COP29: Who pays for climate finance?

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00:00Staying with climate, the COP29 summit is being held in Baku, Azerbaijan this week

00:06and this year's event has been dubbed the finance cop. Negotiators must

00:11increase a 100 billion dollar a year target to help developing nations

00:16prepare for the worsening impacts of climate change and wean their economies

00:20off fossil fuels. How much is to be on offer and who will pay for it are the

00:25two major points of contention. To talk to us about that, Valérie de Camp, our

00:30environment editor, with me now. Valérie, first of all we have this existing target

00:34then of a hundred billion US dollars annually, I just mentioned that. If

00:38negotiations are successful the new goal could reach one trillion dollars. Why are

00:43we seeing such a big jump? Well the 100 billion target a year was never

00:49adequate in the first place. It was a promise made in 2009 but there was never

00:54any economic reasoning behind it. It was just an arbitrary number. Since then

00:59economists have worked to assess what it would cost to face the climate crisis

01:03and they came up with a number. 2.4 trillion US dollars every single year

01:08would be needed for developing countries, excluding China, to cut their greenhouse

01:13gas emissions and also adapt to the consequences of global warming. They say

01:18that of that sum about half could come from countries own domestic budgets and

01:24also domestic investments and that would leave roughly one trillion US

01:29dollars coming from developed nations. The UN climate chief though is insisting

01:34this isn't charity, this money. Why is the new goal so important? It's obviously a

01:40climate justice question. Developing nations did not cause the climate crisis

01:45in the first place. Wealthy nations did and so you can understand why developing

01:49nations today are saying hang on you know you've become rich with your

01:53fossil-fuel powered economies. You're asking us to stop using what made you

01:58rich but not helping in the process. So in order to address the climate crisis

02:03you need everyone on board and so you need to provide that financial aid. And

02:07just to give you an example, developing nations, developed countries, they

02:12have access to capital markets. Developing nations it's a lot more

02:16expensive and so an example of that is that Africa has about 60% of the best

02:22solar resources in the world and yet you have you know some European countries

02:27Belgium, the Netherlands, Poland not necessarily known for their sunshine.

02:31They have installed more solar panels than the whole of Sub-Saharan Africa in

02:372023. Why? Because it costs a lot more money to actually install solar panels

02:43in Africa because the cost of capital is higher. And Valerie look this trillion

02:48dollar figure, can it actually be delivered? Where's the money from that

02:52likely to come from? Well it sounds huge a trillion dollar but it's actually 1%

02:57of global GDP. It's also a year of pure profit for the fossil-fuel industry for

03:03the last 50 years on average. They've made a trillion dollars every single

03:08year and so the money does exist. It's a question of it's a political question so

03:13no developed country as we stand is ready to commit to a specific figure as

03:18long as we don't expand the donor base of who actually contributes. Other

03:24countries they're also quite wealthy and polluting so for example you know the

03:29group of countries obliged to actually provide climate finance that list was

03:35prepared in 1992. The world economy has changed massively since then. You have

03:41emerging economies like China, South Korea a lot richer than they used to be.

03:45They pollute a lot more. They're still considered developing petro-states.

03:49Saudi Arabia, the UAE, Qatar also considered developing nations although

03:54they have amassed vast oil wealth. So it's another kind of climate justice

04:01question. Should only historical high emitters contribute or should we open up

04:05the donor base? China has been very clear that they don't want to give up on

04:09their developing status. Just a final question then if countries aren't going

04:13to pay who will? Economists say that much of the funding will not actually come

04:19from taxpayers money in the West. It's actually multilateral development banks

04:25like the World Bank, the IMF. We are looking at about 200 to 400 billion a

04:30year in the form of low interest loans but that will require sweeping reform so

04:37it will take time. And there's the other idea of global taxes, solidarity taxes

04:43being increasingly discussed. So for example a 2% wealth tax on billionaires.

04:49This is a Brazilian proposal. They have shown that just with a hundred

04:53billionaire families in Brazil alone you could potentially raise more than 250

04:58billion dollars every single year. And then you obviously have taxes on

05:03polluting industries, shipping, aviation, financial transactions and that could

05:08generate about 900 billion by 2030. But it will again require a specific global

05:16agreement. The most likely scenario at COP is that we will reach an estimate or

05:21around you know a couple of billions of public funding, the rest having to come

05:26from private investments. But if you think about the fact that developed

05:32countries were never able to achieve their promise of providing a hundred

05:36billion only by 2020, you know you can understand that it's going to be a

05:41massive challenge to get to a trillion. Indeed but very important story. Thanks

05:46for breaking that down for us Valerie de Camp, our environment editor for us there.

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