Climate finance: The battle begins + Chile: ‘Align all financial flows with the climate’ + Deforestation in Brazil on the decline

Dear reader,

Tomorrow is Finance Day at COP29. After photo ops and speech appointments of the heads of state, real negotiations on the new global climate finance target NCQG have begun. China and the developed countries indicate more flexibility than just a few weeks ago. Nico Beckert analyzes what could motivate Beijing to take a more active role.

Meanwhile, Alexandra Endres met Chilean Environment Minister Maisa Rojas for an interview. In the interview, Rojas demands that “all global financial flows must be aligned with climate action” – and for this to happen “very quickly.” Learn more about the former IPCC author’s expectations of COP29 in today’s briefing.

There is some good news from Brazil: Deforestation in the Amazon rainforest has fallen sharply. On Wednesday, Brazil presented its Nationally Determined Contributions (NDC), but reactions were mixed. Our news section also reveals the demands of the High Ambition Coalition on climate financing, how many delegates are following the negotiations in Baku and why the Argentinian delegation is already leaving.

We wish you an informative read!

Your
Lukas Bayer

COP29: The real battle over climate finance begins

What is at stake: Poorer countries need billions in financial aid to mitigate and adapt to climate change. Drought in southern Africa in April 2024.

By

Nico Beckert

At COP29, after the photo ops and speeches by the heads of government, the actual negotiations on the new global climate finance target NCQG started. The responsible negotiators presented a new text to the delegations on Wednesday. In the evening, however, the proposal was returned to the negotiators with a request to streamline it – observers consider this a minor setback due to chaotic procedures; however, everything is still in the green.

Meanwhile, the various groups sent signals of flexibility: China formally published information on its climate financing for the first time. And the multilateral development banks (MDBs) declared their intention to increase climate finance spending by 2030 significantly.

Transparency from China, 120 billion from development banks

The statement by China’s Vice Premier Ding Xuexiang at the Leaders Summit attracted particular attention. He stated that China had “provided and mobilized project funds of more than 177bn RMB (24.5bn USD)” in climate finance for other developing countries since 2016. Unlike in the past, he did not refer to Chinese spending on “South-South cooperation” but used the terms “provided and mobilized for climate finance,” which are also used by the West.

For Kate Logan from the think tank Asia Society, China’s “ability and willingness to calculate its climate finance contribution to developing countries in the context of provision and mobilization” is on par with developed countries. This demonstrates “that China has capacity and political will to be more transparent about the scale and scope of its own efforts” – a possible concession in the NCQG battle.

Positive signs also came from the multilateral development banks of developed nations. They expect to be able to provide 120 billion US dollars annually in climate financing for developing and emerging countries by 2030 – a significant step up from the 74.7 billion they contributed in 2023. They also expect to mobilize 65 billion from the private sector.

The new figures from the development banks “should give the donor countries some certainty for the negotiations on the new climate finance target,” says Anja Gebel, development bank expert at Germanwatch. However, the leverage effect of World Bank funds has been overestimated in the past, says Gebel. The High Ambition Coalition (HAC) of climate frontrunners from developed and developing countries also issued a joint statement calling for an “urgent increase in climate finance.”

New working basis, compromise signals

A new working basis for the NCQG negotiations is to be created on Thursday. The negotiators’ 34-page concept – a collection of all ideas, options and demands – will now be gradually turned into a text that the political level can decide on next week. In fact, the negotiators had already reduced the large collection of ideas to a short document of nine pages before the COP. However, the G77 group and China were unable to reach a consensus on this.

Just before the climate conference, Western countries and China indicated a willingness to compromise on the NCQG. “Since September, we have heard from both sides that they are more willing to be flexible,” Li Shuo, climate expert at the think tank Asia Society, told Table.Briefings. Germanwatch climate expert David Ryfisch confirms China is “starting to move.”

This has several reasons:

US President-elect Donald Trump: Because the US is weakened in the climate process, China might want to present itself as a constructive partner. China’s participation in the NCQG would be “a sign of China’s commitment, especially in the current geopolitical dispute with the US, which has historically always lagged behind its responsibilities,” says Ryfisch.
China is already paying: Various new studies show that it has provided between 38 and 45 billion US dollars in climate financing over the last nine to ten years. The money has flowed through bilateral and multilateral channels, most of which are controlled by Beijing and not independently. “So far, China has not received any international recognition for its considerable South-South climate financing,” says Ryfisch.

What compromises could look like

The way “to find an NCQG result that could work for China is to anchor and build on what China has already contributed,” says Li Shuo. More transparency from China could be a first compromise. “Improving the quality of reporting is an immediate step that China can take to contribute more responsibly,” Yao Zhe, Global Policy Advisor at Greenpeace East Asia, also told Table.Briefings

However, official Chinese participation in the NCQG’s anticipated core objective is unlikely. This would be tantamount to a paradigm shift. China would then also face higher expectations in other UN bodies and negotiations. Ryfisch says it will take a “creative combination of several aspects.” One tricky question is: “How can Chinese contributions become binding without China having the same level of commitment as developed countries.”

On the other hand, China could stand out in the planned investments in the new NCQG. China has already mobilized large funds for energy investments in the Global South through the New Silk Road (Belt and Road Initiative (BRI)). In the future, China intends to place a greater focus on renewable energies along the BRI.

China as the key to new donors

However, the NCQG should provide new funds and not re-label old projects. Ryfisch says: “Offsetting BRI investments within the broader part of the NCQG would not be sufficient in my view.” Yao Zhe also warns that if developed countries insist on the “issue of the ‘contributor base,’ the door for constructive talks with China could close.”

Getting China on board with the NCQG could also convince other emerging countries to participate (more). “It is not only necessary to find a solution with China,” says Ryfisch. China could even “be a key to ensuring that Saudi Arabia also supports an agreement to expand the donor base.”

Chile: ‘All global financial flows must be aligned with climate action’

Chile’s Environment Minister Maisa Rojas.

By

Alexandra Endres

Madam Minister, the new climate finance target NCQG is being negotiated at COP29 in Baku. How high does it need to be from Chile’s perspective?

We are not asking for a fixed sum. However, we believe three things are clear: It must be a substantial contribution. The money must not only go towards reducing emissions, but also towards climate change adaptation. And it must come from various sources – government pledges alone will not be enough. All global financial flows must be aligned with climate action. That is absolutely crucial.

When will Chile be ready to contribute to global climate finance?

Chile takes the same position here as the G77: The group of donor countries cannot be changed.

What are your overall expectations for this climate summit?

The financial issue is obviously crucial. For me, the single most important thing is that we achieve one thing: Absolutely everyone must align their financial flows with the energy transition, from big multilateral banks to the smallest chamber of commerce in the farthest village, in every single aspect. That really is the most important thing. And it has to happen very quickly.

Chile will hold presidential and parliamentary elections in November 2025. What is the most important goal you want to achieve in the remaining year?

Last year, the Chilean Congress passed a law to protect Chile’s biodiversity. As a result, we have created a national system of protected areas and a biodiversity authority. Now it is important to put the law into practice and leave the country with an effective conservation authority. This will be our greatest contribution to the country’s environmental institutions. It is the most important operational goal of my ministry, but not the only one.

What else do you want to implement?

We are currently in the process of protecting a network of salt lakes as part of the national lithium strategy. The national strategy for a just socio-economic transition also needs to be finalized. Our vision is sustainable development in Chile. To achieve this, we need to maintain certain continuity. Chile has had 16 years in which opposing parties took turns in government. When it came to advancing the country’s development – I’m not even talking about the environment here, but about pensions, health and education – that was a problem. That’s why we must work to ensure that our coalition also forms the next government.

What are your plans for climate policy?

Chile’s climate policy aims to both reduce emissions and adapt to climate change. The preservation of our natural environment is vital for both. Chile’s NDC focuses on nature-based solutions. This means that there is a very concrete link between protecting our biodiversity and the climate. One particularly dramatic effect of climate change in Chile was an extensive drought in a large part of the national territory. In order to secure the drinking water supply, it is now possible to reforest the source areas of water bodies with natural tree species. This benefits both the climate and biodiversity.

Where do you see the greatest challenges for the decarbonization of the Chilean economy and a climate-friendly transition?

The energy sector is currently going through an adjustment phase. Chile already has a high percentage of variable energy. Right now, the focus is more on a secure and sufficient energy supply – and on the costs of the energy system. However, this is the responsibility of the Ministry of Energy.

Compared to other countries, Chile’s energy transition is at an advanced stage. Why is that?

This has many reasons. One important reason is that Chile has no fossil fuel reserves of its own and has therefore always depended on imports. Renewable energies offered us the opportunity to become more energy-independent.

Chile is an economically strong country, but inequality remains very high. Who will bear the costs of green development?

Achieving net zero is not a cost factor for Chile. Environmental protection is a prerequisite for economic development, not an obstacle. According to a World Bank study, decarbonization can increase Chile’s economic output by up to 4.4 percent by 2050. Of course, this will require an initial investment. But so far, we have managed our energy transition without subsidies – in other words, solely through private capital. Our strategy for a just socio-economic transition is based on the overarching idea that those population groups that have historically borne the costs of dirty industrialization should not pay for decarbonization.

How important is Germany as a climate policy partner for Chile?

We traditionally maintain an important relationship. In particular, Germany is an important partner in developing green hydrogen and is helping Chile fund investments in this area.

Maisa Rojas is Chile’s Minister of the Environment. Before taking up her government post, Rojas headed the Chilean Center for Climate and Resilience Science (CR)2. She served as coordinating lead author of the IPCC’s Sixth Assessment Report and lead author of the Fifth Assessment Report. At COP27, she and German State Secretary Jennifer Morgan mediated the loss and damage negotiations.

(The research in Chile was supported by International Journalism Programs (IJP))

Climate in Numbers: Deforestation in Brazil on the decline

By 2035, Brazil aims to cut its net greenhouse gas emissions by 59 to 67 percent below 2005 levels. This is the new climate target (NDC) presented by Vice President Geraldo Alckmin at COP29 on Wednesday. According to the Brazilian government of President Luiz Inácio “Lula” da Silva, this corresponds to a reduction of 850 million to 1.05 billion tons of CO₂e. The new NDC is aligned with the 1.5-degree limit of the Paris Agreement and will enable Brazil to achieve net zero by 2050 – and it represents “a critical stage in promoting a new development (low-carbon) model,” the government also announced.

Lula’s government is underlining its climate policy ambitions with recent success stories in forest conservation. The government cites new figures from the National Institute for Space Research (Inpe), showing that deforestation in the Amazon rainforest has declined significantly this year. Between August 2023 and July 2024, it was 30 percent below the previous year’s figure, as the graph shows. What’s more, deforestation in the Cerrado, another vital ecosystem in Brazil, has also recently fallen by 25.7 percent, marking the first decline in five years.

As the host country of the next UN climate summit, Brazil is particularly keen to present itself with good news at COP29. However, reactions to the new climate target have been mixed in Baku. Some NGOs commented that they had expected more ambition. The climate organization 350.org criticized the wide range of planned emission reductions, which would create uncertainty and signal a lack of ambition.

Others voiced concerns about the country’s oil and gas production plans. The NDC does show Brazil’s ambition in “reducing emissions,” said Shady Khalil, policy strategist at the NGO Oil Change International. However, the country “cannot claim to be at the forefront of the global energy transition if it does not halt new fossil fuel projects immediately.” Brazil plans to increase its oil and gas production by 36 percent by 2035. The new NDC omits this fact. ae

High Ambition Coalition: ‘Climate financing requires trillions’

Germany’s representatives in Baku were visibly relieved to announce on Wednesday that German Chancellor Olaf Scholz had signed the Leaders’ Statement of the High Ambition Coalition (HAC). After not signing several declarations of the alliance of developed and developing countries last year, the German government returned to the circle of ambitious climate champions in Baku.

BMZ State Secretary Jochen Flasbarth did not gloss over who, in his view, was responsible for Germany’s temporary paralysis of the HAC. Although the German government lost its majority with the end of the government coalition, it also reduced its complexity, said Flasbarth. The nod towards the Free Democratic Party (FDP) and former Finance Minister Christian Lindner, who always insisted on “technology neutrality” and using CCS when phasing out fossil fuels, was obvious.

‘Developed countries must take the lead’

Although the HAC statement does not contain any specific demands for the current negotiations at COP29, it does underline what is at stake in Baku when it comes to climate finance: More funds must urgently be made available for climate action: “Trillions of dollars are required.” The HAC sees grants and concessional loans, especially for adaptation and loss and damage, as crucial. In this regard, “developed countries must continue to take the lead and live up to existing finance commitments,” the HAC heads of state and government wrote.

The statement from countries of the Global South and North sends “a strong signal for an ambitious new climate finance target,” commented Laura Schäfer, Co-Head of International Climate Policy at Germanwatch. “This momentum must now immediately translate into a less defensive negotiating position,” demands Linda Kalcher, Executive Director at the think tank Strategic Perspectives. luk

Climate Action Tracker: Climate targets worsen again

If all signatory countries to the Paris Climate Agreement achieve their voluntary climate targets for 2030 (Nationally Determined Contributions, NDCs), the planet would warm by 2.6 degrees by 2100. This is the result of a new calculation by the Climate Action Tracker (CAT), which was published on Thursday at COP29. Last year, the CAT had still reached 2.5 degrees of warming, and 2.4 degrees the year before.

In other words, the trend is pointing in the wrong direction. While emissions from the combustion of fossil fuels continue to rise, global climate policy has stagnated over the last three years. According to report lead author Sofia Gonzales-Zuñiga from Climate Analytics, a CAT partner organization, current policies lead to 2.7 degrees of warming with a ten percent risk of 3.6 degrees or more – an “absolutely catastrophic warming.”

Even the optimistic scenario, in which all countries fulfill their NDCs, climate targets and net-zero pledges, would lead to a warming of 1.9 degrees. The report expects that greenhouse gas emissions will not peak until 2030. Although renewables are booming and investments in them are already twice as high as in fossil fuels, there are also record subsidies for fossil fuels. Donald Trump’s presidency will likely lead to an additional 0.04 degrees of warming if he weakens climate policy as described in “Project 2025”. lb

COP29: How many delegates negotiate in Baku

Over 65,000 delegates and 4,000 registered online participants are currently following the COP29 climate negotiations in Baku, Azerbaijan. This makes it the second-largest COP to date after last year’s climate summit in Dubai (United Arab Emirates, UAE). This is according to an analysis by Carbon Brief.

Meanwhile, French Energy and Climate Minister Agnès Pannier-Runacher has canceled her trip to Baku. She wrote on X that President Ilham Aliyev’s critical comments “against our country, its institutions, and its territories are unjustifiable.” Argentina, which has not had an environment ministry since President Javier Milei took office and had only sent a small delegation to Baku anyway, withdrew its delegation from the negotiations completely on Milei’s orders. Partly “so as not to hinder the negotiations and decisions with which they disagree,” as the Argentinian daily newspaper Clarin reported.

According to Carbon Brief, host Azerbaijan sent the largest delegation with 2,229 participants, followed by Turkey, the UAE and Brazil, where COP30 will be held next year. At the Leaders Summit, Turkey again applied to host COP31 in 2026. As hosts of COP28, COP29 and COP30, the other three countries together form the COP Troika, which aims to drive forward ambitions for the 1.5-degree target.

Papua New Guinea, on the other hand, did not attend the climate summit at all – and many well-known heads of state were also absent, including Xi Jinping. However, China was present with the fifth-largest delegation with 969 participants. According to Carbon Brief, although the Chinese delegation is smaller than at COP28, it is many times larger than at previous climate summits.

Germany has registered 325 participants, and 405 US delegates are in Baku. 59 percent of all participants are men, and 41 percent are women. The figures concern registered participants; the UNFCCC will publish official figures after the end of COP29. lb

Nitrous oxide: Germany plans to ban the party drug

German Health Minister Karl Lauterbach plans to quickly ban nitrous oxide as a party drug, which has been increasingly popular among young people for several years. To this end, he submitted a draft to the cabinet on Wednesday. The government factions of the Social Democrats and Greens could add it to an upcoming law before the early elections.

Nitrous oxide (N₂O) is not only dangerous to health when consumers inhale the euphoric substance directly from balloons – it is also a greenhouse gas. It also damages the ozone layer. This is the warning sounded by the Global Nitrous Oxide Assessment, which was presented by the UN Environment Program (UNEP) at COP29 on Wednesday.

20 million deaths could be avoided

The report urgently calls for swift action. If nothing is done, the 1.5-degree limit could fail due to nitrous oxide emissions alone. According to the report, an ambitious anti-nitrous oxide policy could reduce nitrous oxide emissions by more than 40 percent below current levels in the coming decades and prevent up to 20 million deaths. The necessary technologies are largely “cost-effective” and would require “no significant changes” to current production processes.

Among other things, the report proposes:

Switching to nitrogen-fixing plants in agriculture, storing fertilizer in dry conditions, rotating livestock on pastureland and promoting a shift towards a less animal-based diet;
Converting the industry from fossil fuels to renewable energies and using thermal or catalytic processes to break down nitrous oxide, which would cut emissions by more than 90 percent at a low cost.

More than 180 governments, NGOs and international organizations collaborated on the report in the Climate and Clean Air Coalition. It is the first comprehensive global assessment of this particularly climate-damaging pollutant. lb/dpa

Decarbonization: German companies miss their own targets

The auditing firm KPMG has published an analysis outlining the decarbonization status of the 160 largest DAX, MDAX and SDAX companies listed in Germany. Although progress has been made, the overall result is sobering.

Most companies have transparent and ambitious targets. For example, 66 percent of companies are committed to long-term targets for their Scope 1 and Scope 2 emissions. The former are direct emissions, while the latter take into account indirect CO2 emissions from the purchase of energy. However, according to KPMG, more than half of companies (57 percent) lag behind their own Scope 1 and 2 targets.

There are significant differences between the sectors: While financial companies are closest to their targets in Scope 1 and 2 (66.7 percent), only 16.7 percent from the chemicals and materials management sector estimate that they are on track.

This is noteworthy because more than half of the industrial companies surveyed believe climate transformation will improve their competitive position. Nevertheless, additional expert interviews show that most companies in the industrial sector do not dare predict when they could achieve net zero or emissions-free: 63 percent of the 30 companies surveyed did not set a specific year.

Hardly any ambition for Scope 3 emissions

Commitment and transparency are even less pronounced regarding Scope 3 emissions. Only around one-third (33 percent) of companies set themselves clear targets to reduce greenhouse gas emissions that occur indirectly in their upstream and downstream value chains, for example, during the transportation of goods or the use of their products. At 4.1 billion tons of CO₂ equivalents reported by the 160 companies analyzed, these emissions account for the majority compared to around 293 million tons of CO₂ equivalents (Scope 1 and 2).

However, as not all companies report Scope 3 emissions, the actual figure is likely to be significantly higher than 4.1 billion tons.

According to the study authors, many companies are only doing the bare minimum when it comes to climate change and many still do not realize that the green transformation could give them a competitive advantage. “The climate transformation remains a major challenge,” says Benedikt Herles, Director and EMA Head of ESG Insights & Innovation at KPMG in Germany. aga

RNZ: Tuvalu calls for fairer climate finance. Tuvalu’s Prime Minister Feleti Teo supports calls for a fairer climate finance system for small island states and least developed countries. He demands better access to climate finance and pushes for the climate finance pledged by developed countries to significantly exceed the current target of 100 billion US dollars annually. Click here for the article

Financial Times: China seeks climate dialogue with the US. During the UN climate summit COP29 in Baku, China called on the US to engage in a constructive dialogue to combat climate change. In contrast to the stance of future US President Donald Trump, who has called climate change a hoax, China is determined to improve its controls on methane and other pollutants. Read the article

CNN: Act fast before Trump arrives. The US Environmental Protection Agency (EPA) has adopted one of the last remaining climate action measures from the Biden administration. This measure is aimed at preventing methane leakage. It could be difficult for the incoming Trump administration to repeal this regulation, as it is part of Biden’s climate law passed by Congress in 2022. Read the article

The Hill: Citizens for climate action. In California, Hawaii, Washington and Colorado, citizens have voted in favor of various climate action measures. In California, for example, they voted for a climate resilience bond worth 10 billion US dollars. Read the article

The Shell ruling confirms: Fossil fuel companies must protect the climate

By Roda Verheyen

Some rulings are milestones, even when climate action loses on paper. One example: In 2020, the Berlin Administrative Court dismissed the lawsuit brought by three families and Greenpeace for more climate action – but in its ruling, it recognized the CO2 budget and enshrined the fundamental right to climate action. This laid the foundation for the same plaintiffs to win their case before the Federal Constitutional Court a year later.

The situation is similar with the Shell ruling by the Court of Appeal in The Hague. This is also well known at corporate headquarters around the world. So anyone who thinks the ruling will be celebrated there is mistaken. In fact, the fossil fuel industry has lost in The Hague. The appeal against the first-instance ruling from 2021 may even have backfired.

Corporate responsibility cannot be shifted to countries

A brief review: In May 2021, Royal Dutch Shell (RDS), as a globally operating company, was ordered to reduce its own emissions (Scope 1 and 2) by 45 percent below 2019 levels by 2030 based on calculations by the Intergovernmental Panel on Climate Change (IPCC) and to at least make an effort to do the same for Scope 3 emissions – for example, emissions caused by the combustion of RDS gas in cars and RDS oil in heating systems.

The court made it clear that companies also have a due diligence obligation to protect the climate. They cannot simply shift the responsibility onto states.

Shell remains obligated to cut emissions

This ruling is off the table. But that’s just the facade. In short, the associations around Milieudefensie and Greenpeace lost because RDS – according to the Court of Appeal – was already doing enough to reduce its Scope 1 and Scope 2 emissions. The court believed the company’s voluntary commitment and found that there was no risk of a violation of legal requirements.

However, it also confirmed RDS’ legal obligation to protect the climate – including with regard to Scope 3 emissions. As far as these are concerned, the judges only felt unable to transfer the IPCC-based reduction obligations of 45 percent to individual economic sectors or companies. In principle, however, it confirmed that RDS is still obliged to cut its emissions.

This is the good news for the climate contained in the ruling: RDS will continue to be subject to a climate action obligation. The company can be forced to comply with it through legal action.

Decisive arguments for climate lawsuit against Volkswagen

Moreover, the company failed with all its fundamental challenges to the first-instance ruling. The Court of Appeal has confirmed this:

Civil law is applicable in this case, even if there is a specific national law that regulates climate action in principle. This primarily refers to EU emissions trading. This means that RDS cannot escape its responsibility by pointing to national rules and laws.
Companies are also responsible for their Scope 3 emissions.
Their duties are also indirectly rooted in human rights, because without climate action, the right to life and health cannot be safeguarded.

These fundamental principles from the ruling may be crucial in Germany, for example, in the pending proceedings against Volkswagen AG.

Global lawsuits to ban new oil and gas projects

And how it backfired? According to the court, developing new oil and gas deposits is unlawful as the foreseeable emissions are incompatible with the Paris goals. Yet the plaintiff associations had not even sought such a ban. However, other plaintiffs in other proceedings have done so – in total, there are around 25 comparable lawsuits worldwide.

And with this court ruling, those delegations and environmental organizations currently calling for a global fossil fuel ban at the COP29 in Baku are also receiving a tailwind. It would come at just the right time.

Roda Verheyen is a lawyer specializing in climate and environmental law. Together with Greenpeace, she is suing Volkswagen AG in Germany for more climate action and RWE AG for the payment of climate impact costs.

CLIMATE.TABLE EDITORIAL OFFICE

Bernhard
Pötter

Alexandra
Endres

Christiane
Kühl

Lisa
Kuner

Lukas
Knigge

Malte
Kreutzfeldt

Nico
Beckert