The urgency of climate finance: Is the world ready to commit?

FE Team | Published: November 17, 2024 21:55:15 | Updated: November 17, 2024 22:00:03

BAKU, Nov 17 (Arab News): As global leaders gather in Baku for the COP29 UN climate change conference, the focus on climate finance has never been more pressing. This year's conference theme, "Accelerating Climate Action for Sustainable Development," suggests that climate action must advance economic stability as well as address environmental concerns.
Yalchin Rafiyev, Azerbaijan's lead negotiator for COP29, has said that "trillions of dollars" are needed to fund the fight against climate change - a significant increase from the longstanding annual target of $100 billion, which itself remains unmet. Vulnerable nations are especially affected by this shortfall, lacking the resources to build resilience against climate impacts.
Delegates from developing regions, including African representatives, have called for climate finance to reflect the distinct economic realities faced by less developed countries.
Shaimaa Al-Sheiby, senior director of strategic planning at OPEC, spoke to Arab News about the importance of ensuring that climate finance meets the needs of developing economies
"In many countries, it's difficult for governments to sustain economic progress without accessible financing," Al-Sheiby said. She advocated for wealthier nations and financial institutions to play a greater role in "de-risking" investments in developing markets to attract private capital for renewable projects.
Yusuf Idris Amoke, a Nigerian climate adviser, said: "The Global South is on the receiving end of climate impacts while contributing far less to emissions."
For these countries, the push to phase out fossil fuels often clashes with immediate economic needs, especially given that alternatives are limited and expensive.
"Financing third world countries or the Global South is key," Amoke added, saying that transitioning without robust financial support is neither equitable nor feasible.
Voluntary carbon markets have been gaining traction as a flexible solution for reducing emissions, especially in regions where compulsory systems have struggled to achieve significant results.
These markets encourage companies to take part in climate initiatives by creating financial incentives, which, as Al-Sheiby said, are essential for involving the private sector.
"Private capital is very shy," she added, saying that risk-reduction strategies could help attract these funds to where they are most needed.
The success of voluntary markets, however, depends on strong regulatory support, transparency and accountability.
The COP29 Presidency has launched the Baku Initiative for Climate Finance, Investment and Trade, a collaborative platform designed to align climate finance and trade with sustainable development priorities. By convening leaders from developed countries and the Global South, the initiative aims to foster equitable climate solutions.
In Africa, Saudi Arabia's "Empowering Africa Initiative" exemplifies South-South collaboration. Minister of Energy Prince Abdulaziz bin Salman has signed agreements with Ethiopia, Chad, Senegal and other countries to promote energy equity as well as accelerate the continent's energy transition. These agreements are set to harness Africa's vast renewable energy potential, including its 10 terawatts of solar capacity.
Abid Malik, ACWA Power's geo head for Central Asia, highlighted the importance of fostering local expertise during an
interview with Arab News. "Our projects in Africa don't just bring renewable energy; they create jobs, enhance technical skills and empower local communities to take charge of their energy futures," he said.
The recently announced Baku Call on Climate Action for Peace, Relief and Recovery highlights the role of climate action in stabilizing conflict-affected regions. "Climate-induced challenges such as water scarcity and food insecurity are catalysts for conflict," said Mukhtar Babayev, COP29 president. "Peace-sensitive climate action is crucial for the most vulnerable."
Gilles Carbonnier, vice president of the International Committee of the Red Cross, highlighted the environmental fallout in conflict zones like Gaza. "In places like Gaza, where infrastructure has been decimated, renewable energy offers a lifeline," he told Arab News. "Solar microgrids in refugee camps are providing critical electricity for healthcare and other essential services."
The commitments announced at COP29 reflect a growing recognition of the interconnected challenges of climate finance, energy equity and conflict recovery. With asset owners controlling $10 trillion pledging to accelerate private capital deployment and initiatives like BICFIT gaining momentum, the foundations for transformative change are being established.
For vulnerable nations, these efforts offer a glimmer of hope. However, achieving a just transition will require sustained political will and a reimagining of global financing systems. As COP29 unfolds, the world is watching to see if the pledges made in Baku will translate into tangible action.