COP29 in Baku: Azerbaijan to launch new climate fund at this year’s conference
While countries are still struggling to come to an agreement over the quantum of finance that developed nations must mobilise in the coming years to fight climate change, Azerbaijan, the host of this year’s climate conference, has decided to launch a new fund to finance climate action in the developing world.
The Climate Finance Action Fund (CFAF) would seek “voluntary” contributions from fossil-fuel producing countries and companies, with Azerbaijan, itself a petroleum economy, making the initial contribution. It is not clear how much money this new fund is hoping to raise.
The CFAF is part of a large package of proposals that Azerbaijan has prepared for inclusion in the final outcome of COP29 (29th edition of the Conference of Parties to the UN Framework Convention on Climate Change), which is to be held in the country’s capital, Baku, from November 11 to 22.
The main agenda of COP29 is to finalise an agreement on climate finance, including the amount of money that developed countries must raise in the post-2025 period to help the developing world fight climate change. The rich and industrialised countries have been under an obligation to mobilise at least $100 billion every year from 2020. The 2015 Paris Agreement, however, mandates that this sum must be scaled up after 2025 and every five years thereafter.
Negotiations on the contours of this finance agreement have been going on throughout this year, but little progress has been made. There are several more meetings scheduled in the coming weeks before the start of COP29.
The plan for the CFAF was revealed a few months ago by Azerbaijan, the president of COP29, and now it has been formally included, along with several other proposals, in the COP29 Action Agenda that the host country has finalised.
Other proposals in this package include a pledge to increase the global energy storage capacity by six times by 2030, a declaration on working towards a global market on green hydrogen, and an agreement to ensure the emissions footprint from the growth of digitisation and data centres is kept to a minimum. Azerbaijan wants these to be included in the final outcome of COP29.
The CFAF would be the latest addition to the long list of existing climate funds, almost all of which are short on money. Azerbaijan has proposed that fossil-fuel producing countries and companies can choose to make annual contributions that can be a fixed sum or based on volumes of production.
Half of the funds that come in are proposed to be utilised for financing climate projects in the developing countries, while the other half would be allocated for helping developing countries implement their national action plans.
The fund would become operational once it builds up a corpus of at least $1 billion and at least 10 countries commit themselves to become shareholders.