Finance text balloons and Brazil presents new NDC

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Negotiators ask for streamlined finance text

Government negotiators have asked the co-chairs of the talks on a new climate finance goal to streamline the text by Thursday morning, removing repetitions and redundancies – but not adding anything new or taking away anything substantial.

These instructions come one day after negotiators asked the co-chairs to make the nine-page text they had prepared before COP29 longer, by adding back in all the options, leading to a 34-page text released at 8.30am this morning.

Alejandra Lopez, head of climate diplomacy at Colombian NGO Transforma, said streamlining the document was a good idea, because the text was now “really long” with “lots of repetitions, lots of duplications”. She said the “options weren’t clear”, and it didn’t offer “a workable text to negotiate”.

Natural Resources Defence Council finance expert Joe Thwaites said this kind of lengthening and chopping is common in the UN climate process, as countries want the comfort of knowing their ideas have been included in the text but then need to start whittling it down so they can move forward..

But, he warned, “it’s Wednesday already – we have three more days until ministers arrive next week”. The  delay on the first day in adopting the agenda for COP29 has put negotiations behind schedule, he said, “so I think that’s why everyone is a bit anxious and stressed”.

The new finance text is likely to have the same options for the structure of the goal as the previous two. The first option is a goal for a certain dollar amount, consisting of finance provided by governments and private finance mobilised by their money. 

The second is a provision and mobilisation goal, plus a wider investment goal that includes private and domestic finance. As this goal is “multi-layered”, it has been compared to an onion – and it’s what developed countries want.

The latest text has several different proposals for the size of the government finance goal: $100bn+, $1tn+, $1.1tn, $1.3tn+ or $2tn. Developed countries want less and developing countries want more, with the G77 and China umbrella group jointly pushing for $1.3tn+. 

On who pays, both texts include the same options – either just developed countries or various criteria to identify a larger set of contributors based on countries’ wealth and emissions. 

Wednesday’s morning text had new specific proposals for minimum amounts that should go to Least Developed Countries (LDCs) and Small Island Developing States (SIDS). The latest text has options for $220bn for LDCs and $39bn for SIDS in grant-equivalent terms each year. 

It also introduces options specifying that countries should stop using climate finance to support fossil fuels or “emissions intensive investments”. That might seem obvious but it’s not, for example, to the Asian Infrastructure Investment Bank – which last year counted its investment in a gas-fired power plant in Bangladesh as climate finance.

Both the pre-COP and the Wednesday morning texts have – outside brackets, suggesting it’s uncontroversial – commitments to phasing out “inefficient fossil fuel subsidies that do not address energy poverty or just transitions”. But the Wednesday morning text adds a target date of 2025 alongside the previous text’s options of 2035 and “as soon as possible”.

MDBs’ big climate-cash goal

Multilateral development banks (MDBs) say they are “walking the talk” on climate finance as pressure piles on them to channel more of their cash into developing countries’ efforts to shift to clean energy and adapt to climate change.

Their overall climate finance provision is estimated to reach $170 billion a year by 2030 – up 30% from a “record high” of $125 billion in 2023, the group of ten MDBs, including the World Bank, said in a joint statement on Tuesday.

Drilling down into the numbers, over 70% of the money ($120 billion) is expected to go to low and middle-income countries, with more than a third of that earmarked for adaptation.

Rob Moore, associate director for public banks and development at think-tank E3G, told journalists on Wednesday that this number is “significant” as it “provides a basis” for the New Collective Quantified Goal (NCQG) to go significantly beyond the existing figure of $100 billion a year.

MDBs have been under the spotlight over the last few years as several country leaders and campaigners have called for wide-ranging reforms that would enable the financial institutions to pour more money into climate action. The World Bank – the largest among them – updated its mission to focus more on climate and made a series of technical tweaks to free up more capital for projects across the world.

Nadia Calviño, president of the European Investment Bank, said in a statement on Tuesday that “the family of multilateral development banks is walking the talk” with its new climate finance commitment. But experts think MDBs could and should go further.

Economists Vera Songwe and Nicholas Stern wrote in an influential report last year that development banks need to triple their lending to $390 billion by 2030 with a substantial chunk of the extra dollars funding climate projects.

In their statement on Tuesday, MDBs warned that their ability to do more largely depends on the commitment of their shareholders from both developed and developing countries. The group of banks urged them to show “greater ambition”, adding that “additional capital” could “unlock more MDB financing”.

Campaigners have also raised concerns over where the MDB’s climate cash actually ends up and on what terms it is provided.

In a report published this week, NGO Recourse said that the lenders’ definition of climate finance is “far from as extensive and stringent as required”, allowing for “troubling and high emitting projects”, like fossil gas, waste-to-energy incineration and airport expansion projects, to count as climate finance. It also highlighted that the majority of funding comes as loans, which contributes to “worsening the debt crisis in many countries”, the NGO said.

The MDBs added on Tuesday that they aimed to mobilise an additional $130 billion a year from the private sector by 2030. The development lenders have repeatedly stressed their role as multipliers of climate finance, using relatively modest amounts of public money to unlock much higher private capital.

But a Climate Home investigation earlier this year found private-sector climate projects enabled with the World Bank’s backing included the renovation of luxury hotels in Senegal, while a vulnerable fishing community next door struggled against rising seas with almost no support.

Meanwhile, some leaders are continuing their search for “innovative” ways to fill up the climate coffers. Barbados’ Prime Minister Mia Mottley used her speech on Tuesday to point out that putting levies on shipping companies, airlines, and bonds and stocks, as well as taxing fossil fuel extraction, could raise hundreds of billions of dollars.

Fourteen countries – including France, Spain, Kenya, Senegal and Colombia – plus the European Commission and the African Union are trying to make those ideas more concrete through a “Coalition for Solidarity Levies”. It announced five new developing-country members in Baku on Tuesday and said it will target carbon-intensive industries.

Brazil’s fossil fuel problem

On Wednesday, upcoming COP30 host Brazil revealed the full details of its new updated climate plan (NDC), which aims to cut emissions between 59% and 67% from 2005 levels by 2035, mostly by relying on its carbon-storing forests. 

After the UAE, Brazil is the second country – and the first G20 member nation – to present a new NDC in this third round since the 2015 Paris Agreement, although the UK also announced a new 2035 emissions-reduction target this week without a full NDC.

Brazil, home to the largest share of the Amazon rainforest, plans to achieve zero deforestation by 2035 through improved land tenure, better monitoring and potentially opening the door to private finance through the sale of carbon credits. 

This makes sense given that emissions from deforestation – largely caused by agriculture, logging and wildfires – are the country’s largest source of planet-heating gases. But experts say the plan ignores one key part of the puzzle: Brazil’s looming fossil fuel expansion.

While planning to slash its emissions by 2035, the South American nation is also planning to increase oil and gas production by 36% by the same year, according to campaign group Oil Change International.

“Brazil cannot claim to be at the ‘forefront of the global energy transition’ unless it puts an immediate end to new fossil fuel projects,” said Shady Khalil, senior policy strategist at Oil Change.

The Brazilian government has insisted that the new climate plan is aligned with the 1.5C warming limit in the Paris Agreement. But some observers say the targets don’t go far enough. The new plan has kept Brazil’s existing target for 2030 and is not nearly as ambitious as a proposal made by NGOs for cutting energy emissions by 80%. 

The energy section of Brazil’s NDC mostly focuses on creating new legal frameworks for emerging technologies such as low-carbon hydrogen, carbon capture and storage, and synthetic fuels.

When asked about fossil fuels, Brazilian VP Geraldo Alckmin did not address the planned expansion but focused mainly on the country’s achievements in producing biofuels and mixing ethanol with gasoline for transport.

Brazil’s plan does call on countries to define a schedule to transition away from fossil fuels, as agreed at last year’s COP28 – with developed countries leading the way.

Brazil’s environment minister Marina Silva, in response to a question on whether she agreed with Azerbaijan’s stance that oil and gas are a “gift from god”, said “God gives us gifts, but he always asks us to be very careful with the gifts he gives us.”

“If we eat too much sugar, surely we’ll become diabetic,” she added.

In brief…

Beating a retreat: Argentinian president and climate change denier Javier Milei ordered the country’s negotiators to pull out of COP29 on Wednesday, Argentinian journalist Tais Gadea Lara reported. While it is unclear why he suddenly withdrew the delegation on the third day of the summit, Milei has form for referring to the climate crisis as “a socialist lie”. The Argentinian contingent registered 21 delegates, mostly from the country’s embassy in Azerbaijan, to take part in the conference, according to a list of participants published by the UNFCCC.

Fossil fuel emissions still rising: Carbon dioxide (CO2) emissions from fossil fuels worldwide are expected to grow 0.8% in 2024, belying predictions of a peak, according to the Global Carbon Project. That’s higher than the average growth rate of 0.6% per year over the past decade and follows a rise of 1.4% in 2023. Global fossil CO2 emissions are now 8% higher than in 2015, when the Paris Agreement was negotiated. Emissions from coal use are set to increase 0.2% in 2024, hitting another record high, due to growth in India and China. 

Youth take on NDCs: Youth-led organisations are calling for a “Universal NDC Youth Clause” to be included in countries’ updated national climate plans, urging governments to involve young people more actively in climate strategies. The proposed clause has three pillars: recognising young people as essential drivers of climate action, collaborating with youth in developing the NDCs, and educating young people on the impacts of climate change. At the launch, the organisations noted that “several governments” are expected to announce commitments to the clause in the coming days. 

Gas fan – Italy’s Prime Minister Giorgia Meloni called in her leader’s speech today for a “balanced energy mix” which includes “all available technologies – not only renewables but also gas, biofuels, hydrogen, CO2 capture and in future nuclear fusion”.

Military risk – Pacific island states say they will try to persuade US President-elect Donald Trump of the need to tackle climate change by framing it as a military risk. Marshall Islands President Hilda Heine told a press conference at  COP29 that she will “communicate” with Trump the “importance to our shared security – as there are bases in the Marshall Islands – of taking the climate crisis seriously”.