“Azerbaijan Launches Climate Finance Action Fund to Support Developing Countries at UN Climate Talks”
Azerbaijan, the host of this year’s UN climate talks, has made a significant decision to shelve a planned levy on fossil fuel production and instead launch a fund to invest in climate action in developing countries. This move comes after facing resistance from some oil- and gas-producing Gulf countries regarding the planned levy announced in May.
The newly established fund, named the “Climate Finance Action Fund” (CFAF), will receive annual contributions from fossil fuel-producing countries and companies. The initial fundraising goal is set at $1 billion, with members committing to annual contributions as fixed sums or based on production volume. The fund, based in the capital city of Baku, will focus on climate projects in developing countries, aligning with the next generation of national climate plans aimed at limiting global warming to 1.5 degrees Celsius and addressing the consequences of climate change-fueled disasters.
Financial support for middle-income and poor countries to combat climate change will be a key focus at the UN climate conference in Baku, where discussions will revolve around the New Collective Quantified Goal (NCQG) that developed nations must mobilize annually starting in 2025 to support climate action in developing countries. However, reaching a consensus may prove challenging, given the slow progress made on the issue at the mid-year UN Climate talks in Bonn, Germany.
The COP29 presidency has outlined that 50% of the fund’s capital will be allocated to climate projects in developing countries, emphasizing clean energy, energy efficiency, climate resilience, and new technologies. The remaining half will assist members in meeting their Nationally Determined Contributions (NDCs) to keep the 1.5-degree-Celsius target achievable. Additionally, a Rapid Response Funding Facility will be established to provide immediate, grant-based disaster response support to vulnerable communities.
Harjeet Singh, Global Engagement Director for the Fossil Fuel Non-Proliferation Treaty Initiative, expressed concerns about the fund’s design, stating that it may inadvertently support the ongoing extraction of gas, oil, and coal. He emphasized the need for accountability in holding the fossil fuel industry responsible for its role in the climate crisis.
The push for climate finance goals has been ongoing since the 2009 UN climate conference in Copenhagen, where rich nations pledged to provide $100 billion annually from 2020 to assist developing countries in mitigating and adapting to climate change. Delays in meeting this goal have strained relations between developed and developing nations, with discrepancies in reported climate finance figures adding to the complexity of the issue.
As the world gears up for the upcoming UN climate conference in Baku, the focus remains on bridging the gap between financial commitments and climate action, with developing nations advocating for increased support from developed countries to address the challenges posed by climate change.