Trillions needed for climate action — COP29 must deliver more than just a number for Africa

This year’s climate summit, the Conference of the Parties of the United Nations Framework Agreement on Climate Change (COP29), has been dubbed “the finance COP”. Starting on 11 November in Baku, Azerbaijan, developed and developing countries will fiercely negotiate the creation of a new “finance goal” — the New Collective Quantified Goal (NCQG).

Many onlookers will label COP29 a success or failure solely based on whether parties can reach a fair and just agreement on this new goal. Daily Maverick has previously reported that South African negotiators and the African Group will be asking for $1.3-trillion per annum.

But for African nations, the outcome needs to mean much more than simply reaching a trillion-dollar target. It must mark the start of a transformative finance approach that respects the specific needs, aspirations and challenges of our continent.

In 2024, African countries are losing an average of 2–5% of their GDP and diverting up to 9% of their budgets responding to climate extremes. Nine years ago, when parties ratified the 2015 Paris Agreement, they included a clear commitment by developed countries to jointly mobilise $100-billion annually in climate finance for developing countries to implement mitigation and adaptation.

It represented the first major commitment by developed countries to acknowledge their historical responsibility for climate change and their duty to assist developing nations.

But this number was purely political and symbolic — it wasn’t based on any attempts to estimate how much money developing countries actually needed. It just “sounded right” when it was first suggested in 2009 at COP15, and parties only agreed to bring it into effect by 2020.

It was woefully inadequate in scale, but even so, developed countries didn’t deliver it. In 2022, OECD countries claimed they had finally met the goal — but used a very broad definition of climate finance, which allowed them to count finance that doesn’t genuinely contribute to their obligation:

• Roughly a quarter of the total funds counted were just existing foreign aid, now reclassified as “climate finance”. None of this was new or additional;


• Roughly 70% of the funds were loans, some at market rate. Not only did developed countries not hand over the funds, but they actually made a profit from the interest, and


• They even counted export credits, which aim to finance developed countries’ exports to developing countries, further benefiting their own exporting industries.

This “creative accounting” of developed countries has eroded trust in their commitment to genuinely fulfil their obligations. It has led to calls for clear, enforceable commitments and accountability mechanisms that are essential to avoid counting finance such as market-rate loans as climate finance.

Fast forward to October 2024, and the co-chairs for the NCQG have released a “substantive framework” which will set the stage for the quantum, structure and timeframe of the new goal. Developing countries are focused on making it more than just a number this time.

These are some of the key elements that need to be in the final text, to make it meaningful for Africa:

The quantum

The costs of implementing developing countries’ NDCs (their nationally determined plans for climate action) by 2030 would amount to roughly $5.012-trillion and $6.876-trillion. That number is almost certainly an underestimate, as many developing countries’ NDCs don’t include the costs of all actions and do not fully account for all adaptation needs nor loss and damage from global climate inaction. Nonetheless, if implementation started in 2025, that would be $1-trillion to $1.4-trillion needed annually.

Grants versus loans

Given the disappointing performance of the $100-billion goal, developing countries need a ring-fenced amount of public grant-based finance in the goal. This doesn’t mean there is no role for the private sector, but many adaptation projects (which have received significantly less financing than mitigation) are not geared toward private-sector lending.

Many developing countries are heavily over-indebted already. With this in mind, it is reasonable to push for adaptation finance at least to be exclusively grant-based.

The 2023 Adaptation Gap report models the current adaptation finance gap, now estimated at $194-billion to $366-billion per annum. Given that developing countries are owed a historical debt, which some studies have estimated to be up to $5-trillion/annum, asking for only $1.3-trillion, with only a portion of that being grants, is very gracious.

Public versus private sources

Developed countries argue there simply isn’t enough public-sector money available for this big a number, and therefore the private sector is the only solution.

However, the IPCC Sixth Assessment Report demonstrates that there is sufficient global capital and financial liquidity to address global climate finance gaps, the money just needs to be redirected. Developed countries currently spend trillions of public dollars on fossil fuel subsidies, military spending and other harmful industries, which could easily be redirected.

Global subsidies for fossil fuels hit an all-time high of $1.5-trillion in 2022. The US alone spent $916-billion on the military in 2023, with the global total being $2.4-trillion.

Apart from redirecting current public spending, there are multiple avenues for countries to tax fossil fuel extraction based on the polluter-pays principle or the introduction of a wealth tax. Spain recently successfully introduced a “featherlight” wealth tax of 0.5%, and a similar model could raise more than $2-trillion if applied globally.

Contributor base

Developed countries are still responsible for the vast majority of historical emissions and have had many decades to amass the economic growth benefits from cheap fossil fuels, making them the wealthy countries they are today. The $100-billion goal, despite its flaws, was a clear recognition of this and the obligation it places on developed countries.

However, for the new goal, developed countries are pushing for other high-emitting developing countries to be included. Many of these countries still have much lower emissions per capita and historic cumulative emissions compared to developed countries like the US.

And arguments over who should be included are increasingly a distraction from the main point: developed countries still owe the majority of the debt that has gone unpaid.

Timeframe

Developed countries are calling for there to be significant lead time from the new goal being agreed upon in 2024 to it being implemented to allow them to build up from the base of $100-billion towards the new goal. Some have even suggested that the new goal should only be reached in 2035.

However, this would mean 10+ years of inadequate finance available, and every year the cost of inaction rises considerably. Developing countries want the NCQG as a goal of public finance that is provided and mobilised to start in 2025.

Transparency on what counts and what doesn’t

Transparency in defining and tracking climate finance is crucial to making the goal real and ensuring money in the bank accounts of developing countries. The Enhanced Transparency Framework should be the basis for reporting and accounting with the NCQG. Otherwise, a negotiated outcome that looks like it includes big numbers will still only result in a small percentage of that actually reaching developing countries.

Ultimately, if parties return from Baku without a new goal that explicitly commits developed countries to provide a specific, significant amount in grants directly to developing countries and $1.3-trillion in finance overall per annum, starting in 2025, it will have failed to deliver on its mandate.

This is only the beginning of what is needed. Without transparent and trackable ways to hold developed countries to this commitment and broader reforms in the financial architecture, African countries and their 1.5 billion people will continue to bear the cost of a crisis for which they are less than 4% responsible. DM

Charlotte Scott is the global engagement and learning lead for the Voices for Just Climate Action Alliance at SouthSouthNorth (SSN). She is a PhD candidate and Canon Collins Sol Plaatje scholar at the University of Cape Town.

Samson Mbewe is a technical programme lead and researcher at SouthSouthNorth (SSN). He specialises in the intersection of finance, energy transitions and policy, supporting sustainable development in the Global South.

Yared Tsegay is the monitoring and evaluation lead for SouthSouthNorth and the Voices for Just Climate Action Alliance. He is a development economist with 19 years experience in development finance and sustainable development.