COP28, THE FUTURE OF CLIMATE FINANCE ON THE TABLE

• The COP28 negotiations are crucial in the process towards establishing the new post-2025 climate finance target, which will take place next year at COP29.
• As with Global Stocktake, there are several options on the table that reflect the divergent positions of Countries.
• Among the most contentious points: the list of donors and sub-targets for Loss&Damage.
• The EU’s position appears sensitive to the needs of developing Countries: Brussels could have a mediating role between the two “extremes” of the North and South of the World.

Financial support for developing Countries and, even more so, for less developed ones, is a central aspect of the Paris Agreement, inextricably linked to mitigation measures which, without external help, cannot be carried out in Countries with fewer resources available. Therefore, one of the central lines of work in this COP28 is that of the new climate finance goal to be pursued after 2025, which will follow the current target of 100 billion per year set for the period 2020-2025. COP28 is a decisive moment in this process, since the new target will have to be set in 2024 at COP29.

Despite the inadequacy of the previous target of 100 billion, which had been decided arbitrarily, the richest Countries have not yet fulfilled their commitment to allocate the entire sum. It is therefore essential that the new goal does not repeat the same mistakes as the previous one:

• it must be adequate, both quantitatively and qualitatively (based mainly on grants or subsidized loans for mitigation);
• it must be transparent, with reliable reporting that guarantees its additionality, for example with respect to commitments regarding public development aid;
• must truly contribute to advancing the goals of the Paris Agreement. As Simon Stiell, Executive Secretary of the UNFCCC, stated, only an adequate new finance target can ensure that the next NDCs (scheduled for 2025) are sufficiently ambitious to allow us to close the gap that separates us from the Paris goals.

Not only. If it truly responds to the needs of developing Countries, the new goal could restore the trust of the most vulnerable Countries in the entire UNFCCC process.

Already from the first days of COP28, it is evident that there is unanimity on the urgency of establishing a new goal as soon as possible, and consequently on the need to move from the technical phase to the negotiation one in order to have enough time between now and COP29, avoiding repeating the errors in the process on the first Global Stocktake, which technical phase was perceived as excessively long by various Parties, effectively postponing all negotiating decisions to Dubai. Unfortunately, unanimous consensus is limited only to this point, given that Countries seem to disagree on practically everything else: the qualitative and quantitative aspect, the timing, the sources of financing, the contributors. And, as with the differences on Global Stocktake, these too will be difficult to resolve.

The “donors list”, i.e. which countries should contribute to the financing, is one of the thorniest points. Here too, the industrialized countries and in particular the United States ask to include other Countries in the list of those who must provide this financial support: the historical division between developed/developing Countries of the Convention no longer reflects the current reality of the facts, with emerging Countries such as China clearly having a much more significant role in the current level of emissions. Consequently, they should also contribute to financially support the most vulnerable Countries.

On the other hand, the decision to expand this list cannot be arbitrary. For example, a study by the think tank Overseas Development Institute (ODI) found that some Countries should be among the first ones to be included in a possible expanded list, as they surpass many Annex II Countries (those obliged to provide financial support) in both per capita income and per capita emissions: China is not among these there, but there are for example the United Arab Emirates, Qatar, Kuwait and Israel. The outcome would vary based on the parameters used, but the answer should still be the result of objective analysis and not geopolitical strategies.

Another insidious issue is linked to the inclusion of finance sub-goals for mitigation, adaptation and hypothetically also for Loss and Damage. In particular, the inclusion of the latter is opposed by several industrialized countries, probably since it would open “a Pandora’s box” that they would prefer to remain closed. Some Countries, such as France, have proposed merging this type of finance into adaptation finance, an obviously unacceptable solution for civil society: the loss and damage caused by the impacts of climate change must necessarily be financed after the catastrophic event (ex post), as opposed to those of adaptation which are intended for prevention (ex ante).

Despite these unpromising signs, there are also some steps forward. In particular, the position of the European Union is much more sensitive to the needs of vulnerable Countries (compared to the USA for example). This also emerged during a bilateral meeting of the EU Heads of Delegation at COP28 with Climate Action Network (CAN) Europe, in which Italian Climate Network participated: as stated in other interventions at COP, the European Union reiterated its recognition of the importance of public funding, although it still considers them insufficient to reach the necessary sums. Brussels’ position, on finance as well as on Global Stocktake, seems to be much softer than that of the USA, and this leaves room for the hope of seeing them play a mediating role.

Above all, establishing the new climate finance target is an urgency, and there is a fear that the long discussions on the different options will end up delaying the process and putting at risk the achievement of the Paris goals. For the most vulnerable Countries such as Small Island States, however, the stakes are much higher: their very survival is on the table.

Article by Teresa Giuffrè, delegate of the Italian Climate Network at COP28

Cover photo: Teresa Giuffrè