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No big launch for presidency’s fossil-fuelled climate fund
On COP29’s ‘finance day’, the Azerbaijan presidency was expected to unveil one of its flagship – and most controversial – initiatives: a climate fund designed “primarily” for developing countries with money voluntarily put in by fossil fuel-producing countries and companies.
“We’ve heard that communities want action not words,” said COP president Mukhtar Babayev back in July when the idea was first floated, calling the fund “a significant step”.
But, when the big day came, the Climate Finance Action Fund (CFAF) all but disappeared from the agenda. A “high level event” to launch the financial mechanism was scrapped, while the presidency put the idea on the backburner.
When Climate Home asked Azerbaijan’s lead negotiator Yalchin Rafiyev about it, he said that the COP hosts have established a working group to “work out a concept that would be workable and acceptable” for donor countries interested in joining the initiative.
He added that it is “a very complex process to establish a new fund” but that they have seen “a great interest” by the potential contributors from developing and developed countries.
A COP29 source who did not want to be named went further, telling Climate Home that the presidency decided to deprioritise the initiative temporarily as it was getting tangled up with the negotiations over the post-2025 finance goal (NCQG), the main outcome expected from this year’s summit.
The source said that potential donors from developing countries were particularly worried that pitching money into Azerbaijan’s fund now would be seen as a precedent that could be used to push them to contribute to the NCQG as well. On top of this, developed countries might have counted any contributions into the CFAF towards their climate finance share, the COP29 source added.
Azerbaijan COP29 presidency’s lead negotiator Yalchin Rafiyev. Photo: UNFCCC
The CFAF seeks to raise at least $1 billion and should become operational when at least 10 countries commit money to the vehicle, according to the COP29 presidency. It is meant to channel funding “primarily” towards developing countries to help them shift to clean energy, improve energy efficiency and boost climate resilience.
The fund would mainly give out money at commercial lending rates with only a fifth of its revenues being reinvested into a facility providing “highly concessional and grant-based support” to vulnerable countries.
Climate campaigners have reacted positively to the postponement of the fund. They have previously criticised it as a distraction from efforts to make fossil fuel producers pay adequate reparations for the climate crisis they are primarily responsible for.
While the COP29 presidency insists that the fund will go ahead soon, Andreas Sieber, associate director of policy and campaigns at 350.org, said it would be no loss for the planet if it ended up being scrapped entirely.
“The presidency’s fossil fuel fund was a distraction and a greenwashing fund,” he told Climate Home. “Putting money into a fund while expanding fossil fuels essentially means pretending to put out a fire while feeding it more fuel”.
At COP29, Azerbaijan had also been expected to announce a new national climate plan – known as a nationally determined contribution (NDC) – but it has yet to do so.
Europe hits back at Aliyev criticism
After Azerbaijan’s President Ilham Aliyev opened COP29 by criticising the European Union, particularly France and the Netherlands, European diplomats have fired back today, with France’s environment minister cancelling her trip to Baku.
On Tuesday, Aliyev accused “some politicians, state-controlled NGOs and fake news media in some Western countries” of “double standards, a habit to lecture other countries and political hypocrisy”.
Just before that comment, he spoke of the EU’s 2022 energy partnership with Azerbaijan, as evidence of hypocrisy. This aimed to diversify the EU’s gas supplies in the wake of Russia’s invasion of Ukraine. “It was not our idea,” he said, “they asked us to help”.
The next day, Aliyev used a summit of small island developing states (SIDS) to rail against France and the Netherlands’ relationship with their “so-called overseas territories”, as COP29 president Mukhtar Babayev applauded enthusiastically in the front row.
Aliyev listed over a dozen islands – mainly in the Caribbean and Pacific like Aruba and New Caledonia, but also Corsica in the Mediterranean – which are “still suffering today in the 21st century from colonial rule” and “are often brutally suppressed by the regimes in their metropolises”.
Politicians from France, which has a large Armenian population, have been critical of Azerbaijan’s war with Armenia. French politicians have also accused Azerbaijan of promoting pro-independence protests in the Pacific island of New Caledonia. Azerbaijan invited separatists from four French territories to Baku in July 2023.
French, Dutch and European politicians reacted angrily to Aliyev’s words. France’s environment minister Agnes Pannier-Runacher told parliament on Wednesday the remarks were “unacceptable” and that “Azerbaijan is instrumentalising the fight against climate change for its own unworthy personal agenda”.
Agnes Pannier-Runacher, french minister of ecology, energy, climate and risk prevention, speaks, at the public session of questions to the french government at the bourbon palace, in the hemicycle of the french National Assembly, in Paris, FRANCE. Xose Bouzas / Hans Lucas via Reuters Connect
She said that, having spoken to President Emmanuel Macron, she would no longer be going to COP29 but would support the French and EU negotiating teams remotely “to protect the planet and our populations”.
When asked about France’s reaction on Thursday morning, Azerbaijan’s lead negotiator Yalchin Rafiyev said the host country “has made sure we have an inclusive process” and that “our doors are still open” to everybody.
The EU’s top diplomat Josep Borrell added that “Aliyev’s allegations” were “most regrettable” and “risk to undermine the conference’s vital climate objectives and the credibility of Azerbaijan’s COP29 presidency”.
He said in a post on X that the EU rejects the Azerbaijani authorities’ “attacks against media and NGOs facing the critical situation of human rights in the country”. In May, the authorities detained Azerbaijani economist Farid Mehralizada who criticised the country’s fossil fuel reliance, as his wife explained for Climate Home. He remains in prison.
Still no progress on finance text
Progress on COP29’s headline outcome – the new post-2025 climate finance goal (the NCQG) – continues to be incredibly slow.
After pre-COP talks had whittled down the text, negotiators came to Baku with a nine-page document. On Tuesday, they asked the co-chairs to put all the options back in.
The co-chairs went away and came back on Wednesday morning with a 34-page text. Negotiators then asked them to go the other way and streamline it – but late on Wednesday they received a new version of just one page less.
They plan was to consolidate the draft text some more on Thursday, focusing on more technical issues like transparency and reporting. Iskander Erzini Vernoit, who follows the talks for Moroccan think-tank IMAL, said the text needs to be “shorter” but to include developing countries’ common points.
Government ministers, who are more empowered to make compromises and therefore to delete options, will arrive in Baku on Monday. The text needs to be “workable” by then, said Erzini Vernoit. The COP29 presidency’s lead negotiator Yalchin Rafiyev claimed this morning at a press conference that it is already “workable”.
Aside from shortening the text, negotiators will discuss some substantial issues behind closed doors today – like human rights, how recipients can directly access funds and issues that stop climate finance flowing.
This morning in Baku, top economists released a well-timed new UN-commissioned report on climate finance.
Nicholas Stern, Vera Songwe and Amar Bhattacharya say that finance talks should focus on mobilising $1 trillion a year by 2030 for developing countries other than China and this should rise to $1.3 trillion by 2035.
To demonstrate their commitment to achieving this, the authors write, “advanced economies” need to triple their existing $100 billion climate finance commitment to $300bn. The rest should come primarily from the private sector and multilateral development banks.
Stern, Songwe and Bhattacharya add that cooperation between developing countries “is already making a significant contribution and there is great scope for enhanced support and financing from leading developing countries”.
Developing countries have resisted developed nations’ attempts to widen the contributor base for the NCQG to include new donors like China and the Gulf states.
Campaigners support transition minerals treaty
Campaigners at COP29 have backed Colombia’s recent call for a global treaty on the mining of critical minerals for the energy transition, as Zimbabwe’s president warned against repeating past mistakes.
Mining for minerals needed for the energy transition like lithium, cobalt and nickel has, as a United Nations panel recently acknowledged, sometimes led to human rights abuses, environmental degradation and conflict.
In response, at the recent COP16 biodiversity summit in Cali, Colombia called for a global treaty on the traceability of critical minerals needed for the energy transition. This would stretch from mining the minerals to recycling them.
Workers are seen during a break at Prospect Lithium mine and processing plant in Goromonzi, Zimbabwe July 5, 2023. REUTERS/Philimon Bulawayo
Suneeta Kaimal, CEO of the Natural Resource Governance Institute, told a side-event on the issue today that this agreement is needed because “voluntary standards” have not been enough.
Kuda Manjojo, just transition associate at Power Shift Africa, said “the West needs to realise that they cannot keep the whole pie”, so instead of taking away minerals in trucks, “we need to see more investments coming to Africa and staying in Africa.”
While not addressing the treaty directly, the president of lithium-rich Zimbabwe Emmerson Mnangagwa said on a panel this week that “we all have a duty to avoid the global mistakes of the past – a situation where mineral-rich countries remain in perpetual poverty and mere suppliers of raw materials and the net-importers of the value of expensive technologies and goods.”
As Climate Home reported in January, Mnangagwa is trying to turn Zimbabwe into a battery manufacturing hub to help meet his ambition to turn it into an upper-middle income country by 2030.