COP29 in Azerbaijan: Focus to be on climate finance agreement

• As Azerbaijan hosts COP29 in its capital city from November 11 to 22, the main agenda will be an agreement on climate finance.

Highlights:

• As countries continue to negotiate over the amount of climate finance required from developed nations to combat climate change, Azerbaijan, the host of this year's COP29 climate conference, has announced the establishment of a new fund to aid developing nations.

The Climate Finance Action Fund (CFAF):

• Voluntary Contributions: The CFAF will seek voluntary financial contributions from fossil-fuel-producing countries and corporations. Azerbaijan, a petroleum-based economy, will make the initial contribution.
• Fundraising Uncertainty: The total financial target of the fund remains unclear.

Azerbaijan’s Proposals for COP29:

• The CFAF is part of a broader package that Azerbaijan has designed for COP29, which will take place in Baku from November 11 to 22.

Main COP29 Agenda:

• Climate Finance Agreement: Finalising an agreement on post-2025 climate finance commitments by developed countries will be a key focus. These countries are already obligated to contribute at least $100 billion annually, but this target must be scaled up beyond 2025, as outlined in the 2015 Paris Agreement.

Ongoing Negotiations:

• Negotiations on the climate finance agreement have been slow, with more meetings scheduled ahead of COP29 to try and reach a consensus.

Additional COP29 Proposals by Azerbaijan:

• Azerbaijan has introduced several other proposals to be included in the COP29 Action Agenda:
• Global Energy Storage: A pledge to increase global energy storage capacity by six times by 2030.
• Green Hydrogen Market: A declaration promoting a global market for green hydrogen.
• Digitisation and Climate: A proposal to limit the emissions impact of growing digitisation and data centers.

Structure of the CFAF

• Fund Allocation: Half of the fund's contributions will go toward financing climate projects in developing nations. The other half will support the implementation of national climate action plans in these countries.
• Operational Threshold: The CFAF will become operational when it accumulates a corpus of $1 billion, and at least 10 countries commit to becoming shareholders.

Challenges Facing Climate Finance

• The CFAF joins a long list of existing climate funds, most of which are underfunded. Azerbaijan’s proposal allows fossil-fuel producers and companies to contribute based on a fixed amount or production volumes, aiming to tackle climate finance challenges faced by developing countries.

Prelims Takeaways:

• Climate Finance Action Fund
• COP29