was announced last November, BlackRock CEO Larry Fink said Stratos “represents an incredible investment opportunity for BlackRock’s clients… and underscores the critical role of American energy companies in climate technology innovation”.

But Stratos’ critics have questioned Occidental’s motivations and dismissed its DAC investments as a greenwashing ploy to keep pumping oil and slow down the transition away from fossil fuels.

“We believe that our direct capture technology is going to be the technology that helps to preserve our industry over time,” Vicki Hollub, Occidental’s chief executive, told the CERAWeek energy industry conference last year. “This gives our industry a license to continue to operate for the 60, 70, 80 years that I think it’s going to be very much needed.”

Call for safeguards

While BlackRock’s infrastructure fund deploys its cash largely in the Global North, ALTÉRRA’s promised investments in developing countries are still taking shape.

Brookfield in June launched a new “Catalytic Transition Fund” backed by ALTÉRRA with a $1-billion commitment. The fund’s stated focus is “directing capital into clean energy and transition assets in emerging economies”.

Climate Home asked ALTÉRRA if it had adopted any exclusion policies that would, for example, rule out investment in certain types of fossil fuels.

The UAE fund did not respond to the question, but a spokesperson said its investment approach is aligned with the goal “of accelerating the climate transition, with a focus on clean energy, industry decarbonization, sustainable living, and climate technologies”.

Climate activists protest against fossil fuels during COP28 in Dubai in December 2023. REUTERS/Thomas Mukoya

350.org’s Sieber called on Al-Jaber – who was widely criticised by green groups for his dual role as president of COP28 and head of a fossil fuel corporation – to “act swiftly to enforce stringent safeguards” for ALTÉRRA’s investments.

“The UAE is on the brink of losing the little credibility it still has left in addressing the urgency of the climate emergency,” Sieber added. “The world, especially communities who are being hit the hardest by climate impacts every day, cannot afford to have one more cent invested in fossil fuels.”

The key question now is whether Azerbaijan – the host of COP29 and itself a substantial producer and exporter of oil and gas – will do things differently. Last week, it announced a new voluntary fund that it said will invest at least $1 billion for emissions reduction projects in developing countries. Baku is hoping to secure contributions for it from fossil-fuel producing nations and companies.

Power Shift Africa’s Adow said developing countries need state-backed climate finance from rich nations, negotiated through the UN climate process, and “not just cooked up in voluntary schemes”. That funding “can be used where the need is greatest, not just where it might make most money for some private profit-seeking businesses,” he added.

(Reporting by Matteo Civillini; fact-checking by Sebastián Rodríguez; editing by Megan Rowling and Sebastián Rodríguez)

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When G20 finance ministers gather in Rio de Janeiro this week, Brazil and France have a chance to put these powerful countries on track to deliver a global wealth tax that could raise over $680 billion per year in the fight to tackle poverty and the climate crisis. Both countries have been vocal supporters of taxing the super-rich to fund international development and climate action.  

In April, finance ministers Fernando Haddad (Brazil) and Bruno Le Maire (France) announced their intent to tax the wealth of billionaires by at least two percent annually, prompting ministers from Germany, South Africa and Spain to back the proposal. As the current host of the G20, Brazil commissioned an investigation into the feasibility of this global wealth tax – and the results were published by French economist Gabriel Zucman in June, generating further momentum in efforts to fill the funding gap for climate and development.  

Zucman’s findings show that a global wealth tax on the super-rich – billionaires and people with assets worth more than $100 million – could be enforced successfully even if all countries did not adopt it. It is also a popular measure: more than two-thirds of people across seventeen G20 countries show support for making the super-rich pay higher taxes as a means of funding major improvements to our economy and lifestyles.  

This isn’t surprising. Ensuring that billionaires are properly taxed could deliver significant, tangible benefits in people’s lives and go some way to addressing the systemic injustices and inequality reflected by the climate crisis and poverty. 

The world needs a new global deal on climate and development finance

An ambitious global wealth tax, together with higher and permanent tax on oil corporations and extraction, would provide hundreds of billions of dollars/euros each year to properly fund scaling up renewable energy, rolling out heat pumps and insulation programmes to lower the cost of heating or cooling our homes, new public transport links, future-proof jobs and much more – helping communities to thrive.  

It would also end more than a decade of broken promises by G20 states, ensuring that some of the world’s wealthiest countries have enough money in their national coffers to provide adequate finance to pay for those suffering the consequences of climate impacts now. Helping the poorest communities prepare for unnatural disasters like increased wildfires, flooding and sea level rise, and ensuring people can rebuild their homes, infrastructure and places of work when preventative measures are not an option. 

Power to communities

A global wealth tax is a moral imperative. By implementing a fairer system of taxation, the G20 could accelerate a just transition to a low-carbon economy, cutting dangerous carbon emissions and boosting living standards and energy access at great scale, while also tackling deep-rooted injustice. Delivering finance for community-oriented renewable energy projects across Latin America, Africa, Asia and the Pacific would put power back in the hands of communities that continue to suffer from the violent legacy of colonialism and extractive profiteering. 

For this to be achieved France, and other wealthy nations in the G20 like Germany and the UK, must be willing to make concessions and assume historical responsibility for exploiting fossil fuel extraction in the economically poorer countries whose citizens are experiencing the worst consequences of the climate crisis. The emerging French government must deliver concrete plans to redirect its fortune and tax its billionaires towards a renewable energy-powered planet. 

Where East African oil pipeline meets sea, displaced farmers bemoan “bad deal” on compensation

It is incumbent on both Brazil and France to seize the opportunity presented by growing support to deliver a global wealth tax at the meeting of powerful finance ministers this week. Both countries must do everything they can to build trust and political will around the crucial proposal. But this will be a challenge if they undermine their stance on the international stage with contrasting domestic policy, something both governments are guilty of. 

Brazil has been pushing for new oil projects, including in the Amazon and is gearing up to become the fourth-largest oil producer in the world. France, despite being fined by the European Commission, is still not on track to meet its domestic renewable energy targets and announced in February a two billion-euro cut to the budget allocated for environmental and energy transition programmes. It is high time for both countries to stop the smoke and mirrors approach to international diplomacy, by aligning their commitments at national and international levels. 

Leaders’ summit

This week, ministers Haddad and Le Maire have a responsibility to rally their G20 counterparts around the wealth tax proposal and send a strong and unified signal to heads of state and governments to take concrete action that delivers a global wealth tax on billionaires when they meet in November. 

The stakes are high. The vast scale of global inequality means that nearly one in eleven people around the world live below the poverty line according the World Bank. In addition, this is set to be yet another record-breaking year for climate impacts, in a critical decade to prevent global heating from tipping over the 1.5°C threshold – a limit beyond which the ability of impacted communities to survive and thrive will be put at intolerable risk. We need to see vast quantities of finance mobilised to scale up renewable energy at the speed needed, and billionaires and multi-millionaires need to be forced to pay up.  

We’re all rooting for this one to work – it can take us a long way.

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At COP29 in Baku in November, the world will come together to agree a new target for climate finance. The stakes are huge given record temperatures and heatwaves, floods and droughts wreaking havoc globally.  

Tackling climate change and its consequences – and supporting wider human development – needs urgent investment. But the international financial system is struggling to respond. Is it time now to agree a new framework for international climate and development finance? Can the G20 under Brazil’s leadership, and international leaders meeting at the United Nations in New York in September, prepare the ground for COP29?  

Almost 54 years ago, in 1970, the world came together at the UN to set a target for rich countries to support poorer countries. They promised 0.7% of national income as “official development assistance” (ODA) to improve economic outcomes and reduce poverty. At the Copenhagen climate negotiations in 2009, world leaders again came together and promised to mobilise an annual $100bn to finance climate action by 2020. They said this would be “new and additional” to development finance.  

Hurricane Beryl shows why the new UK government must ramp up climate finance

Since then, with the exception of a few Europeans, rich nations have failed to meet the 0.7% target. In 2022, ODA peaked at $211bn, or 0.37% of combined OECD national income. Almost 15% of this was used to finance refugee-related costs in OECD countries themselves. The climate commitment was met in 2022, two years late. Without ODA levels rising, the 33% of ODA classified as climate-related cannot reasonably be claimed as “additional”.   

 In practice, maintaining this distinction between climate and development finance has proved difficult. For example, is planting trees in an urban landscape a climate investment because it absorbs emissions, a health investment because it reduces street-level temperatures, or a biodiversity investment as it creates habitats for wildlife? 

 The challenge of navigating these distinctions means it is difficult to track commitments or secure meaningful accountability against promises made. And it leaves many countries juggling a false trade-off between investments for the planet and for their people.  

Trillions needed

It is absolutely clear, however, that financing for poorer countries needs to increase dramatically. Despite progress over recent decades, development needs remain significant, with major setbacks through the pandemic. The Independent High Level Expert Group on Climate Finance estimates, presented to the G20, indicate that by 2030 $5.4 trillion a year will be needed for development, climate and nature. Of this, $1 trillion a year will be required in external financing for developing countries for climate and nature alone, of which roughly half will need to come from international public finance.  

International public finance – including new and additional aid finance from rich countries – is needed to provide concessional resources for the poorest and most indebted countries. It is needed to anchor capital increases for international financial institutions that can leverage this at least ten-fold, in part by borrowing from private capital markets. These institutions, together with other development finance institutions and strong policy environments, are key to bringing in private lenders and investors, whether by reducing risk or helping develop investment pipelines. 

The Loss and Damage Fund must not leave fragile states behind

As well as additional finance, poorer countries need money that better responds to their needs. In recent years, the relentless cycle of summits has spawned dozens of initiatives. The landscape is fragmented, with over 80 funds or instruments in the climate space alone. It has become increasingly difficult for poor countries to navigate this. There is an urgent need for a moratorium on new funds and to agree principles and coordination mechanisms for all external finance – building on the aid effectiveness principles agreed in the 2000s. 

Binding 0.7% commitment?

Taking these elements together, is it time now to drop the voluntary framework of ODA crafted in the last century to meet the problems of the last century? Can countries come together now to agree a new framework for official climate and development assistance, with a binding commitment for rich countries to finally meet the 0.7% national income promise by, say, 2030?  

Such a target, negotiated under a UN framework, would double the flow of aid finance. That funding would anchor multilateral, public and private investments that are needed to close the financing gap. A negotiated process could also bring in emerging countries like China that already provide significant finance. It could clarify definitions and shift arrangements for monitoring climate and other development spend from the OECD to the UN to improve accountability. And it could begin to consolidate the range of instruments and make them more responsive to the needs of poor countries. 

With public finances under strain around the world, many will say this is simply unaffordable. But international polling indicates that people are willing to contribute 1% of their income to fight climate change. Will politicians have the courage to engage their electorates? And at the G20, in the UN, in the lead up to Baku and beyond, will they have the vision to collaborate internationally to agree a new deal that delivers both development and climate justice? 

The post The world needs a new global deal on climate and development finance appeared first on Climate Home News.

This month has been unprecedented, even in a news cycle that has grown increasingly immune to ever-worsening climate catastrophes. After Beryl, a powerful category five hurricane, smashed its way across the Caribbean, an alarming report by the Copernicus Climate Change Service found that the planet has breached 1.5 degrees Celsius of warming for the twelfth month straight.  

For a new UK government pledging to take strong climate action at home, this must be a wake-up call for it to act on its historic responsibilities as a major global greenhouse gas polluter. These two alarming events alone show why it must put climate finance at the heart of its climate agenda as COP29 rapidly approaches. 

In Hurricane Beryl’s shadow, loss and damage fund makes progress on set-up

The Caribbean is one of the regions most at risk of climate change, with 70 percent of its population living or working in coastal areas surrounded by ever-warming seas that make hurricanes like Beryl more common and more violent. While a category five hurricane is unprecedented this early in the year, forecasters have already predicted that the region could experience up to seven severe hurricanes between now and the end of October.  

Extreme climate shocks are not only wreaking havoc, claiming lives, and destroying whole communities – they are also severely affecting the region’s tourism-dependent economies. Already it’s been estimated that the clean-up alone will cost tens of millions of dollars – a cost that doesn’t even begin to factor in what’s needed to rebuild destroyed communities still paying the price of previous disasters – crises that are gendered in their nature.  

Costly damage

Women and girls are more than 14 times more likely to be killed by climate shocks, according to Women’s Environmental Leadership Australia, while our own research found that women also face an increased risk of non-economic impacts such as gender-based violence and forced child marriage.

Hurricane Maria – the deadliest Atlantic hurricane to make landfall in the 21st century – cost the island nation of Dominica an estimated 225 percent of its GDP, while Hurricane Irma in the same year cost Antigua and Barbuda more than $136 million in damages, with the tourism industry representing around 44 percent of all losses.  

Even seven years on, the scale of the destruction has meant that communities are still rebuilding while dealing with hurricanes that worsen with intensity and frequency with each passing year. Yet, despite this, small island nations that have only contributed around 1% of all global carbon emissions, have struggled to unlock climate finance, accessing a mere $1.5bn out of the $100bn pledged in total to Global South countries.   

Negative debt spiral

To make matters worse, countries across the Caribbean have no choice but to turn to international financial institutions and take on eye-watering levels of debt to help communities regain their footing. Debt laden with restrictive repayment conditions further locks countries into a negative spiral – forcing governments to shape their economies and societies in order to service their debts.  

All this means that small island nations are left to play catch up, forever stuck on the back foot. Instead of spending the meagre levels of finance pledged to resilience-proofing their economies and communities, loans are used to service debts while interest rates for repayments globally remain at a record high.  

In its manifesto, Britain’s Labour Party spoke about “tackling unsustainable debt” as a “priority area” in its global commitments – indeed a positive step forward. But in power we need it to act and end the colonial debt system and support countries in the Caribbean and beyond move towards a just and climate resilient future. 

The Loss and Damage Fund must not leave fragile states behind

For a new government keen to show global leadership on climate, this year’s COP summit is a vital moment for the UK to play a much stronger role on climate finance than its Conservative predecessors. As the fourth-highest historic carbon emitter in the world, the UK has a moral and historic responsibility to address climate change, but its actions haven’t matched its words so far. 

During its election campaign, Labour failed to pledge new funds to address the huge gulf in climate financing for losses and damages, opting instead to simply deliver the previous government’s low-ball commitments to spend £11.6bn between 2021-2026. With nations set to meet at COP this year to define new annual climate finance commitments for Global South countries – known as the New Collective Quantified Goal (NCQG) – Labour needs to be much more ambitious in Azerbaijan. The future of communities on the frontlines of the climate crisis depends on it. 

Now, in the words of Grenada’s Prime Minister Dickson Mitchell, is not the time for countries like the UK to “sit idly by with platitudes and tokenism.” Now is the time for radical action and for the new UK government to stand up and deliver for the billions of people facing a runaway climate emergency. 

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As the Loss and Damage Fund’s board meets this week, it is addressing key issues such as selecting a host country, how to disburse its financial resources, and lobbying for more funding from donors. However, the agenda currently doesn’t address the challenges communities in fragile contexts will face in accessing the fund. This oversight mirrors a recurring pattern in international climate talks, where the needs and realities of fragile and conflict-affected situations (FCS) often receive little to no attention. 

FCS, as defined by the World Bank, experience high levels of institutional and social fragility and violent conflict. These nations, which include Afghanistan, Mali and Niger to name a few, often face extreme climate hazards and struggle to cope due to weak institutions, poor governance, and ongoing conflict.  

Together, fragility and climate risks make these countries particularly vulnerable to the effects of the climate crisis. Because of their vulnerability, fragile contexts are frequently deemed too risky for climate finance investments, as project partners find it challenging to operate and donors are concerned about their return on investment.   

A simmering conflict over one of Latin America’s biggest wind hubs confronts Mexico’s next president

While the Paris Agreement prioritizes Least Developed Countries (LDCs) and Small Island Developing States (SIDS) for international climate finance, LDCs and SIDS with additional challenges like violent conflict and fragility face barriers, receiving significantly less financing than more stable regions.  

Mercy Corps’ analysis reveals that the 10 most fragile states received only $223 million in climate adaptation financing in 2021, less than 1% of total flows. Without prioritizing the unique needs of fragile contexts, the Loss and Damage Fund risks excluding these climate-vulnerable communities once again. 

Action needed from the start

There are no references to fragility or conflict in the COP decision that established the Loss and Damage Fund or the Governing Instrument, which sets the Fund’s rules and practices. Additionally, there is no mention of how fragile or conflict-affected places in more “stable” countries will receive financing through the Fund.  

Fragility and conflict can limit how communities and institutions across a particular country respond to climate impacts. For example, in Northern Kenya, where Mercy Corps implements several climate adaptation and food security programs, unpredictable rainfall affects water resources, creating pressure on pastoral livelihoods and leading to conflict over water and pasture. Relatively weak institutions at the local government and community level lack the capabilities and resources to plan and implement climate adaptation interventions.

If the Loss and Damage Fund does not address how to support both fragile states and contexts like Northern Kenya now, it will be hard to incorporate these considerations later.   

New South African government fuels optimism for faster energy transition

Advocating for specific challenges in fragile contexts during the Fund’s initial setup is crucial, as evidenced by Mercy Corps’ experience with the multi-billion-dollar UN-backed Green Climate Fund (GCF). Although the GCF has made strides to consider communities affected by climate change, conflict, and fragility through its policies and programs, including endorsing the UAE’s Declaration on Climate, Relief, Recovery, and Peace at COP28 last year, it still struggles to effectively serve communities in fragile contexts.  

Prioritizing finance for those who need it most

At the second meeting of the Loss and Damage Fund’s board this week, its members should take the following steps to realize the Fund’s promise and ensure loss and damage financing reaches those who truly need it most: 

1. Designate a board member for fragile and conflict-affected situations: This idea, initially proposed by Afghanistan for the GCF, was never fully realized. Board Members play an important role in shaping the policies and procedures of the Loss and Damage Fund and in the future, approving projects. Additionally, an active observer from civil society can represent the views of FCS at Board meetings.
2. Develop a framework to identify “particularly vulnerable” countries: The Loss and Damage Fund board will need to determine which countries are particularly vulnerable to climate change and thus, eligible to receive financing. To ensure a comprehensive understanding of vulnerability, the LDF must include fragility metrics such as economic, political, social cohesion, and security dimensions in any forthcoming vulnerability framework. 
3. Develop and approve operational policies and frameworks for fragile contexts: To effectively utilize loss and damage finance, the Fund should adopt policies and tools that allow fragile contexts to flexibly respond to shocks and disrupt the climate-conflict cycle. Mercy Corps’ Assessment for Adaptation to Conflict and Climate Threats, for example, examines the dynamics between climate change and conflict, and identifies entry points and approaches to interrupt the cycle of fragility. In Mali and Niger, where we piloted this tool, program participants identified the rainy season – especially the beginning and the end – as the time when many of the land-based conflicts take place between farmers and herders. It is being used by the UK government to plan ways to resolve tensions and support women who are particularly vulnerable.   

The creation of the Loss and Damage Fund was a significant victory for nations that have contributed the least to climate change yet bear the brunt of its impacts. The board of the Loss and Damage Fund now has a critical opportunity to ensure inclusion and equity by guaranteeing that all communities, especially those in fragile and conflict-affected states, have access to the necessary funding to address loss and damage. It is imperative that no one is left behind in this global effort to combat the climate crisis.

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European investors hold shares worth at least $65 million in major coal firms across China, India, the United States, Indonesia and South Africa within funds designated as “promoting environmental and social” goals under EU rules, an analysis by Climate Home and media partners found.

Taken together, these companies emit around 1,393 million tonnes of carbon dioxide (CO2) into the atmosphere every year, putting them among the world’s top five polluters if they were a country.

The investments are owned by major financial firms including BlackRock, Goldman Sachs and Fideuram, a subsidiary of Italy’s largest bank Intesa Sanpaolo. Most firms analysed are signatories of the Glasgow Financial Alliance for Net Zero (GFANZ), whose members pledge to align their portfolios with climate-friendly investment.

The asset managers told Climate Home their coal holdings do not contradict EU green policies or the 2015 Paris Agreement to tackle climate change.

At the COP26 UN climate summit in Glasgow in 2021, countries agreed for the first time to accelerate efforts “towards the phase-down of unabated coal power”. “Unabated” means power produced using coal without any technology to capture, store or use the planet-heating CO2 emitted during the process.

But rather than shrinking, global coal capacity has grown since the signing of the Glasgow Climate Pact with a fleet of new coal plants firing up their boilers, primarily in China, India and Indonesia. Coal miners in those countries have also boosted their operations to keep up with the increasing demand.

European leaders have heavily opposed this, with EU president Ursula von der Leyen saying the bloc is “very worried” about coal expansion in China.

“Light green” funds

The investments analysed by Climate Home have been made by funds classified under Article 8 of the EU’s Sustainable Finance Disclosure Regulation (SFDR), which the European Commission hoped would discourage greenwashing and promote sustainable investments when it was introduced in 2021.

Article 8 – known as ‘light green’ – refers broadly to a fund that has “environmental and social characteristics”, while the ‘dark green’ Article 9 refers more directly to sustainability.

The rules were also intended to offer members of the public more clarity on where asset managers invest their money and enable them to make an informed decision on whether they want their savings or pension pots to prop up climate-harming activities.

Workers shovel coal onto a truck at a coal yard near a coal mine in Huating, Gansu province, China. REUTERS/Thomas Peter

But a group of European financial market watchdogs warned this month the rules are having the opposite effect and called for an overhaul of the system.

“Status as ‘Article 8’ or ‘Article 9’ products have been used since the outset in marketing material as ‘quality labels’ for sustainability, consequently posing greenwashing and mis-selling risks,” they said in a joint opinion to the European Commission.

“The general public is still being misled when it comes to sustainable funds,” Lara Cuvelier, a sustainable investments campaigner at Reclaim Finance, told Climate Home. “The regulations are very weak and there is no clear criteria as to what can or cannot be included. It’s still in the hands of investors to decide that for themselves.”

Funding coal expansion

Climate Home identified investments in the biggest-polluting companies in the coal sector as part of a wider investigation led by Voxeurope, which tracked holdings by funds that disclose information under the EU’s sustainable finance directive.

These “green” funds include investments in mining companies like Coal India and China Shenhua – the respective countries’ top coal producers – and Indonesia’s Adaro Energy, as well as in giant coal power producers such as NTPC in India and China Resources Power Holdings.

All of these companies are planning large-scale expansions of their coal output, according to the influential Global Coal Exit List compiled by German NGO Urgewald.

No new coal mines, mine extensions or new unabated coal plants are needed if the world is to reach net zero emissions in the energy sector by 2050 and keep the 1.5C warming limit of the Paris Agreement “within reach”, according to projections by the International Energy Agency (IEA).

State-owned Coal India is the world’s largest coal producer, with fast-growing output topping 773 million tonnes in the latest financial year. It is targeting 1 billion tonnes of annual coal production by 2025-26 by opening new mines and expanding dozens of existing ones.

IEA calls for next national climate plans to target coal phase-down

In its latest annual report, Coal India cited “pressure of international bodies like [the] UN to comply with [the] Paris Agreement” as one of the main threats to its business. Coal India’s share value has more than doubled over the last 12 months on the back of stronger coal demand in the country, as extreme heatwaves have fuelled the use of air-conditioning among other factors.

State-run mining and energy giant China Shenhua plans to invest over $1 billion in 2024 to expand its fleet of coal power stations and build new coal mines. “We will keep a close eye on climate change to improve the clean and efficient use of coal,” its latest annual report said.

Big investors

The funds with stakes in those coal-heavy companies are managed by Fideuram, an arm of Italy’s largest bank Intesa Sanpaolo, US-based AllianceBernstein and Mercer, a subsidiary of the world’s largest insurance broker Marsh McLennan.

Coal investments in Fideuram’s Article 8 funds – worth at least $16 million – also appear to breach the company’s own coal exclusion policy, designed to rule out holding shares in certain coal firms.

Two of its flagship “emerging markets” funds claim to promote environmental and social characteristics including “climate change prevention” and the “reduction of carbon emissions”, according to information disclosed under EU rules. To achieve their ‘green’ objectives, the funds claim to exclude any investment in companies “deriving at least 25% of their revenues” from the extraction, production and distribution of electricity connected with coal.

But Climate Home found the funds include investments in at least six major coal companies exclusively or primarily involved in coal mining or power generation.

A coal-fired power plant under construction in Shenmu, Shaanxi province, China, in November 2023. REUTERS/Ella Cao

Fideuram did not answer Climate Home’s questions about the funds’ apparent breach of their own policy. But a company spokesperson said in a written statement that “investments in sectors with high-carbon emissions do not conflict with the objectives of the SFDR, which concern the transparency of sustainability investments, nor with the Paris Agreement, which promotes a transition to a low-carbon economy”.

A spokesperson for Mercer said its Article 8 fund, which holds shares in NTPC and China Resources Power Holdings. has an exclusion policy to avoid investing in companies that generate more than 1% of their revenue from thermal coal extraction. “Based on the data provided by ISS [a provider of environmental ratings], no groups involved breach the 1% threshold, and therefore, the fund is not in violation of its SFDR commitments,” they added.

AllianceBernstein did not respond to a request for comment.

Coal-hungry steelmaking

While excluding investments in so-called thermal coal used for electricity generation, several ‘green’ funds put their money in companies producing coking coal – or metallurgical (met) coal – which is used to make steel.

Goldman Sachs’ Article 8 funds hold shares worth several million dollars in Jastrzebska Spolka Weglowa, Europe’s largest coking coal producer, and Shanxi Meijin in China. BlackRock offers exchange-traded funds (ETFs) tracking indexes that include investments in SunCoke, a leading met coal producer in the US and Brazil, Alabama-based Warrior Met and Shanxi Meijin.

Five things we learned from the UN’s climate mega-poll

Reclaim Finance’s Cuvelier said that, up until recently, the focus has been on pushing thermal coal out of investor portfolios because the alternatives to met coal in steel production were “less developed”.

“There are now increasing calls on financial institutions to cover met coal as well in their exclusion policies as alternatives exist,” she added. “It’s becoming very important because there are new projects under development that should be avoided”.

A spokesperson for BlackRock said: “As a fiduciary, we are focused on providing our clients with choice to meet their investment objectives. Our fund prospectuses and supporting material provide transparency as to the methodology and investment objectives of each fund”.

Goldman Sachs did not reply to a request for comment.

Reforms on the horizon

At the end of 2022, the European Commission began a review of the SFDR’s application with a view to updating its sustainable finance rules.

Future reforms may include changes to the ways funds are categorised. “There are persistent concerns that the current market use of the SFDR as a labelling scheme might lead to risks of greenwashing… partly because the existing concepts and definitions in the regulation were not conceived for that purpose,” the Commission said in a consultation paper released last year.

It also indicated that the existing categories under Articles 8 and 9 could either be better defined or scrapped entirely and replaced with a different system. The new Commission, yet to be formed following last month’s elections, will decide if and how to move forward with the reform process.

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Separately, the EU’s market supervisory authority, ESMA, has recently issued guidelines to prevent funds from misusing words like “sustainability”, “ESG” – environmental, social and governance – or “Paris-aligned” in their names. A handful of the funds with coal investments analysed by Climate Home have used those labels.

Under the new guidelines, asset managers wanting to slap climate-friendly labels on their funds will have to exclude companies that derive more than a certain percentage of revenues from fossil fuels.

Climate Home produced this article with data analysis contributions from Stefano Valentino (Bertha Fellow 2024) and Giorgio Michalopoulos. This article is part of an investigation coordinated by Voxeurop and European Investigative Collaborations with the support of the Bertha Challenge fellowship.

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Opinion polls predict that voters are set to back the left-wing Labour Party over the incumbent Conservative government by a significant margin, a BBC tracker shows.

Lammy told an event during London Climate Action Week that he supports the green reforms of the global financial system that have been proposed by the leaders of Kenya, Barbados and the World Bank.

Clare Shakya, climate lead at The Nature Conservancy, a green group, told Climate Home that Lammy’s comments were “massively ambitious” and “exactly what the world needs to hear right now”.

But promises on climate finance to developing countries in the Labour Party manifesto are the same as the ruling Conservative Party. Lammy argued that “all across the world, a cost-of-living crisis is making it hard to make the case solely for taxpayers’ funds” to support climate action in developing nations.

The Conservatives and Labour have both pledged to restore the overseas aid target from 0.5% to 0.7% of gross national income when “fiscal circumstances allow”. Both have committed to providing £11.6 billion ($14.7bn) in international climate finance between 2021 and 2026.

Claudio Angelo, international policy coordinator for Brazil’s Climate Observatory, commended Lammy “for being so vocal about the need for the UK to step up” on climate multilateralism.

But, he added, the Labour politician “doesn’t seem to offer anything new on climate finance and now, with four months left until COP29, we desperately need a breakthrough”.

IEA calls for next national climate plans to target coal phase-down

At the COP29 climate summit in November, governments are due to agree on a new post-2025 goal for international climate finance. Developed and developing countries have been divided so far, with developing nations proposing targets of $1.1-$1.3 trillion a year but wealthy governments refusing to openly discuss figures until the issue of where the money will come from is addressed.

Outside the UN climate talks, a coalition led by Barbados Prime Minister Mia Mottley – partly backed by the US, Germany and others – has been pushing for multilateral development banks to lend more money to green projects. Kenyan Prime Minister William Ruto has called for taxes on polluters to raise money for climate finance.

Lammy told a forum on climate politics, organised by think-tank E3G on Tuesday, that the global financial system’s rules “were set up in a different age, a different century – they don’t work today”. “We want to work with [World Bank president] Ajay Banga and others to bring about the changes that are required,” he added.

Angelo said he supports the need to shake up the system, but described Lammy’s references to reforming multilateral development banks while limiting public finance as “standard developed-country talking points”.

Five things we learned from the UN’s climate mega-poll

Asked about the Labour manifesto promise to “audit” its relationship with China, Lammy said Labour would “engage appropriately” with the world’s biggest emitter on key policy areas, adding “there is no more important issue in so many ways than the climate issue.”

He praised the EU, US and Australia for their efforts to talk with China, and said a Labour government would “cooperate with China when we can”. The previous day, he told the India Global Forum that he would also work with India on climate change.

Li Shuo, director of the China climate hub at the Asia Society Policy Institute in Washington DC, told Climate Home that “the UK has been quite self-absorbed and quickly disappeared from the list of interlocutors with Beijing since COP26 in Glasgow”.

“The desire to restart engagement is a welcome development,” he added. “This is particularly true if the US election goes south. Much of the rest of the world will need to hold the fort.”

On domestic energy policy, Lammy reiterated Labour’s pledge not to issue any new licences for oil and gas production in the North Sea.

The party’s manifesto outlines further national climate policies, including decarbonising electricity by 2030 – five years earlier than the current government’s plans – by doubling onshore wind, tripling solar and quadrupling offshore wind.

(Reporting by Daisy Clague and Joe Lo; editing by Joe Lo and Megan Rowling)

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There’s no getting around it. The recently concluded climate talks in Bonn have left the goal of limiting global heating to under 1.5C in peril.  The reason: rich countries are backtracking on their financial pledges.   

The crucial deadline for next year’s new national climate plans, known as NDCs – which are the bedrock for the collective global effort to tackle climate change – are now in danger. This is because developing countries have no assurances that the climate finance they were promised, and which fund the NDCs, will be there.  

The theme of this year’s COP29 summit in Baku, Azerbaijan, is supposed to be climate finance. It is the meeting where the world is tasked with agreeing a new long-term global finance goal.  

This goal is the key ingredient to tackling climate injustice, and how we help vulnerable people adapt to the climate crisis and fund the transition to a zero-carbon energy system. However, at the mid-year talks in Bonn this month, rich countries dragged their feet, blocked progress and deliberately offered only vague signals about their intentions.  

UN climate chief warns of “steep mountain to climb” for COP29 after Bonn blame-game

They also attempted to unpick the commitment they made at COP28 in Dubai: to have an annual dialogue specifically on climate finance. They are now suggesting it cover other issues.  

Rich countries also used up valuable time arguing about who should pay the bill, trying to get some developing countries to also be included in the donor base. This was something they continued to talk about in the G7 summit communique issued this weekend. Delay and fudging on the new climate finance goal are hugely dangerous because the Bonn session was crucial to ensuring a successful COP29. 

Waiting for US election? 

COP summits take a huge amount of preparation with negotiators taking all year to lay the groundwork for the final landing zones that will be finalised this year in Baku. Leaving it all to the last minute would be disastrous and could result in a failure that derails international momentum on climate change just as Donald Trump is elected US President. 

The infuriating go-slow in Bonn seems to be because countries are waiting for the result of this election before making any finance commitments. This is folly.   

The need for a coalition of the sensible – to counter the ignorance and malice emanating from a potential Trump White House – will only be greater should the Republican candidate win.  

The victims of the climate crisis will need support, and the energy transition will need to be funded, whoever is elected as the next US president. Dragging out the process to the point where Baku might end up being a chaotic rush will only make things worse.  

COP29 host lacks influence 

The horrors of climate change continue to rage daily. Heatwaves mercilessly ravage lives, with over 100 people reported dead in India and over 50 lives claimed in Sudan during the Bonn talks. These are not just statistics; they are human lives from vulnerable countries, who once dared to hope for a better tomorrow.  

The dark clouds forming over Baku are compounded by the fact that the Azeri presidency for COP29 is inexperienced, with few diplomatic allies and lacking in geopolitical or economic weight to knock heads together as needed. The lack of a strong host in 2024 means we need to see leadership from other quarters. 

Bonn talks on climate finance goal end in stalemate on numbers

Those other would-be leaders must ensure that the negotiators see the coming dangers ahead and work to catch up and avoid them. The crucial opportunities for this are the UN General Assembly summit in September and the pre-COP meeting in Baku. It’s vital that much clearer and more ambitious negotiations take place so that ministers have a streamlined process when they get to Baku in November.   

Without that, we risk getting an underwhelming finance goal or even a failed COP. That would imperil millions of people who need climate finance, as well as taking the wind out of the sails of the NDCs from developing countries, which are due to be published next year.  How can these poorer countries be expected to slay the climate dragon with paper swords, having gotten zero assurances on the long-term finance they need?  

If countries can set a clear and unambiguous path for future finance in Baku, then the world will be set up for a hope-filled and ambitious round of climate action plans next year. This is the best way to protect the world from the volatility of the US election. The work to achieve that starts now.  

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In the closing session of the two-week talks on Thursday evening, many countries expressed their disappointment and frustration at the lack of any outcome on the Mitigation Ambition and Implementation Work Programme (MWP), noting the urgency of stepping up efforts to curb greenhouse gas pollution this decade.

The co-chairs of the talks said those discussions had not reached any conclusion and would need to resume at the annual climate summit in Azerbaijan in November, unleashing a stream of disgruntled interventions from both developed and developing countries.

Samoa’s lead negotiator Anne Rasmussen, speaking on behalf of the Alliance of Small Island States (AOSIS), emphasised that “we really can’t afford these failures”. “We have failed to show the world that we are responding with the purpose and urgency required to limit warming to 1.5 degrees,” she said.

Anne Rasmussen of Samoa, speaking on behalf of the Alliance of Small Island States (AOSIS). Photo: IISD/ENB – Kiara Worth

Governments, from Latin America to Africa and Europe, lamented the lack of progress on the MWP because of its central role in keeping warming to the 1.5C temperature ceiling enshrined in the Paris Agreement.

Current policies to cut emissions are forecast to lead to warming of 2.7C, even as the world is already struggling with worsening floods, droughts, heatwaves and rising sea levels at global average temperatures around 1.3C higher than pre-industrial times.

Mitigation a taboo topic?

Despite the clear need to act fast, a deep sense of mistrust seeped into talks on the MWP in Bonn, with negotiators disagreeing fundamentally over its direction, according to sources in the room.

Developed countries and some developing ones said that the Like-Minded Group of Developing Countries (LMDCs), led primarily by Saudi Arabia and China, as well as some members of the African Group, had refused to engage constructively in the discussions.

“The reason is that they fear this would put pressure on them to keep moving away from fossil fuels,” an EU delegate told Climate Home.

Bonn bulletin: Fossil fuel transition left homeless

Bolivia’s Diego Pacheco, speaking on behalf of the LMDCs, rejected that view in the final plenary session, while describing the atmosphere in the MWP talks as “strange and shocking”. He also accused developed countries of trying to bury data showing their emissions will rise rather than fall over the course of this decade.

The EU and Switzerland said it was incomprehensible that a body charged with cutting greenhouse gas emissions had not even been allowed to discuss them.

“Mitigation must not be taboo as a topic,” said Switzerland’s negotiator, adding that otherwise the outcome and credibility of the COP29 summit would be at risk.

Rows over process

Before MWP negotiations broke down in Bonn, its co-facilitators – Kay Harrison of New Zealand and Carlos Fuller of Belize – had made a last-ditch attempt to rescue some semblance of progress.

They produced draft conclusions calling for new inputs ahead of COP29 and an informal note summarising the diverging views aired during the fraught exchanges. For many delegates, the adoption of those documents would have provided a springboard for more meaningful discussions in Baku.

But the LMDC and Arab groups refused to consider this, arguing that the co-facilitators had no mandate to produce them and calling their legitimacy into question – a claim rebutted by the UN climate secretariat, according to observers. Frantic efforts to find common ground ultimately came to nothing.

A session of the Mitigation Work Programme in Bonn. Photo: IISD/ENB – Kiara Worth

Fernanda de Carvalho, climate and energy policy head for green group WWF, said the MWP discussions must advance if the world is to collectively reduce emissions by 43% by 2030 and 60% by 2035 from 2019 levels, as scientists say is needed.

The MWP should be focused on supporting countries to deliver stronger national climate action plans (NDCs) – due by early next year – that set targets through to 2035, she said.

“Instead, we saw [government] Parties diverging way more than converging on hard discussions that never made it beyond process,” she added.

‘Collective amnesia’

Some developing countries, including the Africa Group, pushed back against what they saw as efforts by rich nations to force them to make bigger cuts in emissions while ducking their own responsibilities to move first and provide more finance to help poorer countries adopt clean energy.

Brazil – which will host the COP30 summit in 2025 – said the MWP was the main channel for the talks to be able to find solutions to put into practice the agreement struck at COP28 to transition away from fossil fuels in energy systems in a fair way.

But to enable that, “we have to create a safe environment of trust that will leverage it as a cooperative laboratory”, he said, instead of the “courthouse” it has become “where we accuse and judge each other”.

Observers in Bonn pointed to the absence of discussions on implementing the COP28 deal on fossil fuels, which was hailed last December as “historic”.

“It seems like we have collective amnesia,” veteran watcher Alden Meyer, a senior associate at think-tank E3G, told journalists. “We’ve forgotten that we made that agreement. It’s taboo to talk about it in these halls.”

‘Detour on the road to Baku’

After the exchange of views, UN Climate Change executive secretary Simon Stiell noted that the Bonn talks had taken “modest steps forward” on issues like the global goal on adaptation, increased transparency of climate action and fixing the rules for a new global carbon market.

“But we took a detour on the road to Baku. Too many issues were left unresolved. Too many items are still on the table,” he added.

The closing plenary of the Bonn Climate Change Conference. Photo: Lucia Vasquez / UNFCCC

Another key area where the talks failed to make much progress was on producing clear options for ministers to negotiate a new post-2025 climate finance goal, as developed countries refused to discuss dollar amounts as demanded by the Africa and Arab groups, among others.

Bonn talks on climate finance goal end in stalemate on numbers

Developing nations also complained about this in the final session, while others expressed their concern that a separate track of the negotiations on scientific research had failed to address the topic in a rigorous enough manner.

In his closing speech, Stiell reminded countries that “we must uphold the science”, and urged them to accelerate their efforts to find common ground on key issues well ahead of COP29.

The next opportunities to move forward on the new finance goal – expected as the main outcome from the Baku summit – will be a “retreat” of heads of delegations in July followed by a technical meeting in October, including a high-level ministerial dialogue on the issue.

But several observers told Climate Home that highly contentious issues – such as the size of the funding pot and the list of donors – are beyond the remit of negotiators and are unlikely to be resolved until the political heavyweights, including ministers, take them up in Azerbaijan in November.

Rising costs of climate crisis

“Business-as-usual is a recipe for failure, on climate finance, and on many other fronts, in humanity’s climate fight,” Stiell said. “We can’t keep pushing this year’s issues off into the next year. The costs of the climate crisis – for every nation’s people and economy – are only getting worse.”

Mohamed Adow, director of Kenya-based energy and climate think-tank Power Shift Africa, warned that “multiple factors are setting us up for a terrible shock at COP29″, saying this “ticking disaster threatens to undermine” the NDCs and in turn the 1.5C warming limit.

North Africa’s disappearing nomads: Why my community needs climate finance

In comments posted on X, formerly Twitter, Adow called for justice for those dying from the impacts of climate change such as extreme heat in India and Sudan in recent days, arguing that climate finance remains “a vital part in securing a safe and secure future for us all”.

But, he said, Bonn did not deliver a beacon of hope for vulnerable people. “Developing countries are expected to slay the climate dragon with invisible swords, having gotten zero assurances on the long-term finance they need,” he added.

(Reporting by Megan Rowling and Matteo Civillini, editing by Joe Lo)

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A few weeks ago, leaders of Small Island Developing States (SIDS) met in Antigua & Barbuda to discuss our next decade of action. This, for us, is the critical decade, no less. We have a few years to change the tides that are swallowing our islands and extinguishing our culture and our identity.  

Pacific Island communities are unwilling witnesses of the climate crisis – emitting minuscule amounts of greenhouse gases while bearing the brunt of the extreme and devastating consequences of the world’s failure to break its addiction to fossil fuels.  

During that meeting, we heard from some G7 leaders that they will support our priorities, that a fossil fuel phase-out and a just and equitable transition is necessary. But these cannot be hollow words. As the single greatest security threat for our region, it is time to implement your commitments or be held accountable for your lack of inaction by carrying the loss of our future generations on your shoulders. 

Just a few months ago, at the UN climate talks in Dubai, countries around the world finally agreed to transition away from fossil fuels. This week in Bonn, any talk of how countries plan to implement this agreement was noticeably absent.

Bonn bulletin: Fossil fuel transition left homeless

But now, G7 nations – Canada, Japan, Italy, the United States, Germany, the United Kingdom, and France – are gathering at a historic time for climate politics, holding one of the first opportunities to show their leadership by putting the COP28 decision on fossil fuels into action. 

This will also be the last time these countries meet before they are required to submit updated and enhanced climate plans through to 2035 under the Paris Agreement. It is a final chance for G7 nations to adopt the measures that are necessary to limit warming to 1.5°C. 

Despite having both the capacity and the responsibility to be leaders driving forward a full, fast, fair and funded phase-out of fossil fuels, these countries are not walking the walk – at home or abroad.

Islands as “collateral damage”?

Some G7 countries have plans to massively expand fossil fuel production at home despite science telling us that no new oil, gas, or coal projects are compatible with a safe climate, while others are using billions of the public’s money to finance more fossil fuel infrastructure abroad. 

We are urging G7 nations to demonstrate true leadership at the upcoming negotiations, immediately halting the approval of all new fossil fuel projects and committing to 1.5°C-aligned timelines for phasing out existing fossil fuel reliance in a just and equitable manner.  

This transition must prioritise the needs of developing countries, which bear the brunt of climate change impacts despite contributing the least to its causes. 

G7 coal charade: Funding the fire they claim to fight

G7 countries have already committed to end international public finance for fossil fuel projects but continue approving billions of dollars for fossil fuel infrastructure. They are giving the fossil fuel industry a lifeline, indebting vulnerable countries, and delaying a just energy transition.  

In the words of UN Secretary General Antonio Guterres: “The idea that an entire island state could become collateral damage for profiteering by the fossil fuel industry is simply obscene.” 

There is no shortage of public money to enable a just and equitable transition to renewable energy and turn the COP28 agreement into a reality. It is just poorly distributed to the most harmful parts of the global economy that are driving climate change and inequality: fossil fuels, unfair colonial debts, and the super-rich. 

We need G7 countries to pay their fair share on fair terms for fossil fuel phase-out and the other crises we face. Climate finance remains the critical enabler of action – over the course of our meetings in Antigua & Barbuda we heard some G7 countries make commitments and pledges; we also heard a lot of solutions and options that will exacerbate our debt burden.  

But for us, it is clear. Climate finance must be scaled up to meet the trillions of dollars needed for adaptation, mitigation, and addressing loss and damage; and sent to where it is most needed – on fair terms that do not further burden our economies with debt. 

Hold fossil fuel firms to account

The members of the G7 are among the world’s most powerful and wealthiest nations. They have a responsibility to lead the way both at home and abroad. Anything less is hypocrisy and gross negligence, and risks endangering the implementation of the COP28 decision to transition away from fossil fuels. 

The Pacific Island nations have been vocal advocates for ambitious climate action and have led by example for decades. In 2023, our leaders aspired to a Fossil Fuel Free Pacific. We embedded the language of phase-out and transition in our leaders’ declaration.   

Bonn talks on climate finance goal end in stalemate on numbers

We have felt the impacts of climate change more acutely than most and have consistently called for comprehensive and equitable global action for the very survival of our nations and for the good of all people and species.  

For Pacific Island nations, the transition to clean and renewable energy is not just a goal but a necessity for survival. We call upon the G7 to reflect the highest possible ambition. These countries must acknowledge and support our aspiration for a fossil fuel-free future, setting an example for sustainable development that prioritizes the well-being of people and planet over profit – and ensure that the fossil fuel companies responsible for the climate crisis bear the cost of their actions. 

The time for action is now. The fate of our planet hangs in the balance, and the decisions made by the G7 nations will shape our collective future. We implore them to heed the call of the Pacific Island nations and rise to the challenge of the climate crisis with boldness, ambition and urgency. Our shared future depends on it. 

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Thousands of country representatives have spent the last two weeks in Germany at the UN Bonn Climate Conference, marking the mid-year point to the biggest climate summit of the year: COP29. 

But despite being a core milestone each year for global climate discussions, there is troublingly little to show for it. And with less than six months before COP29 – and after years of negotiations – there has been a shameful lack of commitment on delivering for those on the frontline of the climate crisis.   

Climate finance and adaptation play imperative roles in ensuring communities are able to thrive in the face of unpredictable and unforgiving weather patterns. And while both topics have been heavy on the Bonn agenda, finance negotiations so far have failed to really consider those living with climate uncertainty right now. 

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WaterAid has been on the ground at the Bonn talks, calling for robust water, sanitation and hygiene indicators to flow directly through key climate adaptation frameworks, especially the Global Goal on Adaptation and the Loss and Damage Fund – both of which will change the course of the future for those living on the frontlines of the climate crisis. 

Support lacking for those on the frontline

Yet countries at Bonn have hit a roadblock on the Global Goal on Adaptation (GGA), with discussions struggling to go beyond a shared acknowledgement of the value of including the support of experts to progress on areas of concern. Progress on GGA targets remains stagnant as parties grapple over country-specific concerns instead of coming to a collective outcome, with less than two days left of the conference. 

Meanwhile, the most recent talks on the Loss and Damage Fund failed to consider the urgency of the escalating climate crisis at hand and the scale of financing needed to ensure frontline nations can recover and rebuild from impacts of climate change. 

North Africa’s disappearing nomads: Why my community needs climate finance

The new collective quantified goal on climate finance (NCQG) – a new and larger target that is expected to replace the current $100bn climate finance goal – is also high on the Bonn agenda. Many core elements of this new climate fund goal are yet to be agreed.

WaterAid is calling for the NCQG to have sub-goals for adaptation and loss and damage, as well as for the finance pot to have a direct channel to vulnerable communities so they can be involved in ensuring the funds go to where the support is most needed.  

Too much or too little water

Whilst conversations at Bonn have been lukewarm, the climate crisis has remained red hot. Right now, countries around the world are watching it unfold in real time. From flooding and cyclones to drought and deadly heatwaves, communities are dealing with the terrifying reality of living with too much or too little water.  

Southern Asia is being exposed in particular to a dangerous and chaotic cocktail of unpredictable weather, making life unbearable for those on the climate frontline. 

In late May, Cyclone Remal hit coastal parts of southern Bangladesh with gale speeds of up to 110km/h causing devastation across the country for 8.4 million people, leaving many without power, damaging crops and making tube wells and latrines unusable.  

Meanwhile, record temperatures were recorded in Bangladesh through April and May where temperatures soared above 43 degrees Celsius, scorching 80% of the country and leaving thousands without power. 

At the same time, Pakistan witnessed its wettest April since 1961, with the south-western province of Punjab experiencing a staggering 437 percent more rainfall than usual, fuelling the malnourishment of 1.5 million children and damaging 3,500 homes.  

Water infrastructure key to adaptation

Water, sanitation and hygiene equip communities like those across South Asia with the ability to adapt to climate change, protecting livelihoods and farms. These basic essentials ensure people are not subject to the spread of waterborne diseases while preventing families from being forced to migrate due to sea level rises.  

From flood defences to drought resistance, water also acts as a guiding light as to where donors should direct climate finance, ensuring long-term support reaches the people who need it most. Investment in water-related infrastructure in low and middle-income countries is expected to deliver at least $500 billion a year in economic value, protecting countless lives and boosting economic prosperity. 

Bonn talks on climate finance goal end in stalemate on numbers

Now is the time for global leaders to put pen to paper and set plans in motion to ensure that we see real progress on how we achieve the GGA targets at the grassroots and that the necessary level of climate funding reaches those who need it most, without further delay.  

This truly is a matter of life and death – and prioritising action on water, sanitation and hygiene across global adaptation goals may be our only hope to prevent climate change from washing away people’s futures.  

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The G7’s top leaders convene in Italy this week as the world swelters through its 12th hottest month on record. One key issue that needs to be addressed is G7 members’ continued bankrolling of coal, from fossil fuel subsidies to public financing and private investments.

The latest evidence shows that the world’s largest banks – the majority of which are headquartered in G7 nations – continue to pour fuel on the fire of coal expansion.

As the G7 summit approaches, there is a chance for countries to match their rhetoric with action. It is not enough for governments and regulators to “call on” private finance to end their support for coal power. The continued financing of coal by the private sector shows that countries must take concrete steps to implement policies that stem the global flow of funds that fuel the expansion of the coal industry and redirect them to clean energy investments.  

Bonn talks on climate finance goal end in stalemate on numbers

While attention is often directed at public fossil fuel subsidies for coal (which are a problem), the billions of dollars in commercial financing for the coal industry’s expansion cannot be ignored. Commercial banks provided a staggering $470 billion to the coal industry between 2021 and 2023 – money that could have otherwise been channelled into clean energy investments, grid infrastructure improvements, and energy efficiency. 

And the majority of this financing comes from financial institutions headquartered in G7 countries. Collectively, these banks provided $101 billion for coal development in the form of loans and facilitated bonds between 2021 and 2023.  

Worst offenders: US and Japan

Topping the list of offenders are US and Japanese banks, which are the largest coal lenders in the world. Bank of America, actually increased its funding of the coal industry by 30% between 2016 and 2023. It provided a whopping $6 billion in loans and facilitation of capital market issuances to the coal industry in the last three years. For perspective, $6 billion is the size of the entire GDP of the Maldives.

Japanese banks are not faring better.  Coal financing between 2021 and 2023 remained dominated by its megabanks, Mizuho ($8.1 billion), MUFG ($6.1 billion) and SMBC ($4.7 billion).  

Estimates suggest that the absolute greenhouse gas emissions associated with the activities financed by commercial banks in G7 countries are more than the combined emissions of Germany, Italy, the UK, and France. While banks do not directly produce all these emissions, they are borne out of their lending and investment activities of companies that they support.  

No shortage of public money to pay for a just energy transition

The ironic cherry on top is that this amount provided by commercial banks in G7 countries to the coal industry is more than twice the total pledged by the G7-led International Partners Group (IPG) to support the Just Energy Transition Partnerships (JETPs), an intergovernmental initiative intended to provide technical assistance and financial resources to help developing countries with their clean energy transitions. 

Coal phaseout unclear

Nor is the G7 showing great leadership when it comes to their own coal phaseout plans. The US alone still has over 200 gigawatts (GW) of remaining operational coal capacity alone. While this has been falling, there are also signs that this decline is stalling – 200 GW is more than the entire coal operating capacity of all the JETP recipient countries. And Japan has no clear coal phaseout plan despite its commitment.  

This shows that the capital required for the energy transition is available, but just poorly allocated. Financial regulations, such as stricter capital requirements and outright prohibitions, play a crucial role in redirecting capital and investments towards the energy transition. This must include setting international standards to stem the flow of funds towards the continued expansion of the coal industry and restrict financing to coal developers that continue to contribute to environmental degradation and air pollution.  

Financial regulation

The Italian presidency of the G7 2024 has a responsibility to prioritise climate-forward action across different sectors, including financial regulation. G7 Central Banks need to keep up the pressure on keeping climate action at the forefront of negotiations, and call for more international coordination and standard setting. 

Even if the G7 achieves its coal exit goal by the “first half of the 2030s”, this timeline falls short of what scientists say is necessary to limit global warming to 1.5°C, a critical threshold to avoid the most catastrophic impacts of climate change.

As UN Secretary-General Antonio Guterres said last week, “We are in control of the wheel that takes us off the highway to climate hell.” Individual G7 members must take an introspective look at changing outdated policies to adopt strong, binding regulations on private financing for coal.  

The data on private finance for coal is attributable to Urgewald and can be accessed at www.stillbankingoncoal.org.  

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As discussions wrapped up on Tuesday, representatives of countries on both sides expressed disappointment with the process that is intended to result in an agreement on a new collective quantified goal (NCQG) at COP29 in Baku in November.

They will leave the German city with a 35-page informal “input paper” stuffed with wildly divergent views and repeatedly described as “unbalanced” by negotiators during the final session of the talks.

“It is time we get down to serious business,” said a negotiator from Barbados, pleading with colleagues to accelerate discussions before “more and more SIDS [small island developing states] and LDCs [least-developed countries] disappear from this gathering because we disappear from this planet”.

Show us the money

For most developing countries, the sticking point is the lack of negotiations on the size of the new goal – known as the “quantum” in technical language. Governments have already agreed that the new target should be set “from a floor of $100 billion per year” – the existing commitment – and should take into account “the needs and priorities of developing countries”.

Developing countries suggest rich nations tax arms, fashion and tech firms for climate

The Arab and the African groups landed their proposals for a new dollar amount on the table in Bonn – between $1.1 trillion and $1.3 trillion a year for the five years from 2025. Meanwhile, they accused rich states of failing to do the same and refusing to talk about numbers.

“We haven’t heard anything from them on their vision for the quantum,” said Egypt’s negotiator. “Every time there’s been [one] excuse or another why we couldn’t discuss quantum,” reiterated Saudi Arabia’s delegate.

Egypt’s negotiator Mohamed Nasr (middle) speaking with other delegates in Bonn. Photo: IISD/ENB – Kiara Worth

China echoed the same sentiment, but went further in its tirade against some developed countries. “We have been dealing with [a] few insincere and self-serving nations that have no intention of honoring international treaties,” the country’s negotiator said, referring to the 2015 Paris Agreement.

“We have no intention to make your number look good or be part of your responsibility as we are doing all we can to save the world,” he added, hinting at rich countries’ long-standing attempts to broaden the list of finance contributors to developing countries that are wealthier and more polluting.

‘A long way to go’

Developed countries accused their counterparts of entrenching their established positions instead of looking for areas of common ground.

Australia’s representative said the current document – which is not a negotiating text – shows “how much we disagree”. She added that there won’t be an agreement in Baku “if we engage in a game of striking out each other’s texts […] or a tug-of war”.

She expressed her government’s view that a numerical dollar target is “the star on the top of the Christmas tree” and should only be decided once the structure of the goal has been settled.

The UK’s negotiator noted that “we have a long way to go”, as “we are not in a process that will help us get to a final text”.

A delegate from the United States called for a “step change” in the process. “I feel most of what we’ve been doing is repeating views and not going into details on what folks mean,” he added.

No shortage of public money to pay for a just energy transition

Following the comments from developed nations, Saudi Arabia’s negotiator took to the floor again for the Arab Group. “I have to defend members of my group,” he said. “We are being gas-lit”.

It is now be up to the co-chairs of the talks to prepare a new informal document laying out a path forward based on the divergent views. The new paper will be sent to governments ahead of the next round of talks, which are yet to be scheduled.

“We encourage you to reach out to others using the inter-sessional period [between meetings] to discuss areas where you see fertile common ground,” said co-chair Zaheer Fakir in closing remarks. “Up until now we have not seen concrete efforts to reach out to your partners.”

(Reporting by Matteo Civillini and Joe Lo; editing by Megan Rowling)

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The post Bonn bulletin: Fossil fuel transition left homeless appeared first on Climate Home News.

Rich countries have a bill to pay. A study in the journal Nature says they will owe low- and middle-income countries an estimated $100 trillion-$200 trillion by 2050 since they have caused the climate crisis with their outsized emissions, while developing nations bear the brunt of the impacts. 

As negotiators gather in Bonn this week to prepare for November’s COP29 climate summit, wealthy governments have to face the music and pay their fair share of climate finance. With low-income countries struggling with rising seas and spiralling unjust debts, the stakes have never been higher. The good news? Rich countries can deliver the funds needed for climate action. What is lacking is the political will, as usual. But we can change this.

Bonn bulletin: Crunch time for climate finance

At last year’s COP negotiations, world leaders recognised for the first time that all countries must “transition away from fossil fuels” in energy systems. This year they must agree on a new climate finance goal for 2025, which will set a new benchmark for the quantity and terms of the money owed.

Year after year, wealthy countries have failed to pay up. While transitioning away from fossil fuels is technically possible and relatively low-cost, the failure to finance transformative climate solutions like 100% renewable-ready grids, energy access, and programs to support workers and community transitions is one of the key remaining obstacles to tackling the climate crisis. Meanwhile, the lack of funding to adapt and respond to climate impacts means fires, droughts and floods are already bringing devastating consequences.

As UN Climate Change Executive Secretary Simon Stiell has said, “A quantum leap this year in climate finance is both essential and entirely achievable.” But, as negotiations have begun to establish a new global climate finance target, wealthy countries are once again trying to shirk their responsibilities.

Loans and ‘private-sector first’

They have come to the table with only tiny amounts of money. Worse, they argue it should be delivered mostly as loans, investments and guarantees – which they profit from, while climate vulnerable ‘recipient’ countries rack up debt. The US, Canada, UK and their peers claim that there is not enough public money to do anything else. Yet we know they can come up with enormous sums, like for COVID stimulus plans and for bailing out the banks.

Wealthy countries say the private sector can cover most of the costs instead. This ‘private sector first’ approach is particularly emphasized for energy finance. The idea is that all that is needed is a bit of public finance to ‘de-risk’ energy investments and attract much greater sums of private finance.

But as a former World Bank Director has argued, this approach has consistently delivered far less money than promised and “has injustice and inequality built in,” while reducing the role of government action for creating the right market conditions to deliver profits to investors. We need much more public funding to be delivered as grants for a fair energy transition.

Developing countries suggest rich nations tax arms, fashion and tech firms for climate

Rather than relying on the private sector, rich countries can afford the grants and highly concessional finance required for a fast, fair and full phase-out of fossil fuels, which societies and communities want. There is no shortage of public money available to fund climate action at home and abroad. Rather, a lot of it is currently going to the wrong things, like dirty fossil fuels, wars and the super-rich.

The lack of progress is also a symptom of a larger global financial system where a handful of Global North governments and corporations have near-full control. This unjust architecture results in a net $2 trillion a year outflow from low-income countries to high-income countries, historic levels of inequality and food insecurity, and record profits for oil and gas companies.

Make polluters pay

To raise the funds, wealthy governments can start by cutting off the flow of public money to fossil fuels and making polluters pay. The science is clear that there is no room for any new investments in oil, gas or coal infrastructure if we want to secure a liveable planet. And yet governments continue to pour more fuel on the fire, using public money to fund continued fossil fuel expansion to the tune of $1.7 trillion in 2022. 

There is already momentum to stop a particularly influential form of fossil fuel support. At the COP26 global climate conference in Glasgow, 41 countries and institutions joined the Clean Energy Transition Partnership (CETP). They pledged to end all direct international public finance for unabated fossil fuels by the end of 2022 and instead prioritise their international public finance for the clean energy transition.

Rich nations meet $100bn climate finance goal – two years late

With the passing of the end of the 2022 deadline, eight out of the sixteen CETP signatories with significant amounts of international energy finance have adopted policies that end fossil fuel support – and we see international fossil finance figures dropping by billions as a result.

Making fossil fuel companies pay for their pollution through a ‘windfall’ tax on fossil fuel companies in the richest countries could raise an estimated $900 billion by 2030. Alongside taxing windfall profits, a progressive tax on extreme wealth starting at 2% would raise $2.5 trillion to 3.6 trillion a year. Brazil currently has a proposal to tax the super-rich globally, which is gaining momentum at the G20. 

Canceling illegitimate debts in the Global South can free up even more.

The public money is there for a liveable future for all. As leaders negotiate on the next climate target, we must ensure those most responsible for the climate crisis finally pay up.

The post No shortage of public money to pay for a just energy transition appeared first on Climate Home News.

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At UN talks on a new post-2025 climate finance goal in the German city of Bonn, the umbrella group for 134 developing countries said wealthy governments could raise $1.1 trillion a year, needed by poorer nations to curb emissions, adapt to climate change and deal with the damage it causes.

An unpublished position paper by the G77+China, seen by Climate Home, maintains that rich countries would “only” need to spend 0.8% of their GDP per year to raise $441 billion. That would mobilise enough private finance to reach $1.1 trillion a year, it adds.

It notes that 0.8% of GDP is much less than the 6.9% of GDP developing countries currently spend paying interest on their debt.

UN chief calls on governments to ban fossil fuel ads

The paper says developed countries can raise $441 billion “without compromising spending on other priorities entirely by adopting targeted domestic measures” such as a “financial transaction tax”, a defence company tax, a fashion tax and a “Big Tech Monopoly Tax”.

It argues that “the matter in question is not whether the resources exist, it is whether there is political will to prioritise climate change”.

Bolivian negotiator Diego Pacheco, who often speaks for the influential Like-Minded Developing Countries group, told Climate Home that rich countries were trying to pass their responsibility to provide climate finance onto the private sector and development banks that mainly offer loans.

“The [argument of a] lack of public finance is not true,” he said. “There is a lot of finance available and political will is lacking.”

He suggested that developed countries should shift military budgets towards tackling climate change or tax luxury products “because luxurious patterns of consumption are also a driver of the climate crisis”.

Innovative sources

Referring to the document in talks on the new finance goal yesterday, Saudi Arabia’s negotiator justified a tax on arms manufacturers by saying that military emissions of planet-heating gases represent 5% of global historical emissions.

“One… potential idea is to have a tax on defence companies in developed countries,” he said, suggesting it could be put forward. “We also realise that a financial transaction tax can actually generate a lot of revenue as well.”

At the COP28 climate summit last November, France and Kenya launched a taskforce to look into innovative levies that could raise money for climate action. They said they planned to examine taxes on international shipping – which has already agreed to introduce one – aviation, fossil fuels and financial transactions but did not refer to fashion, technology or defence companies.

Global brands targeted

According to the document, a financial transaction tax would raise about $240 billion a year over a decade through a 0.5% tax on trades, 0.1% on bonds and 0.005% on derivatives “only for Wall Street”.

About $57 billion a year could be raised from a 5% tax on the annual sales of the top seven technology firms, it says. Those would include Amazon, Apple and Google. “The ‘Big Tech’ firms hold a global monopoly on technologies, upon which developing countries have been reliant,” the paper argues.

About $34 billion a year could come from a 5% tax on the annual sales of the roughly 80 top fashion firms in developed countries, it says. This would hit brands like Louis Vuitton, Dior and Nike.

The G77+China group adds that the fashion sector comes behind only fossil fuels and agriculture in the size of its emissions – “however, unlike fossil fuels and agriculture, high-end brands are not critical for food and energy security”.

Around $21 billion a year could come from a 5% tax on the annual sales of the top 80 defense firms in developed countries, the paper says. This would include US firms like Lockheed Martin, Northrop Grumman and Boeing, the UK’s BAE Systems and France’s Thales.

All these measures would result in finance flows mainly from developed to developing countries, the document notes, except for the technology tax where “flows would be mixed as consumer[s] would shoulder the cost”.

Quality – not just quantity – matters in the new climate finance goal

Pacheco said the proposals originated within the Arab Group, before winning support from the wider G77+China group. Developed countries have yet to publicly respond to the ideas.

Under the UN climate change process, the group of developed countries defined back in 1992 have so far had the sole responsibility to provide climate finance to developing nations.

Developed-country governments are now pushing hard to change this, so that wealthier and high-emitting developing countries like Saudi Arabia would also contribute towards the new post-2025 finance goal.

This is one of the divisive issues government negotiators will wrangle over this week and next in Bonn to prepare the ground for an expected agreement on the finance goal at COP29 in Baku in November.

(Reporting by Joe Lo; editing by Megan Rowling)

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Frontline communities around the world are shouldering the deleterious injustices of climate change, especially in Africa despite it emitting only around 4% of total global carbon emissions. 

A case in point is the nomadic Amazigh tribes in the southeastern reaches of Morocco. The Amazighs are the oldest known inhabitants of Northern Africa. Their ancestral lifestyle is threatened by climate change, manifest in consecutive years of drought, relentlessly eroding their rights, including access to water and education, and their heritage. 

The story is personal to me, as I am from this region, and these are my people. My father was a nomad but was forced to give up nomadic life and settle in a village due to drought in the early 1980s. 

Among our tribe, “we’ve gone from nearly 600 tents in 1961 to just a few dozen today”, my father declares. According to the national census, Morocco’s total nomadic population in 2014 stood at just 25,274, a 63% drop from 2004. 

“Great enabler of climate action” – UN urges Bonn progress on new finance goal

As pastoralists reliant on livestock, particularly sheep and goats, nomadic families depend on suitable pastures, but drought increasingly has rendered pastures and water sources barren. “This is the eighth consecutive year of drought, this situation is unprecedented,” a 91-year-old nomad told me. 

This is also a story of loss and damage to the nomads’ very culture and way of life. As someone familiar with the experience of displacement, I have witnessed how climate change strikes at the heart of our culture and identity. It’s not just about losing homes or livelihoods — it’s about losing the very essence of who we are.  

Each drought-induced exodus undermines our traditions, leaving us adrift in a world that seems less and less familiar.  

This is an existential crisis for my community. 

In search of water 

In Morocco, the frequency of droughts has increased fivefold, from one dry year in 15 between 1930-1990 to one dry year in three over the last two decades. Now, the Intergovernmental Panel on Climate Change predicts a doubling of drought frequency in North Africa to come.  

Water is being lost, and much is lost with it. As Moha Oufane, another nomad, said to me: “Water is everything. It’s the most important thing for us. We can buy food and feed livestock with what’s left in the mountains or by going into debt, but water can’t be bought. It’s priceless.”

Water shortages are disrupting traditional pastoral routes, forcing families to give up nomadism or put themselves at risk. In the past, the year would be structured around a well-defined nomadic pattern: summer months were devoted to Agdal-to-Imilchil, while winter months were spent on the Errachidia side, with a return to Assoul (a village in Tinghir) and the surrounding area when the cold set in.  

Today, this traditional route no longer exists. Nomads go where little water remains, to preserve their livelihoods and the lives of their livestock. 

Only one new water point exists on this traditional route, a project led by the Moroccan state. “This project is extremely beneficial for us,” Moha says. “Similar projects in other nearby areas would be of immense help to us.”

Loss and damage sub-goal

Many nomads are forced to go into debt to feed their livestock, their main source of income, which worsens their situation. According to Moha, some accumulated debts of nearly 30,000 dh ($3,000) between October 2023 and January 2024”. Debt has long been used by these communities, but this was when nomads were confident of being able to pay it back after good rainfall seasons, which is no longer the case. 

Conflicts over territory and diminishing water-dependent resources, once unthinkable, now disrupt the social cohesion and hospitality for which nomadic communities are renowned. 

The plight of Morocco’s nomads illustrates the need for international support for climate-affected communities. Rich historic-emitter countries must honour their obligations to provide climate finance under the United Nations Framework Convention on Climate Change (UNFCCC).  

Quality – not just quantity – matters in the new climate finance goal

Economic costs of loss and damage in developing countries are estimated to reach $290-580bn/year by 2030. Grant finance, not debt, must be provided for communities to repair and recover. Developing countries should not have to spend a penny to cope with loss and damage they did not cause. However, despite the celebrations, the new UN Loss and Damage Fund has only received $725 million in pledges. 

We need a sub-goal for loss and damage in the New Collective Quantified Goal (“NCQG”) on climate finance, to be debated over the coming days at the mid-year UN climate negotiations in Bonn and the agreed at COP29 in Baku. It is immoral for developed countries to be blocking such a sub-goal. 

It is outrageous that nomads and frontline communities should be left to fend for themselves and see their ancestral lifestyles, identities and cultures eroded, while some wealthy nations prosper from investment in fossil fuels and find public finance for their own purposes but not for climate finance. We refuse to be collateral damage in a game of power and profit. 

The post North Africa’s disappearing nomads: Why my community needs climate finance appeared first on Climate Home News.

With climate negotiators gathered at mid-year UN talks in Bonn, Germany, to prepare for COP29, a critical question hangs in the air: how can we ensure that the money mobilized to address the climate crisis is not only sufficient in quantity, but also effective in quality? 

Negotiators have been tasked to set a new collective quantified goal, or NCQG, on climate finance, which rapidly scales the amount of money we need globally for climate action. In the face of stark needs, the NCQG must be ambitious.  

Experts estimate that by 2030, $2.4 trillion will be required annually to support the needs of developing countries alone. 

“Great enabler of climate action” – UN urges Bonn progress on new finance goal

With just five months before the goal is on the decision-making table at COP29, it is also critical that negotiators consider the issue of quality – such as the type of financing, the ways money is accessed, alignment with national priorities, the predictability of funds, and their impact. 

High-quality climate finance should not create additional burdens and has clear pathways to access for countries and communities in need. However, many developing countries have expressed concern that the current quality of finance is far from where it needs to be. 

Concessional and accessible 

An important signal of quality in climate finance is the degree of concessionality – or how favorable the terms of financing are. Concessional finance includes grants and loans with low interest rates and longer repayment periods, which are easier for recipient countries to manage.  

Concessional tools also have potential to scale action by mobilizing private finance. These ‘blended finance’ approaches can often do far more than a traditional grant or loan. For example, to build a solar plant in Uzbekistan, the World Bank utilized concessional loans to mitigate financial risk and incentivize private-sector participation. 

However, in recent years, more than 70% of public climate finance has been delivered through loans, most of which have been non-concessional. This poses a challenge as many developing countries face burgeoning debt crises, and non-concessional loans risk further indebting these vulnerable states.  

Yet, countries in debt distress like Ghana and Zambia still received 17% of their climate finance through loans in 2021. Without proper concessionality, climate finance meant to build resilience can paradoxically make things worse. 

Rich nations meet $100bn climate finance goal – two years late 

Another measure of quality is the accessibility of finance. Increased climate finance must come with clear channels of access for developing countries, but bureaucratic hurdles, limited transparency, and rigid funding terms can hinder governments from accessing international funding streams.  

For example, small island states have struggled to access resources from climate funds due to capacity constraints in navigating the finance landscape. Access to private finance is also lacking as private funders perceive high risks of investing in emerging markets. If climate finance flows remain unavailable or inaccessible to developing countries, it will be impossible to meaningfully address their needs and priorities. 

Multi-layered goal 

The structure of the NCQG can incorporate elements of impact, concessionality and access. Negotiators should pursue a goal with multiple layers – setting a support target for providing public finance to developing countries, alongside an investment target for mobilizing all sources of finance globally. 

The support goal should be underpinned by concessional finance, targeting the national priorities of developing countries through grant and other non-debt financial instruments fit for purpose. These layers can foster blended approaches that scale available finance and enable greater access without creating new debt burdens. 

Lastly, for public finance to more effectively open new channels of access, we need steady reform in the broader financial system, including the multilateral development banks (MDBs). The MDBs are undertaking reforms to simplify access and increase lending capacity, and made new announcements at the World Bank’s Spring Meetings in April, which will allow public financing from MDBs to catalyze greater private finance flows and mitigate risks of debt distress. 

Pairing quantitative and qualitative elements should be at the top of the agenda in Bonn. Many countries have already called for qualitative elements to be incorporated into the goal. Now, delivering this quality – via greater concessionality, accessibility, and innovation – will be vital to ensure that climate finance can play a transformative role in addressing the complex challenges posed by climate change. 

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Calling climate finance the “great enabler of climate action”, Simon Stiell told negotiators at the start of the annual June session in the city of Bonn that they must come up with concrete options for the New Collective Quantified Goal (NCQG) on finance.

The goal is one of the main decisions expected from the COP29 UN climate summit in November in Azerbaijan’s capital.

“We cannot afford to reach Baku with too much work to do. So please, make every hour here count,” Stiell said on Monday in his opening speech to the June 3-13 conference.

Following delays caused by an unauthorised pro-Palestinian protest and a complaint from the Russian delegation that not all its members had received visas to travel to Germany, government negotiating blocs made statements revealing sharp divisions on who should provide climate finance and how much it should be.

South African & Argentinian climate justice activists Tasneem Essop & Anabella Rosemberg were removed & de-badged after peacefully demonstrating (standing & singing) to alert to the unfolding genocide in Palestine at @UNFCCC #BonnClimateConference opening plenary. pic.twitter.com/xUWXY8dilU

— Center for International Environmental Law (@ciel_tweets) June 3, 2024

While developing countries have repeatedly called for the current $100 billion-a-year goal to be replaced with “trillions”, developed nations have yet to propose any numbers for the target.

Several developing countries said that at least the bulk of the money should come from developed-country governments, whose responsibility it has been so far under the UN climate regime.

Developed countries, in turn, said some of it should come from the private sector and global taxes on carbon-heavy goods, as well as from the public purses of wealthier, higher-polluting developing countries.

Other divides that need to be resolved by November include a common definition of climate finance, the period the new goal should be set for, how funding flows should be monitored, and what the money should be spent on.

A longstanding target to provide $100 billion annually from 2020 was met only in 2022, according to the Organisation for Economic Coopreation and Development (OECD), two years later than the deadline developed countries agreed to back in 2009.

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Diego Pacheco, a negotiator from Bolivia, told the room in Bonn that the level of ambition on the new finance goal will affect developing countries’ level of ambition in their UN climate action plans – which all nations are supposed to publish by early next year. The NCQG will determine “how words translate into actions”, he said.

Billions to trillions

To date, very few governments have made precise demands on a top-line amount for the new goal – although all have agreed it will be set from a floor of $100 billion a year.

India and the Arab group of countries, led by Saudi Arabia, have said rich countries should provide at least $1 trillion a year, while other developing country governments have repeatedly pointed to needs reaching into the “trillions”.

At a press conference in Bonn, Michai Robertson, the lead finance negotiator for small island states, warned: “The cost of inaction if we don’t spend those trillions just far exceeds the seed money we’re putting in”. War and conflict “get trillions already”, he added.

He added that many developing countries have not yet specified a precise amount as they are doing modelling and waiting for a UN “needs determination report” which is due out in October, ahead of COP29.

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In their speeches, neither the European Union or Canada gave any sense of how large the target should be.

Iskander Erzini Vernoit, founder of a Moroccan think-tank called the Imal Initiative, told journalists that developed countries have not been willing to enter into discussions about how much the goal should be.

Wide or narrow sources

Vernoit said the only dimension rich nations have been willing to discuss so far is “their proposal entailing money coming from sources other than themselves”.

The EU’s delegate said in Bonn that the money should come from “a wide variety of sources, instruments and channels including innovative sources while making all financial flows consistent with the Paris Agreement”.

“While we attach great importance to the public core of the new goal, public resources alone will not suffice,” the EU negotiator said.

Rich nations meet $100bn climate finance goal – two years late

“Innovative sources” refers to a variety of money-raising proposals such as taxing billionaires, shipping emissions, planes and financial transactions. A French and Kenyan-led taskforce is currently examining these options.

Developed countries, including those in the EU, have highlighted Article 2.1c of the 2015 Paris Agreement on making finance flows, including private finance, consistent with tackling climate change. They are also pushing to widen the pool of government donors.

The EU negotiator added in Bonn that “the provision and mobilisation of climate finance should be a global effort, reflecting solidarity – notably with the most vulnerable countries and communities, and capturing the evolved global circumstances and the dynamic nature of economic capabilities”.

Developed countries have argued that, since developed and developing countries were last categorised by the UN in 1992, some developing nations have grown much richer and more polluting – and should therefore contribute to climate finance not receive it. China, the Gulf nations and South Korea are among the most prominent examples.

Speaking on behalf of a negotiating group that includes the US, Japan, the UK and Australia, Canada's negotiator said the new goal must be "multi-layered and incorporate all sources of finance - public and private, domestic and international - it should draw from the efforts of a broad set of contributors that reflects economic realities and capabilities".

However, speaking on behalf of the biggest group of developing countries, Uganda stressed the responsibility lies with the traditional set of developed countries.

Speaking through a translator on behalf of the Arab Group, Saudi Arabia's negotiator said the new goal must reflect "the responsibilities of advanced countries" based on the rules of the Paris Agreement.

Brazil's negotiator said public finance should be "at the very core" of the goal, and that climate finance should be defined so there is transparency and accountability on whether it has been provided as promised.

The OECD - a club of wealthy nations that last week announced the $100-billion target had been met - "does not have multilateral legitimacy" to make such judgements, she added.

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Referring to the OECD announcement, Bolivia's Pacheco said: "We see much exaltation in delivery of climate finance in the form of loans at market rates".

Over two-thirds of the climate finance recorded by the OECD came in the form of loans. Of the loans provided directly by governments, about one-fifth was offered at market rates, while nearly three-quarters of loans from multilateral development banks were categorised as non-concessional but still carrying better terms than commercial lenders.

Vernoit warned that developed countries were likely to get their way at the talks in Bonn unless the public - through civil society groups - raised "moral indignation about how the conversation is going".

"This is not a response to an emergency, it is not a response to any moral responsibility," he said.

(Reporting by Joe Lo, editing by Megan Rowling)

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