Done deal: What to expect from the funding deal agreed at COP29 talks

The applause continued for a long time after the President’s statement on Sunday morning. COP29Mukhtar Babayev said that an agreement has been reached on how rich countries can help poor countries economically in the fight against climate change.

The applause masked what was often a quarrelsome affair for most people previous conversationHe they were going to fail After developing countries walked out of the talks on Saturday, they were temporarily suspended.

almost immediately, An Indian representative described the $300,000 million figure as “tragic”.An opinion shared by many present at the talks, especially representatives of developing countries, who were demanding a much larger amount: $1.3 trillion.

Ani Dasgupta, president and CEO of the World Resources Institute, said the final amount “An important progress towards a safer and more equitable future“, but acknowledged that the poorest and most vulnerable nations are “legitimately frustrated that the richest countries have not put more money on the table when billions of lives are at stake.”

Now the focus should be on How the final text of the COP29 agreement will be implemented in practiceAs well as how other stakeholders can help close the gap in financing the fight against climate change.

Who can help close the climate change financing gap?

The COP29 text included a line calling on all parties to cooperate Using “all public and private sources” To reach close to $1.3 trillion.

In fact, it is a appeal to banksas well as to the private sector With its vast resources, to contribute and help close the climate financing gap that governments cannot or do not want to cover on their own.

much is expected multilateral bankWhich are ultimately supported by governments, as they are financed with the taxpayers’ money of their member countries. They are currently the largest source of climate financing For the developing and fastest growing world.

Also called multilateral development banks (MDBs), these institutions are bound by mandates that require them to provide various types of development assistance at a lower rate than private banks that require it. some examples would be Railway line financing

It is very necessary to facilitate economic development in a certain area or to give credit building a renewable energy project,

The largest of these is the World Bank, with regional examples such as the Asian Development Bank, based in Manila, and the African Development Bank (AfDB), based in Abidjan.

These institutions were one of the main reasons why the World in 2022 met the countries’ objective In 2009, a plan was made to provide $ 100 billion annually to developing countries. To combat climate change. In fact, according to the OECD Creditor Reporting System, climate finance provided by these banks to developing countries more than tripled between 2013 and 2022, reaching $47 billion in that year alone. However, in the future, MDBs will need a lot of help to achieve climate finance targets.

Hope implicit in COP29 text’s call for ‘private sources’ To help bridge the funding gap, private investors, such as private commercial banks, will need to step up their game to get closer to the $1.3 trillion target.

In 2022, private investors contributed $22 billion to finance the fight against climate change, significantly less than the $41 billion contributed by foreign governments.

Where will the money go?

The agreement reached over the weekend replaces an agreement reached 15 years ago that imposed an annual burden of $100 billion on rich countries. Climate Finance for the Developing World

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This year’s agreement has the same aims and objectives Help poor countries prepare For a warming world and to stop it getting hotter. To do this, the transition from fossil fuels to clean energy will be financed and the infrastructure needed to install technologies such as wind and solar on a large scale will be created.

Besides, Areas most affected by extreme weather will need funding for adaptation and preparedness Against incidents like flood, storm and fire. Along with new home construction, agricultural practices will also have to become more resilient to extreme weather events.