World agrees to climate deal on financial aid for developing countries after summit nearly implodes

At the COP29 climate conference, world nations agreed on a new climate deal, with wealthy countries pledging to provide $300 billion (about AUD 461 billion) annually to poorer nations by 2035 to help them cope with the escalating impacts of the catastrophic climate crisis. However, many developing countries have criticized this figure as woefully inadequate.

The agreement in Baku, Azerbaijan, was reached after more than two weeks of intense divisions and difficult negotiations, which were at times marred by boycotts, political squabbles, and open celebrations of fossil fuels. Negotiations were at risk of collapse, with some groups representing the interests of vulnerable small island nations and least developed countries walking out on Saturday. Ultimately, nearly 200 nations finally agreed on the deal at 2:40 am on Sunday (8:30 am AEDT), more than 30 hours past the deadline.

Mukhtar Babayev, the COP29 president and a veteran of Azerbaijan's state oil company, said: "People doubted that Azerbaijan could deliver, they doubted that everyone could agree. They were wrong on both counts." The $300 billion will be used to help vulnerable, impoverished nations cope with increasingly severe extreme weather and to transition their economies to clean energy.

Simon Stiell, head of the UN Framework Convention on Climate Change, stated: "It’s been a difficult journey, but we have an agreement." He also noted, "This new finance goal is an insurance policy for humanity against worsening climate impacts that are hitting every country." However, the amount pledged is far below the $1.3 trillion (AUD 2 trillion) that economists say is needed to help developing countries, which have played the least role in the crisis, cope with it. Many developing countries have expressed strong dissatisfaction with this.

Indian delegate Chandni Raina delivered a scathing speech immediately after the deal was reached, slamming the $300 billion as a “pittance” and calling the agreement “nothing more than a visual illusion” that failed to “address the monumental challenges we face collectively.” Tina Stege, climate envoy for the Marshall Islands, echoed similar criticisms, arguing that the negotiations showcased "political opportunism at its worst" and noting that fossil fuel interests were "hellbent on blocking progress and undermining our efforts to build multilateral ambition."

The focus of COP29 was on finance, a critical climate issue but also one of the most politically fraught. Wealthy nations, primarily responsible for historical climate change, agreed in 2009 to provide $100 billion annually to developing countries by 2020. This pledge was already considered woefully inadequate and was not met until 2022, two years past the deadline. The task for the Baku meeting was to come up with a new figure.

The new agreement reached on Saturday calls for wealthy nations, including the US and European countries, to provide $300 billion annually by 2035, with the funds coming from public and private financing. While the agreement also references a broader goal of scaling up to $1.3 trillion, developing countries wanted wealthy nations to commit to a larger share of that and for the funds to be primarily in the form of grants, rather than loans, due to fears of being pushed further into debt. The Group of 77 developing nations had called for $500 billion in funding, but wealthy nations argued that a higher figure was not realistic given current economic conditions.

Avinash Persaud, Special Advisor on Climate Change at the Inter-American Development Bank, said: "We’ve reached the boundary of what is politically achievable today from developed countries and what developing countries are able to make do with." There have also been pushes for wealthier emerging economies like China and Saudi Arabia to contribute to climate finance programs, but the deal only "encourages" developing countries to make voluntary contributions, without placing any obligations on them.

Li Shuo, director of the China Climate Hub at the Asia Society Policy Institute, called the deal a "flawed compromise" that reflected the "more difficult geopolitical environment the world is in." The summit concluded at the end of what will "almost certainly" be the hottest year on record, a year that saw the world battered by deadly extreme weather, including successive hurricanes, catastrophic floods, devastating typhoons, and severe droughts in southern Africa. The urgency of tackling climate change has never been clearer, but this climate conference was always destined to be tricky.

The meeting took place in the oil-rich nation of Azerbaijan and was rife with fossil fuel interests. According to an analysis by a coalition of groups called Kick Big Polluters Out, over 1700 fossil fuel lobbyists or industry figures registered to attend the talks, outnumbering almost every national delegation. The electoral shadow of Donald Trump in the US also loomed over the proceedings. Trump, who has called the climate crisis a hoax, has promised to "drill, baby, drill" and has vowed to withdraw the US from the landmark Paris Climate Agreement, raising fears about the future of multilateral climate action.

Saudi Arabia, the world’s largest oil exporter, which has been a consistent opponent of ambitious action at past climate summits, appeared emboldened in Baku, openly and explicitly rejecting any mention of oil, coal, and gas in the agreement. “It’s another murky, oil-stained climate conference,” said Friederike Otto, a climate scientist at Imperial College London. “Public interest in this climate conference is low and cynicism seems to be at an all-time high,” she added.

Many climate groups have strongly criticized the summit and its outcome. "These have been the worst climate negotiations in years, due to the bad faith of developed countries," said Tasneem Essop, executive director of Climate Action Network. "This was supposed to be the finance COP, but the global north showed up with a plan to betray the global south." Harjeet Singh of the Fossil Fuel Treaty Initiative said the outcome "offers false hope to those already bearing the brunt of climate disasters." He added, "We must keep fighting for a massive increase in finance and to hold developed countries accountable."