The 2024 COPs and Climate Funding Solutions

 

Entrepreneur | Investments | Green Finance | Sports & Media

October 20, 2024

Monday brings the official start of CBD COP16 in Cali, Colombia, focused on Biodiversity and Nature Finance. And three weeks later will be the highly anticipated COP29 in Baku, Azerbaijan, commencing just 6 days after the US Presidential Election on November 5th.

Both conferences provide a historical opportunity to improve momentum on climate action, and to garner much greater financial commitments.

Certainly, the effectiveness of the COPs (Conferences of the Parties) in bringing nations together for discussion and information exchange is not in doubt. Nor is the ability of COPs to create sufficient impetus to get deals done around climate commitments. The levels of organisation and commitments are to be applauded.

But is the current path of the COPs sufficient to achieve true success in mitigating climate change?

We are in a decisive decade – the UN Decade on Ecosystem Restoration (2021-2030). What is really needed is an acknowledgment that time is not on our side. Greater urgency and greater ambition are needed now. And new funding mechanisms will likely be required to pay the bill.

 

Climate and Nature Finance

In 2009, developed countries collectively agreed that by 2020, they would mobilize $100 billion p.a. to support developing countries’ climate action. This goal was met for the first time in 2022 — two years late but better than never. When countries signed up to the 2015 Paris Agreement, a “new collective quantified goal on climate finance” (NCQG) would replace the existing $100 billion p.a. goal.

This NCQG is to be adopted next month at COP29, making it a potential landmark COP.

For many, progress over the years has often been frustratingly slow. The ability for major countries to delay and block has been seen many times. There is often a sense of disconnect between the perceived urgency of the situation, and the often fractious and legalistic nature of COP progressions.

Oversimplifying all of the good work that goes into the COPs, they are in essence forums for negotiating climate financing, and all the conditions that go with such. Financial and emissions commitments – and in what ways they are delivered.

The COPs are focal points for focusing on future money flows. Larger and larger numbers have been floated at successive COPs – reflecting the reality of financing the climate action and new infrastructure required.

This year the new NCQG goal will be much more ambitious, in recognition of what is truly required – of the order of $1 trillion p.a. This is the right scale of funding to achieve much greater results. But is it realistic given past COP negotiations?

Increased financial support and technology transfer are necessary for developing countries – across nature restoration, energy, transport, agriculture and other sectors. Much greater financial support ambition is needed – to enable them to reflect the same ambition in the next round of Nationally Determined Contributions (NDCs), due in 2025.

 

 

“Never have I seen such a disconnect between what the science requires and what the climate negotiations are delivering in terms of meaningful action. Most of the world’s biggest emitting countries are missing in action and resisting calls to raise their ambition.”

Alden Meyer, Union of Concerned Scientists

 

Taking Stock

The reality of the situation, after some 28 COPs and 15 CBD COPs, is that we are well behind the curve. The historical problem is funding. The future problem is also funding.

 

• Emissions are still rising. Despite numerous accords and commitments, and continued expansion of renewables and electric vehicles, global GHG emissions are still rising, and total energy demand is accelerating.
• Global population continues to rise. Annual global population growth is c. 83 million, or 1.1% p.a.
• We are already in a climate emergency – The effects of climate change are becoming increasingly evident to all, and serious. Planetary boundaries and tipping points are crossed and within reach, respectively.

 

Revisiting the chart “Anthropogenic Causal Reactions” (see also The Environmental Imperative), population and population growth, alongside our global consumption and production patterns, are the proximate causes of the global emissions, waste and pollution crises.

Almost all modern development, industrial and agricultural progression has involved “negative externalities” and environmentally-destructive practices (GHG emissions, deforestation, waste, pollution, natural resources depletion, harmful emissions and chemicals etc). All of which leads to environmental impacts, disruptions to the major biogeochemical cycles and the so-called polycrisis.

 

“We cannot wait for speeches, when the sea is rising around us all the time”

Simon Kofe, Tuvalu Foreign Minister

 

“The lengthy discussions at COPs with its stalling, delaying tactics and procrastination, that have hampered implementation and delivery is simply cruel and unjust. We cannot afford to spend more time skirting around the real issues, and we must break out of the open ended process-focused discussions we are trapped in….. In the face of impending catastrophe, whose warning signs are already unbearably disastrous, weak action is unwise. No action is dangerous.”

William Ruto, President of Kenya

 

The Way Forward

In order to create the right conditions for greater and more effective global action, several points spring to mind:

 

1. Acknowledgment that the Climate Emergency is not in the future, it is already here. And there are some extremely scary scenarios as we cross numerous “planetary boundaries” and “tipping points”.
2. Global short-term actions from all parties, as all parties are affected.
3. Near-unified agreement and action from all nations. A means to achieve effective global agreement and concerted action between as many of the COP Parties as possible.
4. In particular, developed nations and all oil-producing nations have to collectively and individually acknowledge the “resources balance sheet” – of which they form a large part and owe their prosperity to – has a colossal carbon debt on it.
5. And similarly the “nature balance sheet” – to which we all owe our continued existence – has an equally large carbon hole in it, that must be closed as soon as possible.
6. A greater appreciation of what we are failing to address. The underlying science and its longer term implications are not well understood. The reality of the science is that we are already in a “hothouse” scenario – this is due to the global warming response that is still in the pipeline. “Equilibrium climate” scenarios are much hotter but are much further into the future. We can mitigate much of that future heat if we take key planet-wide remedial actions now, to reduce the present GHG and Energy Imbalances.

 

“The world still needs a giant leap on climate ambition.”

UN Secretary-General António Guterres, COP27

 

“Accelerating the green energy transition requires significant investment in robust and efficient grid systems… To achieve this, we must address challenges such as access to finance and high capital costs, particularly in emerging markets that are home to over half the world’s population. Policies that harmonize Right of Way and environmental clearances will also play a crucial role.”

Sagar Adani, Adani Green Energy

 

 

Other Funding Mechanisms

Alongside the latest round of national financial commitments, other mechanisms can be made to operate alongside.

 

• Greater commitments from multinationals – to support developing countries’ grid infrastructure and renewable energy acceleration, investing in their own supply chains.
• Greater commitments from cities and states – the Net Zero stocktake 2024 currently shows that Net zero targets now exist for 75% of countries; 58% of publicly listed (Forbes Global 2000) companies; 26% of states and regions; and 23% of cities.
• More national legal and regulatory instruments – While the number of countries setting net zero targets has levelled off, the proportion formalised into law or official policy now covers 73% of global emissions.
• The Sustainable investment funds universe – Currently with $3.5 trillion in assets (June 2024) or 7% of global assets under management, these funds must show greater investment ambition – investing in nature, the energy transition and other climate-related investment themes.
• The UAE Consensus / COP28 goals of triple renewable power capacity (11.2 TW) and double energy efficiency (4% energy intensity improvement) by 2030. This implies a tripling of annual investment in renewable capacity, from $ 570 billion in 2023 to $ 1.5 trillion p.a. between 2024 and 2030
• Redirection of existing subsidies – Countries are collectively spending $1.25+ trillion on subsidies for agriculture, fishing, fossil fuel development, industries that are known to cause environmental harm. The redirection of a significant portion of these funds to more sustainable uses is paramount.

 

Mutualisation of Climate Funding

Carbon Liability Funds could be established to take on greater funding requirements over time. These could be funded through a far-reaching combination approach, demonstrating seriousness and how this affects everyone.

There is greater sustainability in such funding, as a centralised Environmental Funds sector will be created, with the benefit of ongoing funding that is automatic, rather than piecemeal and hard-fought. For developing countries it provides greater certainty of funding and action, without them being forever in debt to the funders. A win win situation.

New Funding sources:

 

• a small mandatory tax on all financial transactions, or a large subset of them
• a mandatory tax on global assets under management (0.25% on c.$200 trillion AUM would generate $0.5 trillion p.a., for example)
• mandatory taxes on products and services, in order to finance circularity and low carbon transitions
• explicit national environmental taxes, along the lines of CESS in India (4% tax on income to fund education)
• other similar taxes which in effect mutualise the contributions required in individual markets and industries.
• in order to achieve long-term buy-in from Oil-producing nations in particular, another major source of funding could come from Carbon Liability Funds that are funded by a per barrel tax, along the lines of Oil Spill Loss Funds.

In the US for example, to ensure rapid effective response to oil spills, a per barrel excise tax of 9c is charged, in order to fund the OSLTF (Oil Spill Liability Trust Fund).  A second major source of funding has been transfers from other existing pollution funds. Similarly, the International Oil Pollution Compensation Funds (IOPC Funds) are financed by contributions paid by entities that receive certain types of oil by sea transport. Contributions are based on the amount of oil received in the relevant calendar year.

 

“How do companies make $200 billion dollars in profits in the last three months and not expect to contribute at least 10 cents in every dollar of profit to a loss and damage fund. This is what our people expect.”

Mia Mottley, Prime Minister of Barbados

 

Conclusion – A New Funds Architecture

To be in time for successful action, funding will need a much greater momentum. We must all acknowledge the existential risks involved and be open to the many ways to raise the funding required.

In terms of the engagement required, this is like a war. But a different kind of long-term climate war – one where we cannot always see the enemy forces, only the mounting environmental damages or losses. And these losses are going to be increasingly heavy. The only “enemy forces” we can identify are the fossil fuel interests and the oil-producing nations. And those nations who have already created their history of emissions. And the laws of physics, of course.

As we all know, “turkeys don’t vote for Christmas”, so the collective whole is going to have to get all of these “giga-ton turkeys” to commit to Carbon Liability Funds, Environmental Protection Funds, and other Funds for the Future Generations. Failing this we will increasingly be looking at a hothouse Earth, with state interventions taking place in any case.

Funding for these new initiatives will be through direct contributions but also through new “market-based mechanisms” of the type described above. These huge existing assets are held mainly by the developed world – who are best positioned to implement the new taxes and whose assets and economies will also suffer greatly if they do not. So it is entirely logical to tax them in order to provide financing for tomorrow’s mitigation and solutions.

 

Recent posts:

The 2024 COPs and Climate Finance Solutions 20.10.2024

Global Climate Financing – The 2024 COPs provide a historical opportunity to garner much greater financial commitments for climate action. The way forward is to create a centralised Common Wealth or Environmental Funds sector – with ongoing funding that is automatic, rather than piecemeal and hard-fought.

Restoring Nature’s Green and Blue Lungs 13.10.2024

A Global Call for Ecosystem Restoration – There has never been a more urgent need to restore ecosystems – both terrestrial and marine – than now. In this decisive decade, the challenge is to scale up the quantity and quality of projects, and redirect greater finance to nature, for as much impact as possible.

Beyond Normal – The Mechanisms behind our Extreme Weather 3.10.2024

The sheer number and severity of recent extreme weather events is a sign of things to come.  With COP29 just a month away, what are the world’s leaders going to do about it?

COP29 and New Climate Finance Initiatives 2.10.2024

With just 6 weeks to go, the world’s nations are set to decide on a new climate-finance goal, to go beyond the $100 billion per year target set at COP15 in 2009.

Earth’s Energy Imbalance and Global Warming Solutions 25.09.2024

Alongside the massive expansion (and funding) of land restoration and regenerative agriculture schemes and the reduction of CO2, are other solutions on the horizon?

Restoring Natural Capital, Diversity and Resilience 21.09.2024

Despite a slew of international accords over the past three decades, along with 28 COPs, the rate of decline continues. Focus has diverted away from direct physical solutions, towards technological and market solutions supporting short-term decarbonisation. Yet we have the solutions and available funding.

The Environmental Imperative 15.9.2024

The tipping risk elements of the Earth system, their nature and interdependence, and how to mitigate these risks going forwards

 

 

Appendix – A Brief History of the COPs

 

The United Nations Climate Change Conferences are held annually as formal meetings of the UNFCCC parties – to assess progress in dealing with climate change and to establish legally binding obligations for developed countries to reduce their GHG emissions.

Since 2005 the COPs have also admitted parties to the convention that are not parties to the Kyoto protocol, as observers. From 2011 to 2015 the meetings were used to negotiate the Paris Agreement as part of the “Durban Platform for Enhanced Action”. This created a general path towards climate action. Any final text of a COP must be agreed by consensus.

Since COP22 (Marrakech) a much larger contingent of NGOs and fossil fuel interests have attended, further altering the original nature of the meetings.

 

Brief Summary of the COPs and Progress by year

 

COP1 COP2 COP3 COP4 COP5 COP6 COP6-2 COP7 COP8 COP9 COP10 COP11

 

COP12 COP13 COP14 COP15 COP16 COP17 COP18 COP19 COP20 COP21 COP22 COP23

 

COP24 SB50 COP25 COP26 COP27 COP28 COP29 COP30 COP31

 

The CBD COPs

Since 2016, these have also been referred to as the UN Biodiversity Conferences.

Year Name Alternate name Location Link to Summary of Actions

1994 COP 1 CBD COP1 Nassau, Bahamas CBD COP1

1995 COP 2 CBD COP2 Jakarta, Indonesia CBD COP2

1996 COP 3 CBD COP3 Buenos Aires, Argentina CBD COP3

1998 COP 4 CBD COP4 Bratislava, Slovakia CBD COP4

1999/2000 EXCOP 1 Cartagena and Montreal CBD EXCOP1

2000 COP 5 CBD COP5 Nairobi, Kenya CBD COP5

2002 COP 6 CBD COP6 The Hague, Netherlands CBD COP6

2004 COP 7 CBD COP7 Kuala Lumpur, Malaysia CBD COP7

2006 COP 8 CBD COP8 Curitiba, Brazil CBD COP8

2008 COP 9 CBD COP9 Bonn, Germany CBD COP9

2010 COP 10 CBD COP10 Nagoya, Japan CBD COP10

2012 COP 11 CBD COP11 Hyderabad, India CBD COP11

2014 COP 12 CBD COP12 Pyeongchang, Korea CBD COP12

2016 COP 13 CBD COP13 Cancun, Mexico CBD COP13

2018 COP 14 CBD COP14 Sharm El-Sheikh, Egypt CBD COP14

2020 CBD EXCOP 2 Online CBD EXCOP2

2021 COP 15 PART 1 Kunming, China CBD COP15 PART1

2022 COP 15 PART 2 Montreal, Canada CBD COP15 PART2

2023 COP 15 RESUMED PART2 Nairobi, Kenya CBD COP15 RESUMED PART2

2024 COP 16 CBD COP16 Cali, Colombia CBD COP16