Climate Justice or Market Expansion? Unpacking COP29’s Financing Decisions

Dear Bertha, welcome to Völkerrechtsblog. Thanks for agreeing to take the time to answer our questions so thoroughly.

How do you assess the commitment of the states – particularly the developed countries – to meet their financial pledges for climate action, particularly in terms of the promised $100 billion per year? Have there been any significant steps forward at this year’s conference?

This year’s conference was largely about establishing a new goal for climate finance, considering that the $100 billion per year goal’s period will come to its end in 2025. Countries of the Global South expected this new goal to be a significant step forward for the provision and mobilisation of climate finance from developed to developing countries, beyond the $100 billion per year, which was already largely inadequate to meet the growing finance needs linked to the implementation of the Paris Agreement. In that sense, the COP 29 outcomes where a disappointment, and for many developing countries, a betrayal. COP 29 established a goal that continues to be largely inadequate, represents little progress beyond previous efforts and is largely aimed at shifting the responsibilities of developed countries onto developing countries themselves, as well as the private sector. As some comments from developed countries’ leaders show, their aim was more to open the door for their own private sector to access developing countries’ markets, under the guise of support for climate action, than about recognising and keeping up with any obligations to support developing countries under the Paris Agreement.

Considering the ongoing challenges of the disproportionate impact of climate change on small island states and other states in the Global South, do you believe the current climate financing mechanisms sufficiently address the needs of vulnerable countries, or do they fall short of providing equitable and accessible support?

The new goal certainly does not address the needs and priorities of any developing country, let alone those most vulnerable. These countries themselves have made this very clear in their statements about the COP 29 results. Of particular concern is the enhanced role that the new goal has given to Multilateral Development Banks (MDBs), a move that was resisted by many, but that in the end was approved at the insistence of developed countries. The use of these mechanisms, which have deeply undemocratic governance structures that do not respond to the needs and priorities of developing countries, and that are more likely to use financial instruments that will further exacerbate debt sustainability issues in developing countries, bodes badly for the future of climate finance. Even though the role of the funds that are linked to the UNFCCC was also enhanced, they will continue to play a marginal role in the overall climate finance landscape, despite being more responsive to the needs and priorities of developing countries, particularly those most vulnerable.

The private sector is increasingly being called upon to fund climate action. However, there are also concerns about profit-driven motives overshadowing the needs of vulnerable communities. How do you see the role of private investment in climate finance, and what safeguards are needed to ensure it serves the public good rather than corporate interests?

I think there is not one answer to the question of the role of private finance in the context of climate action. There may be sectors and outcomes that can be well served by private investments but there will always be many, particularly in adaptation and loss and damage that will not. The blanket push to rely on private sector investments for climate action is in no way motivated by what is best for climate action, or more responsive to the needs of vulnerable peoples and countries. This push is just the result of the interest of developed countries to reduce their own responsibilities, while finding opportunities for their own private sector to profit from the climate crisis and from developing countries’ needs. This is not new, and we have seen this in development finance as well. What is particularly egregious about this situation is that this position is a clear rejection of an agreement reached by the global community, in the Convention and the Paris Agreement, that developed countries have responsibilities towards the Global South, because of their unfair appropriation of the carbon budget for their own development.

There are attempts at establishing safeguards to ensure private finance contributes to climate action, while minimising potential negative impacts, for example under the concept of sustainable finance. However, I believe that at some point we will need to recognise that under current structures, the profit motive will always be in contradiction to the public good. As long as the private sector is allowed to privatise the benefits of climate action, while socialising its cost, as they have been allowed to do in all other areas, there is no amount of safeguards that will prevent the most vulnerable from having their rights disregarded and violated.

In light of COP29’s outcomes, what concrete steps should be taken to ensure that the voices and priorities of marginalized communities in the Global South are truly integrated into climate finance decision-making processes? How can we ensure that finance mechanisms are transparent and accountable to those most affected by climate change?

Well, we can start by looking at the COP 29 process, where at some point, climate finance negotiators representing Least Developed Countries (LDCs) and Small Island Developing States (SIDS) walked out of the room because their voices were not being heard. If the highest decision making body in terms of climate action ignores the voices of those most vulnerable, and leads to outcomes that are decided in backrooms by a few rich countries and emerging economies, there is little hope that anything coming out of this process will ever truly reflect marginalised communities in the Global South.

At an operational level, the channelling of most climate finance through undemocratic mechanisms with opaque decision-making processes, like bilateral cooperation and MDBs, leaves little hope that things can be improved. This is why requests for more finance to flow through more democratic and transparent institutions under the UNFCCC, as well as directly to the national and local levels, are so important. Calls to reform the governance of institutions like the MDBs are also key. The Global South and its allies will need to continue pushing for this in the coming years, against the strong resistance of Global North countries.

In your publication on the NCQG, you highlight the need for increasing adaptation finance for vulnerable regions. How do you propose ensuring that adaptation finance reaches the communities most at risk, rather than being diverted to projects that do not address local needs?

It is a matter of governance. My previous answers have given a sense of the need for finance to flow via more democratic institutions, where the Global South is better represented in decision-making bodies, and where finance flows more directly to the communities themselves. There is a real need to stop depending on intermediaries, particularly those based in the Global North, that not only keep to themselves large parts of the money that is supposed to reach vulnerable countries and communities, but also make decisions on funding without fully taking into account the needs and priorities of communities most at risk. Only then can we truly address local needs. There are many institutions, particularly those under the UNFCCC, like the Adaptation Fund and, to a lesser extent the Green Climate Fund (GCF) that have pioneered and tested such approaches. We need to learn from these experiences and move them from small pilots to the mainstream, if we really mean to address the needs of the most vulnerable.

Given your analysis of the NCQG framework, do you believe current international financing mechanisms, such as the Green Climate Fund or the Fund for Responding to Loss and Damage (FRLD, are sufficient to meet the scale of adaptation needs, especially for the most vulnerable countries in the Global South?

The finance flowing through these mechanisms has represented a small percentage of total climate finance flows. Under the new NCQG decision, this will improve slightly, but not reach anywhere near the levels of finance channelled through other bilateral and multilateral mechanisms. Therefore, the current and expected size of these funds are largely insufficient to meet the scale of adaptation needs. Then again, so is the new goal itself, which is only a small fraction of the total needs. In this context, the adaptation finance gap will only increase in the coming years, with little hope for vulnerable countries to rely on international support, therefore putting the largest burden on them to finance their own adaptation and to pay for the increasing losses and damages they will face.

In your view, how can the principle of climate justice be more effectively incorporated into climate finance, especially when large-scale investments often prioritize maintaining economic growth over social equity or environmental sustainability?

Climate justice needs to start with the recognition that the Global North has obligations to support the Global South to implement climate action. The goal agreed at COP 29, however, is a clear sign that the countries of the Global North are rejecting and backtracking on these obligations. Their focus on private finance as a means to access developing countries’ markets does away with any hope that the principle of climate justice is driving climate action. With that in mind, it will be hard to push for climate justice to be part of climate finance delivery, especially if this delivery is expected to rely on private investments, as well as on mechanisms whose governance is largely in the hands of the Global North, like the MDBs.

For climate finance to integrate the principle of climate justice, it will need to, at the very least, rely much more on public finance that is non-debt inducing, is closer to the scale of the needs, responds to vulnerable countries and communities’ priorities, and not to the priorities of the contributor countries, and is delivered through democratic institutions, with Global South representation and decision making power. All of the things that the Global South pushed for at this COP 29, and that were repeatedly rejected by developed countries.

Many countries in the Global South face the dual burden of adaptation needs and historical debt from colonialism and past emissions. How can international climate finance policies address this “climate debt”, and do you think current frameworks are adequate in addressing the historical responsibilities of developed nations?

Current frameworks are not adequate. They frame climate finance as a business opportunity for developed countries’ private sector, with the rest amounting to charity that needs to be accepted under whatever conditions the Global North wants to attach to it. As in the case of colonialism, the Global North refuses to even acknowledge, let alone compensate the Global South for the damage it has caused to the climate and the people of the Global South. It is impossible to design policies that address this “climate debt” if the debt itself is not even recognised by those that owe it, and largely hold the power to design international climate policies. The Global South and its allies will need to keep pushing for this recognition, against all odds, and for global governance to reflect this idea and translate it into policies and practices that address this climate debt.