Mariana Paoli, from Brazil, is the Global Advocacy Lead at Christian Aid and Iskander Erzini Vernoit, from Morocco, is the Executive Director at the IMAL Initiative for Climate and Development.
Government negotiators in Bonn will discuss in the coming two weeks how to put into practice an idea that emerged from the corridors of the COP29 climate talks: “the Baku to Belém Roadmap to $1.3 Trillion”.
This exercise, that aims to propose approaches for scaling climate finance flows for developing countries to over a trillion dollars per year by 2035, is due to be presented at COP30 in Brazil this November. The origins of its mandate offer insights into its perils – as well as its promise.
Brazil seeks early deals on two stalled issues at Bonn climate talks
Initially, negotiators from the G77+China countries united behind Africa’s call for $1.3 trillion as the replacement for the $100-billion goal for annual mobilisation of climate finance by developed countries for developing nations, set 15 years ago. Faithful to this, some G77 countries originally called for a roadmap to indicate actions that developed countries might take to raise public finance resources for this provision and mobilisation for the Global South.
There were, however, those in the Global North who pushed for a broader, less well-defined $1.3 trillion target that would include other sources and types of finance. These forces ultimately won the day, resulting in a final decision on $1.3 trillion that calls for “all finance” from “all … sources”, establishing a “roadmap” process toward this.
Exceedingly disappointing for the Global South, this new formulation obfuscates the responsibility of wealthy historical emitters to pay their fair share of public finance to tackle a proble they have caused and risks shifting the burden to developing countries.
Loss and damage threat
In this context, the Roadmap to 1.3T has the potential to be a milestone in the global governance of climate finance. Yet it faces risks and opportunities, being essentially at the discretion of Azerbaijan and Brazil as the COP29 and COP 30 presidencies.
There is a very real risk that the Roadmap will fall short of sending a strong signal of what level of ambition is required, in terms of public finance from contributor countries. If that happens, the Roadmap could entrench injustice, increase debt burdens, and delay urgent action on climate change.
In terms of injustice, poorer countries, while largely not responsible for climate change, could face loss and damage of $450 billion-$900 billion per year before 2030, not including the costs of reducing emissions and adapting to global warming.
Loss and damage fund to hand out $250 million in initial phase
Within this, Africa’s nomadic pastoral communities are one real-life example of those whose livelihoods and way of life are being destroyed by the choices of others. The COP29 decision on the new climate finance goal disregarded their needs by not including a target for loss and damage funding, but the Roadmap need not.
Heavy debt burden
The Roadmap must not ignore that external debts are at record highs, with repayment costs now higher than capacities for repayment in two-thirds of developing countries, according to UNCTAD.
In 2023, African governments paid around 17% of their revenues on servicing debts, the highest levels in decades, equalling 15% of African export earnings. By comparison, after the Second World War, inspired by the work of Keynes and others, it was decided to cap Germany’s debt repayments at 3% of its exports earnings, to allow recovery.
In this context, Global South countries may lack the fiscal space to invest in essential climate action – or may prioritise other areas, such as healthcare or education.
COP30 President-designate Andrea Corrêa do Lago is correct in his assertion that there is too often a denial of the economic benefits of climate action – yet Global South countries are not always able to pursue economically beneficial investments. Markets are not always efficient, economic benefits do not always equal revenues for investors , and the cost of capital is higher in Global South countries, heightening the need for support, especially with upfront costs.
Framework to scale up finance
Of course, in addition to underscoring the necessity of rich countries increasing their provision of grant-equivalent public funds for poorer countries, for the reasons cited above, the Roadmap can point to opportunities to build the architecture for scaling finance.
Reforming the international financial architecture is important, but, to achieve this, wealthy countries must relinquish their current hegemony and drop their resistance to reform in the negotiations for a UN tax convention and in those around the potential UN sovereign debt workout mechanism that could be agreed at the upcoming Financing for Development (FFD) Conference in Seville.
Climate shocks and volatile currencies hike debt burden for poor countries
Further additions to the financial architecture could include country platforms, aimed at unlocking finance, particularly private investment – but these require resourcing to administer and will only reaffirm the need for catalytic public resources, whether for technical assistance, project preparation, or making finance more affordable.
Of course, current politics are not conducive to increasing international provision of grant-equivalent finance, with recent short-sighted decisions taking overseas aid even further away from the global target for countries to provide assistance equal to 0.7% of their gross national income, established over fifty years ago, despite public support.
Naturally, Global South countries should not hold their breath waiting for others to come to their senses, but should do what they can, including South-South cooperation.
Bold signal needed
And yet, if global temperature goals are not to slip out of reach, if climate action is to be enhanced and injustice and indebtedness curtailed, richer countries must step up on finance. Will the Roadmap affirm this? The COP presidencies have yet to give a firm indication, though have called for inputs from finance ministers and other key groupings through ongoing consultations.
To be successful, there must be a willingness to depart from the status quo — just as was demonstrated with the Paris Agreement and the UAE Consensus, which set ambitious goals to limit global temperature rise and accelerate energy transition, respectively. Even amid uncertainty, these agreements raised the standard for ambition instead of passively allowing low expectations to go unchallenged.
A comparable approach is now needed for international public finance – the Baku-to-Belem Roadmap must send a bold signal of what is required, lest a key opportunity be lost.
