The US$300 billion in annual funding pledged by developed countries to help developing countries to fight climate-related issues at the 29th edition of the Conference of the Parties to the United Nations Convention on Biological Diversity (COP29) aroused the discontent of developing nations and prompted them to leave as a sign of protest about this decision. The event held in Baku, Azerbaijan, brought together over 55,000 delegates from nearly 200 countries.
Trillions, not billions needed
Although the pledged amount is treble the existing US$100 billion annual target that is due to expire in 2025, the developing countries were disappointed as they had advocated for US$1.3 trillion a year to deal with climate change and the transition from fossil fuels to clean energy.
They argued their countries bear heavier burdens of climate change extremes than developed countries despite contributing the least to it. Moreover, they stated that climate-related disasters inflict huge losses, further decreasing their capacity to reduce dependence on fossil fuels which are a primary contributor to climate change.
In this context, Mike Mposha, Zambia’s Minister of Green Economy and Environment, drew the attention of COP29 delegates to the fact that Zambia’s worst drought in over 40 years has reduced food production by over 50%, the country’s hydro power generation has been almost wiped out due to reduced water levels, drought has affected 84 out of 116 districts, and 6.6 million people require humanitarian assistance.
According to a 2024 World Meteorological Organization (WMO) report, on average climate-related hazards cost African countries 2% to 5% of their gross domestic product every year and many are diverting 9% of their budgets to climate change responses. It is estimated that throughout the next decade, climate adaptation will cost sub-Saharan Africa between US$30 to US$50 billion annually.
The WMO report further stated that by 2030, an estimated 118 million people facing extreme poverty and living on less than US$1.9 a day will be exposed to drought, flooding, and extreme heat in Africa if adequate response measures are not urgently implemented.
Against this backdrop, climate justice advocates have expressed dissatisfaction with the COP29 climate finance deal and warn of the consequences. Al-Jazeera Channel, Asad Rehman, a climate justice advocate, explained:
“countries already overwhelmed by climate (change) impacts, by the devastation we are seeing from killer floods, droughts, famines, will not be able to cut their own emissions, adapt to the changes, and pay for the costs of these extreme weather events which are not their responsibility, and be able to safely and cleanly transition (from) their (fossil dependent) economies.”
Reacting to the COP29 outcomes, UN Secretary-General Antonio Guterres urged developed nations to fully urgently honour their financial commitments so that prevailing climate change challenges are met. “Commitments must quickly become cash,” he emphasized, adding that if the financial commitments were honoured swiftly, this would offer a glimmer of hope to climate change vulnerable nations.
Streamlining carbon markets to support climate change mitigation
Despite the disagreements, COP29 delegates did manage to reach a final resolution of Article 6 of the Paris Agreement which calls for the formation of high integrity carbon markets. These will nurture climate change mitigation activities around the world when carbon credits are traded. Climate change vulnerable communities in developing countries will be motivated to conserve forests, plant trees or adopt renewable energy sources such as biogas, clean stoves, or solar power instead of using fossil fuels. These measures will earn them money when they sell carbon credits to developed and industrialized countries that are seeking to compensate for their own greenhouse gas emissions quota.
According to a World Bank report, carbon trading could facilitate the removal of 50% more GHG emissions and an estimated 5 gigatons of carbon dioxide annually by 2030 at no extra cost.
At the COP29, some developed and developing countries signed carbon trading agreements. Norway committed US$740 million for GHGs emission reductions and green growth carbon trading projects with Senegal, Benin, Zambia, and Jordan. Zambia also signed a carbon trading contract with Singapore that will authorize carbon tax-obligated Singaporean companies to purchase carbon credits from eligible Zambian projects to offset 5% of their taxable emissions.
In 2023, carbon credits from least developed countries were valued at US$403 million. Globally, the value reached US$2 billion in 2021 and by 2030 this is expected to rise to up to US$40 billion. In Africa, voluntary carbon markets are expected to create between 110 million to 190 million jobs by 2050 if the carbon price per tonne reaches US$80, according to a 2022 Africa Carbon Markets Initiative report.
