(Bloomberg) — Negotiations over hundreds of billions of dollars in new climate funding for developing countries had staggered into overtime at COP29 in Azerbaijan. Bitter recriminations had thrown a desperate, close-door session on Saturday into what looked like a fatal impasse. It only darkened the mood that food had all but run out the night before inside the Baku Olympic Stadium, which had become United Nations territory during the annual summit.
As talks stagnated, a group of envoys from some of the most vulnerable nations — including island states who see themselves as the first casualties of rising seas and runaway temperatures — abruptly walked out.
While pushing climate talks to the brink is nothing new and negotiations frequently continue for a day past the official deadline, the walkout in Azerbaijan raised the prospect of a scenario that had happened just once in three decades: the collapse of COP’s main negotiating track. With a faction of the most endangered countries complaining they had been systematically ignored by countries whose wealth owed to burning fossil fuels, it looked like finance talks were about to fall apart.
Saturday’s impasse marked the nadir of 14 days of talks in Azerbaijan — and it was a moment that flashed warnings about the difficult future for global climate cooperation. The election of Donald Trump just one week before the start of COP29 promised to eventually remove the US from future negotiations, after productive years where the country linked arms with top emitter China to forge consensus. A risk of backsliding stalked the summit, with Saudi Arabia leading a rearguard maneuver to sideline an agreement over “transitioning away from fossil fuels” that had been hard won at last year’s COP28 talks in Dubai.
Instead of triggering a total breakdown, however, the frustrated envoys came back to the table with new resolve to secure even a disappointing final agreement. In the end, a palpable sense of anxiety over the dangers of leaving COP29 without a new financial commitment carried the day: At next year’s talks in Brazil, negotiators concluded, further headwinds would mean only a fraction of the financing would likely be offered up to poor countries.
A final push saw a smaller group of negotiators lock themselves in a tiny second-floor room, away from the cameras, to dig in on essentials. The gambit worked. Envoys emerged two and a half hours later with a framework for a deal. Grinning diplomats packed into a crowded elevator as a handful of lawyers stayed back to turn the potential compromise into official text.
Poor countries had won a few key concessions from their wealthy counterparts, including a promise of at least $300 billion in yearly support for combatting climate change. That marks a tripling of an expiring annual pledge to deliver $100 billion — and an additional $50 billion more per year than had been on the table the previous day.
But it was far from what developing countries wanted: mere billions instead of the more than $1 trillion per year that had been sought to build emission-free energy and increase resilience to heat, drought, wildfires and violent storms. The world needs to rapidly cut planet-warming pollution to have any hope of staying near the critical 1.5C threshold set out in the Paris Agreement, and there’s no dispute that the money summoned in Baku won’t be sufficient.
Even before the ink was dry on the COP29 agreement, there was skepticism about what was actually achieved. India’s negotiator, Chandni Raina, condemned the $300 billion deal as an “optical illusion.” Part of the objection stems from how the agreement tallies various sums toward that headline figure. Going forward, contributions to multilateral lenders such as the World Bank from India, China and other developing countries will count, potentially paring what’s expected from rich nations. In the International Finance Corporation, for example, India and the UK are roughly equal shareholders.
It’s also still unclear just what counts as climate finance, a problem even under the prior agreement to provide $100 billion annually. Most money goes to developing countries in the form of loans, rather than grants, rendering it unattractive or downright unusable for indebted nations.
And the new $300 billion per year total with a 10-year timeline isn’t adjusted for inflation. That means $100 billion put forward under the prior agreement in 2020 will have the same buying power as $155 billion in 2035, assuming a modest 3% rate of annual inflation. With the risk of inflation running hotter, $300 billion in 2035 might not even double the amount of climate finance received by developing countries today.
Still, the plan formally adopted just before dawn Sunday represents the biggest-ever finance commitment produced by UN climate talks. It was brokered in the shadow of two wars, rising populism and inflationary pressures that are straining national budgets. And it is a validation that the current system of climate diplomacy can still nudge progress on a global scale, even if it comes in the form of halting steps — rather than leaps — forward.
“I don’t think there is any party who would say they got all that they wanted here, and yet I do think it is an important step forward in the end for all of us,” said EU’s climate chief Wopke Hoekstra. “It was an opportunity to show unity and come together in truly very complicated geopolitical times.”
COP29 was a struggle long before 50,000 participants arrived in Baku. The role of host landed on Azerbaijan in bizarre circumstances, after bids by two European Union nations ended up blocked by Russia because of fallout from the war in Ukraine. Azerbaijan, which has close ties to Russia, secured the COP presidency only after agreeing to exchange prisoners with its longtime enemy Armenia.
That put control over the summit into the hands of an autocratic country reliant on fossil fuels for 90% of its exports and for decades largely absent from climate talks. Azerbaijan’s oil riches provided an inescapable backdrop for the negotiations. Nodding pump-jacks pulled crude from the ground just a few miles from where delegates haggled over steps that could shift the world’s reliance on fossil fuel. The country’s president, Ilham Aliyev, used an opening address to proclaim oil and gas a “gift of God” and insist no country “should not be blamed” for having them.
COP29 was always going to come down to money. The principle mandate was to replace an expiring commitment, first inked in 2009, that obligated wealthy nations deliver $100 billion per year in mostly public finance to help poorer nations. The class divide that’s always an element of climate negotiations had not been bridged before talks started on Nov. 11. For some rich nations, anything more than $100 billion would qualify as delivering. Developing countries, with mounting debt levels and rising costs from climate-driven extremes, pointed to credible reports from UN-backed experts showing trillions of dollars would be necessary.
Far lower sums were on offer. At one point early in the second week of talks, rumors of a $200 billion proposal circulated. “Is it a joke?” asked Bolivian negotiator Diego Pacheco in one session, drawing applause and laughter.
Rich countries on the hook to pay more also wanted to ensure other nations stepped up their emissions-cutting ambitions. The EU and US sought to reaffirm the headline-grabbing commitment from last year’s summit in Dubai that for the first time delivered a consensus on a worldwide transition away from fossil fuels. Their goal was to root the vow even more formally in the COP process, helping to prevent backpedaling and push forward a paper promise to deliver real-world action.
But the effort from the EU and US encountered opposition from the start, prompting an hours-long squabble over the summit agenda that stymied talks. Saudi Arabia, which has cast last year’s agreement as presenting a menu of emission-cutting options, opposed any explicit targeting of fossil fuels in this year’s text. Brazil’s environment minister, Marina Silva, criticized the effort as a distraction from COP29’s money talks.
But the finance track wasn’t going any better. Donor countries proved reluctant to discuss potential dollar figures until after agreeing on the scope of what would be covered and how much would come in the form of grants and other low-cost finance. Actual dollar figures would get explored in private consultations between ministers and even tucked into an informal working draft. But when the Azeri presidency released its first draft of a finance plan early morning on Nov. 21, just one day before the summit’s deadline, most numbers had been omitted.
Frustrated delegates pointed fingers at the Azeri presidency, which lacked the negotiating experience of past COP hosts. Floating a draft without hard numbers — and little attempt at consensus — might have been appropriate earlier in the talks, these people said, but it did nothing to bridge the enormous gaps between rich and poor countries with little time before the summit’s official end.
Tensions spilled into public view during a five-hour meeting that afternoon. Saudi Arabia’s representative, Albara Tawfiq, said the kingdom opposed bids to “shift” the responsibility for providing climate finance beyond developed countries, shutting down a bid by the EU and US to expand the pool of contributors.
“We are negotiating on nothing” without clear numbers on the table, said Colombia’s lead negotiator, Susana Muhamad. The country offered a vivid illustration of what’s at stake. Flooding had just swept Colombia, affecting 150,000 people. But affordable finance for projects that would improve defenses against floods remains out of reach. Who is going to pay, Muhamad wanted to know, when Colombia is already highly indebted and borrows at 10% interest rates? “Victims of climate change,” she insisted, should be at “the forefront of the decision.”
Talks continued in private with time running out. A new draft proposal released on Nov. 22 offered a first glimpse of progress and specific headline numbers. Rich nations would commit to $250 billion per year by 2035. But the sum provoked an immediate pushback as too paltry. “No deal is better than a bad deal” became the chant for activists in the hall.
Negotiators worked through the night, some catching naps on upholstered arm chairs. A few ducked back to hotels for one-hour breaks after dawn to freshen up. Azerbaijan ended up increasingly sidelined as countries took it upon themselves to craft text and present it as a done deal. The US and EU eventually agreed to increase the core finance commitment to $300 billion a year, but they resisted changing what counts toward that pledge.
Poor and vulnerable nations felt ignored. “We just couldn’t take it anymore,” said Michai Robertson, a negotiator for the Alliance of Small Island States. The club of richer countries had put more emphasis on diplomatic forums like the Group of 20 nations and the BRICS coalition of leading emerging economies. And now, he said, it looked like the same dynamic would come to dominate UN climate talks.
By the time of Saturday morning’s closed-door talks going line-by-line over a potential new finance plan, there was deep resentment among the small islands and a group of the least-developed countries. Those envoys walked out two hours after the start, as activists slowly marched around outside.
But poor countries had heard a different message in the negotiating rooms. If they walked away now, they risked an even worse outcome next year. Sometimes the threat was made explicit, one negotiator said, but it was always the subtext. The chief dangers came from the prospect of inflation further pinching Western budgets and a US delegation sent by Trump positioned to play the role of spoiler. (A one-year wait before countries withdraw from the Paris Agreement means the US exit will happen after COP30.)
A grim determination took hold. “We need a deal,” said Juan Carlos Monterrey Gomez, Panama’s special representative for climate change. “If we don’t get a deal, I think it’s going to be a fatal wound to this process, to the planet, and to the people.”
Weary diplomats reconvened in the presidency’s upstairs office. Representatives of developed nations — including the EU, US and UK — struck a conciliatory tone. “They appeared to be remorseful about not really listening to our high-level priorities,” said Robertson, negotiator for the island group.
Developing countries pressed for less money to come through “creative accounting,” a catch-all term referring to loans provided through multilateral development banks such as the World Bank and International Monetary Fund. They sought to have more made available from existing multilateral vehicles, such as the Green Climate Fund, which offer transparency, a focus on adaptation, and, for some, a floor of support. “We tried to steer the discussion that way,” Robertson said. “It seemed the developed countries didn’t have faith in…our institutions that we’re supposed to build up to provide climate finance.”
Wealthy nations agreed to set the core total at $300 billion and make that sum a floor for support by affirming it was “at least” what should be delivered each year by 2035. They refused to budge on changes to the kinds of finance that would count toward the total. But in the end the wealthy faction yielded to a top priority from developing countries by agreeing to a “significant increase” of resources steered through existing climate funds. The final agreement states that financial outflows to those programs should be at least tripled by the end of the decade.
Rich nations also agreed in the final text to a “review” of the finance commitment in 2030 — a move Monterrey Gomez of Panama said opened the door to “stepping it up” before 2035. In another change meant to woo African nations, donor countries agreed to language that establishes a new “Baku to Belem” roadmap to enhance international cooperation in scaling up climate finance to $1.3 trillion. The initiative will explore options for setting “minimum allocation floors” for developing countries.
Even with a blueprint for agreement in hand late on Saturday, Hoekstra wasn’t breathing easy. Objections from any one nation can blow up a deal, since COP agreements must be won by consensus. “These things are always about content, about process, and in many ways also about empathy,” the EU climate chief told reporters. In the end, he said, “it will take 195 to tango.“
As it turned out, there was a holdout. When negotiators convened in the main plenary to weigh the final deal, India tried to formally object to the size and structure of the finance plan. The country’s negotiators raised their hands — and were ultimately ignored — as the COP presidency brought down the gavel on the deal. COP presidents scrambling for consensus have sometimes been known to look the other way when objections are raised.
Delegates streaming out of the final session painted a mostly bleak picture of the result. Few negotiators counted themselves happy, and many more described a bitter taste left in their mouths.
Rich nations failed at their effort to win a true expansion of the donor pool so that China, Saudi Arabia and the United Arab Emirates might share in the burden of supporting developing nations. In the end, these countries will simply be encouraged to make voluntary contributions. The EU and US also lost their bid for a full-throated endorsement of last year’s commitment to transition from fossil fuels, instead settling for a more generic reaffirmation.
India is indicative of a widespread feeling that the needs of the poor had once again been trampled by the wealthy world. “We are extremely, extremely disappointed. This has been stage managed,” said Raina, negotiator for the world’s most populous nation. Gaveling through the finance deal without hearing India’s opposition is “indicative of a lack of trust, a lack of collaboration.”
With tensions high at the final plenary, Chinese officials moved to soothe angry delegations from India, Saudi Arabia, Africa and the small island group, according to people close to the Chinese delegation who asked not to be identified as they weren’t authorized to speak publicly. US officials were in some of the same huddles on Sunday — but they might not be after Trump’s promised retreat. Zhao Yingmin, China’s vice minister of ecology and environment, held a series of one-on-one conversations with delegates in the final hours to warn things would be worse without COP29’s finance agreement, according to one of the people.
For Robertson, the island negotiator, the outcome means international diplomacy lives on. It may be imperfect, but for countries on the outside of the world’s power centers it’s perhaps the best they’ve got. “At the end of the day,” he said, “the fear is always, for us, if it collapses, then where do we go?”
–With assistance from Alfred Cang, Natasha White and Zulfugar Agayev.
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