The Conference of the Parties to the United Nations Framework Convention on Climate Change
Past Event
2024-11-08
Uncertain Prospects for COP29: Challenging Road Ahead for Climate Negotiations (Part 1)
The 2024 United Nations Climate Change Conference (COP29) is set to begin on November 11 in Baku, the capital of Azerbaijan. However, with Trump's victory in the U.S. presidential election, concerns have emerged about the United States potentially withdrawing from the Paris Agreement once again, which would inevitably impact the months of negotiation efforts by representatives from various countries. Since the preparatory Bonn Climate Conference began in June, while breakthroughs have been achieved on certain issues, substantial progress remains elusive in key areas, including establishing climate finance targets, developing climate mitigation work programs, and reaching consensus on national climate action goals. The divisions between developed countries and emerging and developing country blocs remain severe, and Trump's election victory appears likely to only deepen these contradictions.
Enormous Challenges in Climate Finance Goal Negotiations
Developing countries require financial support for climate mitigation and adaptation actions. Faced with long-term debt and fiscal constraints, they desperately need support from developed nations, making climate finance negotiations at COP29 a focal point of attention. At COP15 in 2009, countries reached an agreement setting a climate finance target of $100 billion annually from developed to developing countries, which expired in 2020. COP26 in 2021 proposed establishing a New Collective Quantified Goal (NCQG) for climate finance, through surveys and collective negotiations, with the aim of reaching a new funding target at COP29, this year's conference.
However, since proposing the annual $100 billion target, developed countries have consistently fallen short. Just before last year's COP28, the Organization for Economic Co-operation and Development (OECD) released a research report indicating that developed countries finally met the target in 2022. Civil society organisations challenged these findings, arguing that many of the so-called climate finance projects were pre-existing overseas aid initiatives rather than new programs.
Under financial pressure and domestic political atmospheres, many developed countries have reduced their overseas aid budgets this year, further intensifying the financing situation. Countries also differ on establishing new targets, including total funding amounts, funding sources, beneficiary criteria, and the inclusion of various types of climate funds.
Funding sources remain highly contentious, with developed countries supporting the inclusion of private capital, while developing countries insist on public finance, emphasizing that citizens of developed nations must share the 'historical responsibility' for carbon emissions. Another dispute centers on the total amount of funding. Developing countries have proposed targets in the trillions of dollars, reflecting the enormous financial needs for climate action, and demand compensation for the previously unmet $100 billion target; however, developed countries remain reluctant to make concrete commitments. During the high-level ministerial dialogue in early October, the negotiating text draft listed funding options ranging from a minimum of $100 billion to a maximum of $2 trillion annually, highlighting the enormous gulf and the challenging nature of these negotiations.
Climate Finance Contributor Base Faces Significant Challenges
Expanding the donor base remains highly controversial. Developing countries have consistently maintained that since the establishment of the United Nations Framework Convention on Climate Change (UNFCCC), it recognized developed countries' historical responsibility for substantial greenhouse gas emissions since the Industrial Revolution, and established 'common but differentiated responsibilities' between developed and developing countries. This implies that developed countries should bear greater obligations and responsibilities, including funding developing countries' emission reduction efforts. However, many emerging developing countries, such as China, India, and Gulf states like Saudi Arabia and the UAE, have experienced rapid economic growth and gradually become major carbon emitters. This has led to proposals for various criteria to define new donor conditions, such as economic status and emission levels, to include emerging countries among donor countries—a move these emerging countries strongly oppose.
Furthermore, the new climate finance goals must consider developing countries' actual needs, including implementing global climate adaptation targets and compensating for economic losses from climate disasters (through the 'Loss and Damage' fund). Currently, the 'Loss and Damage' fund has only raised $700 million, far short of its $100-400 billion target. Global adaptation finance in 2022 reached only $32.4 billion, falling 6-12 times short of the actual annual needs of $194-366 billion. The finance targets require not only monetary growth but also specific plans, quantifiable indicators, and monitoring measures to ensure effective fund utilisation.
Carbon markets are another key negotiation point at COP29. Carbon market mechanisms create 'carbon credits' through improving energy efficiency, developing renewable energy, and forest conservation, which can be traded in domestic and international carbon markets. These credits can count toward national emission reduction targets and help developing countries fund decarbonisation projects. However, recent voluntary carbon trading through private markets has faced issues of fraud, exaggerated effects, and double counting. Moreover, energy development and reforestation projects have led to indigenous land grabbing and human rights violations, raising concerns about international carbon trading loopholes. Therefore, focus will be on using carbon trading rules to enhance carbon credit integrity and ensure cross-border carbon trading data disclosure. The early October carbon market working group meetings achieved breakthroughs on certain issues, including likely integration of human rights safeguards and establishing standards for calculating greenhouse gas removal. These developments are crucial for building confidence in carbon markets and launching the global carbon market mechanism next year.
Looking ahead to COP29, climate finance negotiations are viewed as a milestone for developed countries' commitment to supporting global climate action. Successfully establishing higher financial targets would help developing countries propose more ambitious carbon reduction goals while ensuring beneficiary nations don't face increased debt burdens. Moreover, incorporating strict human rights safeguards and integrity standards into carbon trading rules would help unlock the global carbon market's potential.
As an international financial center, Hong Kong should leverage its climate finance potential in these challenging international climate negotiations, serving as a model for sustainable and transition finance governance, and creating conditions to facilitate global corporate climate investment and financing. For instance, Hong Kong can share its experience in developing sustainable finance action plans and taxonomies, as well as environmental, social, and governance disclosure rules for listed companies. This knowledge-sharing can promote mutual learning with other cities and advance highly transparent and credible climate finance platforms with high level of integrity.
CarbonCare InnoLab, which became a COP observer organisation in 2018, will send ten representatives this year to closely monitor negotiation progress on various issues, including climate finance and mitigation. We have witnessed an increasing number of Hong Kong representatives participating in COP meetings in recent years, coming from government, business, and civil society sectors. We hope this will encourage more Hong Kong citizens to engage with international climate issues.