(In)justice in the year of climate finance – at COP29 and G20 summit

By Katrina Lehmann-Grube, Imraan Valodia, Julia Taylor and Sonia Phalatse

19 Sep 2024

One of the main outcomes of COP29 is expected to be a new goal for global climate finance but there are substantive differences regarding the amount of funding, the time frames, what should be included, the mechanisms, the types of finance, and what even counts as climate finance.

From 11-22 November 2024, thousands of people will descend upon Baku, Azerbaijan, for the 29th annual conference of the United Nations Framework Convention on Climate Change (UNFCCC) – COP29. Politicians, activists, government officials, researchers, business elites and representatives of international organisations, among others, will all be present to discuss and observe the most significant next steps in the global efforts to address climate change.

The focus of last year’s COP in Dubai was the first global stocktake. This is a process that will occur every five years, to review global progress towards achieving the goals of the Paris Agreement. Unfortunately, its conclusions left little reason to be optimistic.

We are nowhere close to reaching the necessary levels of emissions reductions, adaptation measures, nor financing to achieve them. At this year’s COP, the main topic on the agenda will be climate finance.

To address the impacts of climate change (adaptation), reduce the greenhouse gas emissions causing it (mitigation), and pay for the damage it is already causing (loss and damage), the world needs a lot of money. One of the main outcomes of this COP is expected to be a new goal for global climate finance, known as the New Collective Quantified Goal (NCQG).

This will be an update of the 2009 goal, which aimed to mobilise $100-billion per year by 2020 in climate finance for developing countries, from both public and private sources. This goal was estimated to first be reached only in 2022. However, new estimates of the actual costs of addressing climate change for developing countries (excluding China) are closer to $2.4-trillion per year, with $1-trillion to be mobilised from international sources.

This finance is supposed to be one of the main mechanisms by which climate injustice, between those most responsible for causing it (broadly countries of the global North), and those most affected by it (countries of the global South), is rectified.

Most of the work to achieve this takes place in the build-up to COP. In fact, the NCQG has been in negotiations since 2021, largely through a series of Technical Expert Roundtables. Thus far, little consensus has been reached.

There have been procedural challenges about how the process should be run, as well as substantive differences regarding the amount of funding, the time frames, what should be included, the mechanisms, the types of finance, and what even counts as climate finance.

Who should pay and how?

One of the most contentious differences has been which countries should be contributing money, and which countries should be on the receiving end. While historically, countries of the global North such as the United States, the European Union, Japan, Australia and the United Kingdom, were expected to pay due to their long history of cumulative emissions, they are increasingly arguing that ‘new emitters’, such as China and the Gulf States, must also pay up.

African countries have also called for this funding to come in the form of grants rather than loans, which simply add to Africa’s existing debt burden. In South Africa, funding received to help achieve a ‘just energy transition’ has overwhelmingly been in the form of loans. There have long been calls for climate reparations rather than finance, which may also take the form of debt cancellation, but these have largely fallen on deaf ears.

Read more: Climate Loss and Damage Fund entrenches Africa as beneficiaries — but some believe it’s a wrong turn

On top of the quantity and type of finance, the focus of climate finance is hotly debated. In 2022, it was estimated that 90% of all climate finance was targeted towards mitigation. There is a significant gap between finance needed for adaptation and what is available, recently reported to be between $194 and $366-billion per year.

Loss and damage is also on the agenda for this year and has been underfunded historically. Two years ago, a loss and damage fund was announced. This fund is mandated to provide grant funding for those impacts that are already occurring due to climate change, and that cannot be adapted to.

The governance structure of this fund has been decided (it will be housed initially at the World Bank) and initial pledges towards it amount to $661-million. However, estimates of the actual costs of loss and damage are in the billions.

One estimate suggests that the costs for countries of the global South were already between $116-billion and $435-billion in 2020, rising to between $1.132-trillion and $1,741-trillion in 2050. Therefore, there have been calls that the NCQG goal also set specific sub-targets for loss and damage.

These issues cut right to the heart of climate justice in terms of current and historical responsibilities, as well as barriers to countries of the global South to prosper. Despite the evidence showing the overwhelming financial and technological needs of these countries to address climate change, countries of the North continue to shore themselves up first, pumping trillions of dollars into “green protectionist” policies to protect their own economies.

The G20

The UNFCCC’s COP meetings are not the only place where finance, and climate finance particularly, are top of the agenda. In November, during the COP meetings in Baku, Brazil will be hosting the G20 summit.

Since December 2023, when it took on the role from India, Brazil’s G20 presidency has foregrounded climate finance as well as broader reforms to the global financial architecture. For example, it has established the Task Force for the Global Mobilisation Against Climate Change to consolidate and coordinate the work of the G20 on climate change.

The G20 moves to South Africa in 2025, and South Africa will have the opportunity to take these discussions forward in the G20 structures.

Brazil has also been championing a wealth tax on global billionaires to help unlock finance for both poverty alleviation and climate change goals. While a report commissioned by Brazil’s presidency advocated a 2% tax, the final consensus was diluted due to push back from countries such as Germany and the US.

As a result, the agreement simply stated that the countries would “engage cooperatively to ensure that ultra-high-net-worth individuals are effectively taxed”. Nonetheless, the initiative has been hailed as significant by tax justice movements as a move in the right direction. This includes climate justice organisations who have recognised the possibility of a tax on the wealthiest to help fund the fight against climate change.

Brazil’s championing of climate change during its G20 tenure will form the basis for COP30 next year, to be hosted in the Amazonian city of Belém. This is a long-awaited COP, particularly for civil society, which hopes to foreground global climate justice in a location central to questions of addressing climate change and development.

The Amazon is an enormous sink for carbon emissions and helps to stabilise weather in the region. However, it is also the site of immeasurable destruction through deforestation and industrialisation, driven by large multinationals. Indigenous people are at the frontlines of fighting these environmental injustices, and have paid a high price for their resistance.

Forums such as COP and the G20 are sites where long-standing questions about historical responsibilities, deeply rooted inequalities and ongoing injustice, continue to play out. While there is much talk of a ‘just transition’, to date, there is little evidence that countries in the global North are willing to fulfil their responsibilities.

The financial system is both a driver of, and embedded in, these existing and historical global inequalities. Those who should be paying, are not doing so, adequately, fairly, or rapidly enough. Therefore, the financial system must continue to be a site of struggle and contestation for the making of a more just world. DM

Imraan Valodia is the Pro Vice-Chancellor of Climate, Sustainability and Inequality and the Director of the Southern Centre for Inequality Studies at Wits University. Katrina Lehmann-Grube, Julia Taylor and Sonia Phalatse are all researchers in Climate and Inequality at the Southern Centre for Inequality Studies at Wits University.

https://www.youtube.com/watch?v=REeWvTRUpMk

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Who should pay and how?

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