Hot debate at COP29 over public or private funding of climate projects

 

 People attend the COP29 UN Climate Change Conference in Baku, Azerbaijan on November 13, 2024. [AFP]

The debate between public and private climate finance intensified yesterday at UN climate talks in Baku, Azerbaijan.

Global negotiators are now divided on whether adaptation should rely more on private-sector funding.

Critics argued that private finance often bypasses vulnerable communities and fails to reach countries needing immediate aid.

In comparison, public financing is viewed as more equitable and reliable for adaptation. The risks of private finance were criticized during negotiations, where delegates warned that shifting responsibility from developed countries to private entities is counterproductive.

“It shifts the burden onto developing nations that cannot turn a profit from these adaptation needs,” noted Mariana Paoli Global Advocacy Lead, Christian Aid, who referred to the growing influence of what she called a “Wall Street climate consensus.”

Global public spending patterns reveal clear disparities. Rich countries, for instance, are spending over 2 per cent of their GDP on military and fossil fuel subsidies. A small redirection of these funds, according to Paoli, could bridge the adaptation finance gap in Africa.

Calls for public finance were indicated by a recent letter from US-based climate groups to President Joe Biden, urging a commitment to at least $1 trillion per year in adaptation funds starting in 2025.

This comes amid UNEP Adoption Gap Report 2024 which states that International public adaptation finance flows to developing countries increased from US$22 billion in 2021 to US$28 billion in 2022: the largest absolute and relative year-on-year increase since the Paris Agreement.

This reflects progress towards the Glasgow Climate Pact, which urged developed nations to at least double adaptation finance to developing countries from US$19 billion (2019 levels) by 2025.

However, even achieving the Glasgow Climate Pact goal would only reduce the adaptation finance gap, which is estimated at US$187-359 billion per year, by about 5 per cent. 

The report states that given the scale of the challenge, bridging the adaptation finance gap will also require innovative approaches to mobilise additional financial resources. 

“Adaptation financing needs to shift from reactive, incremental, project-based financing to more anticipatory, strategic and transformational adaptation,” reads the report in part.

Without scaled-up grant-based public financing, Rachel Cleetus Policy Director, Union of Concerned Scientists, argued the resilience efforts of vulnerable countries will remain inadequate, leading to higher costs in both human lives and economic stability. African nations are bearing a significant burden as global financing for climate adaptation remains inadequate, forcing them to reallocate funds from essential services to disaster response.

A reported $1.3 trillion in adaptation funding is needed to meet the continent’s climate resilience goals, yet current financing structures, reliant on a mix of public and private sources, fall drastically short.

In 2022, only 3 per cent of international private climate finance reached low-income countries, according to recent climate finance reports.

Moreover, for every $100 in climate finance, less than 50 cents went toward adaptation projects. For African countries facing increasingly frequent and severe climate events, the shortfall is forcing hard choices.

“Our bottom line is $1.3 trillion, and without access to adequate funds, nations are already diverting resources meant for health, education, and infrastructure to respond to climate disasters,” said Joyce Kimutai Climate Scientist, World Weather Attribution and advisor to Kenyan delegation

In 2024 alone, Africa experienced over 200 climate-related crises, ranging from devastating floods in Morocco to severe droughts across East Africa.

“Without sufficient adaptation funding, these nations find themselves in a recurring cycle of borrowing and disaster response, draining vital public resources,” said Imane Saidi a Diplomacy and Cooperation Researcher, at IMAL Initiative for Climate and Development.