As benchmarks go, few match “1.5 degrees Celsius above pre-industrial levels.” In 2015, the UN said that is the limit above which climate damage would be permanent. “1.5 degrees is not a target, it is not a goal, it is a physical limit,” UN Secretary-General Antonio Guterres wrote in June.
In November, nearly 200 countries met in Azerbaijan for another U.N.-led Conference of the Parties (COP29) to discuss ways to keep that benchmark within reach. “The battle to keep global warming within 1.5 degrees Celsius has been a rallying cry for climate action for nearly a decade,” Zahra Hirji, climate reporter at Bloomberg, wrote in November.
This time, governments are at an inflection point as “using a new technique for measuring the rise in temperatures suggests the world was already 1.49C hotter at the end of 2023,” Hirji noted. If nothing changes, “the world is on track to warm roughly 3.1C before the end of the century.”
Money for environmentally friendly projects continues to be touted as the silver bullet to maintain global warming under 1.5 degrees. Negotiators at COP29 agreed the world’s top polluters should commit $300 billion annually until 2035 to protect low-polluting nations from climate change. That is triple the amount agreed to at COP27 in Egypt and COP28 in the U.A.E.
Yet, the new commitment is $1 trillion short of what emerging markets actually need annually, according to the World Resources Institute (WRI), a think tank. “Countries [should] explore ways to build on the $300 billion goal, including working with international financial institutions on further reforms, using innovative finance and capital enhancements, and … exploring feasible options for climate levies.”
Even more worrisome, almost all COP29’s other main talking points ended in disagreement, with this COP’s presidency pushing topics to the 2025 conference and the multinational meetings held between now and then.
Egypt at COP29
At this year’s COP, Prime Minister Mostafa Madbouly’s keynote address highlighted Egypt’s “environmental goals until 2050 alongside [the country’s] sustainable development roadmap targeting 2030 and ongoing investments directed toward green transformation projects,” SIS reported.
Egypt’s flagship target is to generate 42% of the country’s electricity needs from renewables by 2030. That would more than double the percentage in 2023.
Madbouly also highlighted government financing for public and private climate projects in water, food and energy under Egypt Vision 2030, announced in 2016, and the National Climate Strategy 2050, announced in 2022.
He stressed the importance of the Nouwfi Fund, created by the ministries of international cooperation and environment in 2022 to secure financing for local eco-friendly projects. As of November, “nine projects were selected in … water, food and energy, with estimated investments of about $14.7 billion,” local media reported. Those projects are in “partnership with the European Bank for Reconstruction and Development, African Development Bank and International Fund for Agricultural Development.”
They use “innovative financing mechanisms, whether debt swaps, grants or concessional financing for the private sector,” a statement from the Nowafi Fund said.
Madbouly also criticized the lack of eagerness by wealthy nations to support COP27’s Loss and Damages Fund, which “advances the global climate agenda” by offering money to less fortunate countries damaged by extreme climate events.
“African nations [had to] allocate up to 5% of their gross domestic product to address climate change,” said Madbouly. That is not sustainable as it puts those less wealthy and fragile economies in a precarious financial position. “Developed countries must play the primary role of funding … fulfilling their pledges under the [UN Framework Convention on Climate Change (UNFCCC)] and Paris Agreement.”
Lastly, he warned that “insufficient international financial and technical support [from wealthy nations] is hindering [the country’s] ability to upgrade its energy infrastructure and meet its climate targets. Without increased backing, Egypt’s Nationally Determined Contribution [a five-year progress report voluntarily submitted to the UN highlighting efforts to reduce greenhouse emissions] could be at risk.”
All about money?
The highlight of almost all COP meetings is announcing a single dollar figure that wealthy nations would commit yearly to less fortunate countries. It is always “the center of attention,” said the WRI. “The stakes [are] high, given how crucial external finance is for enabling … developing countries to transition to a low-carbon and climate-resilient path.”
At COP29, the agreed amount was $300 billion annually by 2035, up from $100 billion paid yearly by wealthy countries from 2020 until 2025. “While $300 billion is triple the previous target, it is below [what] could have been reached,” said the WRI. Its research estimates that based on multilateral development banks’ future capabilities and expected capital injections, “this could potentially lift total climate finance … to $340 billion to $450 billion a year.”
Yet, even in that best-case scenario, the amount falls significantly short of what developing nations need. Research from the High Level Expert Group on Climate Finance, a body announced at COP26, estimated that developing countries need $1 trillion by 2030 and $1.3 trillion annually by 2035 in climate finance.
The WRI explained that “within the [extra] trillion … around $500 billion needs to be public finance and around $500 billion private finance. A substantial amount of that private finance would need to be mobilized by public finance through instruments like guarantees or co-investments, which make investing in emerging markets and technologies less risky.”
The WRI also stressed, “Much work is needed to ensure … countries’ own resources and national development banks scale and align their financial flows with the goals of the Paris Agreement.”
Looking to COP30 in Brazil, the WRI said, “countries must continue to follow through on [the $300 billion] commitment,” as it will be effective starting 2026.
For Egypt, a low-middle-income nation by UN classification, the next COP could provide unprecedented green funding opportunities. COP30 will likely “offer opportunities to deepen discussions on debt in low and middle-income countries,” the WRI said. That is a change from the focus on nations classified as “Least Developed Countries” or “Island Developing States” since COP26.
Global Stocktake & NDCs
Launched during COP28, the Global Stocktake “assesses collective [climate] progress against the Paris Agreement and lays out the next steps for implementation,” the WRI said. It acts as a base point for countries that submit their five-year voluntary NDC progress reports and plans.
At COP28, the Global Stocktake focused on making a “historic call for countries to transition away from fossil fuels [and] scale renewable energy [by] cutting transport emissions and protecting forests.”
COP29 should have focused on “how to take these groundbreaking outcomes forward,” the WRI said. Yet countries were divided. Some saw no need to explicitly commit further to reducing their national carbon emissions, instead pledging to further scale their green finance. Other “countries argued that omitting explicit references to fossil fuels would be a troubling setback.”
Accordingly, WRI believes the UNFCCC meeting in Germany in June, ahead of COP30, would “resume [those] discussions … with the aim of reaching a resolution by COP30.”
Such agreement is vital as COP30 is when countries, including Egypt, submit their NDCs, which cover “economy-wide emissions reductions … transitioning away from fossil fuels and … significant action on renewable energy, transport, and forests.”
The WRI believes COP30 negotiators may discuss adding “elaborating features for countries’ new NDCs.”
Carbon markets
COP29 saw progress in trading carbon credits, where eco-friendly companies and nations with low carbon footprints receive payments from top polluters in exchange for the latter operating as usual.
The updates involved how governments buy and sell carbon credits among themselves and with individual entities like corporations. The main change is that “trades cannot be retroactively changed,” the WRI said. “If inconsistencies are found between the information provided about credits and a review by a technical body, then countries cannot use those credits toward achievement of their NDCs.”
For COP30, negotiators should “iron out … a few issues” and clarify some standards that remained vague at COP29. “Despite the scope for further work, … countries can begin taking steps to trade [carbon] credits,” the WRI said.
Those developments are good news for Egypt. In August, the Ministry of Investment announced the start of trading carbon credit on the country’s first “monitored” voluntary carbon market — buying and selling carbon certificates and bonds. “This trading will create a compulsory market in the future with an increasing depth of demand and supply,” Hassan El Khatib, minister of investment, told the media.
Adaptation
COP29 negotiators also discussed the often overlooked “Global Goal on Adaptation (GGA).” It “still hasn’t been [fully] implemented,” the WRI said. “COP28 yielded some results when countries agreed to a framework for global climate resilience that included a range of targets.”
However, there was disagreement at COP29. Developing nations want to include “means of implementation,” including capacity building, and technology and knowledge transfer from wealthy to less fortunate countries, in the GGA goals. “Developed nations argue against it,” the WRI said. “Ultimately, a compromise was reached to develop ‘enablers of implementation’ for adaption, which are not quantifiable.”
At COP30, negotiations will likely set “no more than 100 globally and nationally applicable indicators [to] minimize reporting burdens and accommodate diverse national contexts,” WRI said.
Working together
Negotiation progress regarding the Loss and Damages Fund, first introduced at COP26 and coming into the spotlight at COP27, stagnated at COP29. “Countries [could not] agree on key issues, … such as voluntary guidelines on incorporating loss and damage in NDCs or details of a proposed ‘state of loss and damage’ report,” WRI said.
In the end, six nations pledged a combined $85 million to add to the $674.4 million already promised to the fund. “[That] is still a far cry from the $580 billion in yearly losses and damages anticipated in 2030,” WRI said. “It will be important [in COP30] to verify that these pledges represent new and additional finance, rather than repackaging previous commitments.”
Alternatively, “the last few years have seen a rise in ‘cooperative initiatives’ launched during COPs,” WRI said. Those provide “opportunities outside the formal negotiations for governments, the private sector, cities, and others to work together to fight climate change.”
COP29 saw the launch of the Declaration on Reducing Methane from Organic Waste, where over 30 countries “representing nearly 50% of all methane emissions from organic waste” joined.
Another is the “continuity coalition,” which invites past COP presidencies and other international organizations to “ensure that sectoral pledges build upon one another and do not duplicate efforts,” WRI said. They include work by UN-Habitat on urban climate change, the World Health Organization, and the UN Food and Agriculture Organization.
Like every year, much hangs in the balance until the next COP. This year will “test countries’ willingness to rapidly slash emissions and build climate resilience,” WRI said. In 2025, “global emissions need to be cut 60% below 2019 levels by 2035,” it noted. “These steps are essential to accelerating progress toward a safe, more prosperous future for all.”
To achieve that, WRI stressed, “Countries should rise to this level ambition, … backed by sectoral commitments, strong and effective policies, investment signals, and society-wide efforts to combat climate change and protect people from its impacts.”
This article first appeared in January’s print edition of Business Monthly.
