COP29: Plans for Climate Reparations Fund Begin to Take Shape in Azerbaijan

People outside the conference venue prior to the COP29 Climate Conference in Baku, Azerbaijan, on Nov. 9, 2024. Sean Gallup/Getty Images

A fund aimed at having wealthy nations that profited from fossil fuels during the Industrial Revolution compensate developing countries is taking shape at the COP29 U.N. Climate Summit in Baku, Azerbaijan.

The Loss and Damage Fund, agreed upon at COP27, is now being finalized at COP29, which began on Nov. 11 and runs until Nov. 22.

“Politicians have the power to reach a fair and ambitious deal,” COP29 President Mukhtar Babayev said during a Nov. 18 press conference. “They must deliver and engage immediately and constructively.”

A work plan for 2024–2025 was adopted on Nov. 18, with final management and financial details expected soon.

Countries pledged almost $700 million to the loss and damage fund last year.

The World Bank, a global financial institution providing loans and grants to developing countries, has been appointed as an interim trustee.

Simon Stiell, the U.N. climate change executive secretary, said on Nov.12 that unchecked climate impacts could drive global inflation.

“Worsening climate impacts will put inflation on steroids unless every country can take bolder climate action,” Stiell said. “Let’s not make that mistake again. Climate finance is global inflation insurance. Rampant climate costs should be public enemy number one.”

On Monday, Stiell called for countries to “cut the theatrics and get down to real business.”

Some U.N. human rights experts interpret extreme weather events in poorer countries as a climate emergency caused by historical power imbalances rooted in colonialism.

Between 1850 and 2002, “industrialized countries produced three times the carbon dioxide produced by the entire Global South,” U.N. Special Rapporteur Tendayi Achiume said in 2022, citing a 2020 research paper. “Yet it is the Global South, and colonially designated non-white regions of the world that are most affected and least able to mitigate and survive global ecological crisis, in significant part due to the colonial processes that caused historical emissions in the first place.”

The World Economic Forum said that China suffered direct economic losses from natural disasters amounting to more than $42 billion in the first nine months of 2023.

$1.3 Trillion

Activists have called for more money for loss and damage, publishing an open letter to the COP presidency.

The Loss and Damage Collaboration (LDC)—whose letter includes signatures from the Heinrich Böll Foundation, an environmentalist group affiliated with the German Greens, and the socialist Rosa Luxemburg Stiftung think tank—is advocating for a new collective quantified goal (NCQG) on climate finance.

It called for the NCQG to be established before 2025, with a target of at least $1.3 trillion annually for mitigation, adaptation, and loss and damage.

Tim Worstall, senior fellow of the Adam Smith Institute, told The Epoch Times that the LDC appears unwilling “to listen to the actual evidence.”

“The High Level Expert Group just gave us a sensible estimation of finance required. 50 percent of which comes from capitalists, 25 percent from existing multilateral financiers, and the other 25 percent probably isn’t needed,” he said. “If renewables are so cheap, as we’re constantly told they are, then why does anyone need subsidy to install them?”

Smith said the claim is that poor nations require subsidies.

“The only good reason for poverty these days is bad governance. Sending subsidy to bad governments has a certain illogic to it,” he said.

A spokesperson for LDC told The Epoch Times that the group believes that climate finance is a moral obligation.

“Developed countries have a climate debt that they owe to developing countries for causing the climate crisis and for atmospheric appropriation,” the spokesperson said.

Carbon Credits

Negotiators are working toward a separate plan of up to $1 trillion annually in climate financing for developing countries, aiming to replace the previous $100 billion target.

Multilateral development banks are also proposing to increase climate finance for low- and middle-income countries by up to $120 billion a year by 2030, aligning with Paris Agreement goals.

On the first day of the conference, negotiators agreed to establish a U.N.-backed system for trading carbon credits, aiming to support a decade-long goal of launching a centralized carbon market by next year.

According to the United Nations, carbon credits are measured in metric tons of CO2 equivalent and can be purchased by individuals, businesses, and organizations to offset emissions or support environmental projects.

Samuel Furfari, who was a senior official at the EU’s Energy Directorate-General from 1982 to 2018, expressed surprise at the timing of the agreement.

He told The Epoch Times at the time: “It’s very strange that on the first day, when people are just arriving, there is already a deal. I’ve never seen that at any COP. Usually, the first week is just talks. ... It’s very strange, very odd, and I don’t know the reason behind it.”

The Associated Press contributed to this report.