The first week of the COP in Baku is drawing to a close and the fuss about the heads of government is over. On the contrary, the undiplomatic outbursts by Azerbaijan’s President Aliyev, for example, have put a strain on the conference climate. Detailed work is now required. As usual, things are tough when it comes to content: Progress on the financial target is barely measurable and the negotiations are far behind schedule. Now and again, elements of a possible agreement emerge, as Nico Beckert reports.
Because things are getting serious, the conference leadership must now take the lead, many complain. Big names in the climate scene, on the other hand, are calling for a completely new negotiating system for climate action. It certainly won’t be boring in the packed corridors in the belly of the Baku stadium. And we also discovered a source of chocolate, but it’s a secret.
Unbelievable for all summit participants: Life outside the COP goes on. And so a proposal is taking shape to fundamentally change EU emissions trading with the new EU Commission: New certificates are to boost the market for negative emissions, writes Lukas Knigge. Proposals to make flying less harmful to the climate by changing flight altitudes have nothing to do with the COP for the time being – until everyone gets back on the plane home in just over a week.
Until then, we will stay tuned for you. Hang in there!
At COP29, negotiators are struggling to find possible pieces of the puzzle for a solution to climate finance. The official negotiations have started in earnest, but are proceeding very slowly and are behind schedule. Sweden provided a positive sign. A new climate fund announced by the COP host was postponed – while a new report by a high-level group of experts once again makes it clear how much money is needed.
Time is of the essence when it comes to the new climate finance target , admitted the COP presidency’s lead negotiator Yalchin Rafiyev on Thursday. The Third Report of the Independent High-Level Expert Group on Climate Finance (IHLEG), which was presented on Thursday and quantified the financing requirements under the leadership of British economist Lord Nicholas Stern, shows just how great the need for and pressure to act on climate finance is:
Meanwhile, the EU negotiators are “very concerned” about the sluggishness of the talks on the NCQG so far and describe the draft, which is still over 30 pages long, as a “step backwards”. The final text should not be more than two pages long, demands the chief negotiator for the European Commission, Jacob Werksman. “We are still a long way from a compromise.” The COP presidency must now intervene, he demanded.
“The NCQG negotiations would now benefit from a boost from the presidency,” says David Ryfisch, climate finance expert at Germanwatch. The technical negotiations should actually be concluded by Saturday. “The presidency could support this with a clear strategy on how to make progress.”
Positive news comes from Sweden. The country has made the equivalent of 725 million US dollars available for the Green Climate Fund (GCF) for the years 2024 to 2027. “With its contribution to the GCF, Sweden is the largest per capita donor among the major donors,” said Sweden’s Minister for Development Cooperation and Foreign Trade, Benjamin Dousa.
Unlike at other COPs, such early high-profile contributions are scarce in Baku. But at this year’s climate conference, “this normal dynamic has been changed by the NCQG,” says Rob Moore of E3G. Countries want to keep their powder dry for the decisive NCQG negotiation days.
This is also evident in the financing of climate adaptation. At the so-called Contributor Dialogue of the Adaptation Fund on Thursday, only $61 million were pledged by ten different donor countries. “This is absolutely sobering. Today’s pledges amount to just a fifth of the self-imposed mobilization target – that sends a bad signal to the COP negotiations,” says Julia Grimm, climate finance and adaptation officer at Germanwatch. Germany’s pledge is still pending and is expected next week.
The COP presidency’s Climate Finance Action Fund (CFAF) was actually expected to be presented at yesterday’s COP Finance Day. However, a high-level event to launch the fund was canceled at short notice, as reported by Climate Home News. The CFAF was to collect voluntary payments from oil and gas states for climate financing and reach a volume of one billion US dollars. According to reports, developing countries shy away from a possible precedent for climate financing. According to Rafiyev, a working group is now to draw up a concept for the CFAF.
To bring the topics of finance, investment and trade closer together, the COP29 host launched the Baku Initiative on Climate Finance, Investment and Trade (BICFIT) on Thursday. It is intended to serve as a dialog platform to promote “climate-positive investments”. The initiative is important for highlighting the importance of trade and investment for climate protection. However, there are doubts as to whether it can resolve contentious trade issues. “The multilateral system still lacks a proper venue to address progress on the more contentious issues at the intersection of climate and trade policy, such as unilateral trade measures,” says Ellie Belton, E3G Senior Policy Advisor. Collaboration: Lukas Knigge
The Director of the Potsdam Institute for Climate Impact Research, Ottmar Edenhofer, presented his proposals in Baku on Thursday on how carbon dioxide removal (CDR) from the atmosphere can become marketable and, above all, profitable. He proposes so-called “clean-up” certificates which, in addition to the conventional CO2 levy of the European Emissions Trading Scheme (ETS), include the promise to remove the emitted CO2 from the atmosphere at a later date. Edenhofer explained his ideas at COP29.
Accordingly, companies covered by the ETS would have a choice. They can either buy regular emission allowances or clean-up certificates, which come with a carbon debt. For the latter, they would deposit collateral with a central body – Edenhofer proposes the establishment of a central carbon bank – which they would only receive back if they ensure that the CO2 emitted is removed from the atmosphere at a later date. A removal certificate would not allow any additional emissions above the ETS emissions cap, but would replace a regular emissions allowance on a one-to-one basis.
According to Edenhofer, this would have several advantages:
Clean-up certificates are interesting for companies that assume that CDR costs in the future will be lower than the current costs of reducing emissions, explains Edenhofer. Risk costs for CDR projects would fall and investments in CDR could increase.
The hope of the approach is that private capital would finance the CDR ramp-up. This is because public funds alone can hardly finance the CO2 removals that are necessary in Europe to achieve the climate targets. In the LULUCF sector, the EU expects a potential of up to 472 megatons of CO2 equivalents. This corresponds to 13% of the EU’s total emissions in 2019. For technological CO2 removals, the EU assumes up to 606 megatons of CO2e; this corresponds to 17% of EU emissions in 2019.
These reductions are needed to compensate for residual emissions, for example from industry or agriculture, even after Europe’s planned climate neutrality in 2050. With estimated costs of up to 400 euros per ton of CO2, countries would have to invest several hundred billion euros a year in carbon sinks.
Discussions on this are ongoing at EU level. Both Climate Commissioner Wopke Hoekstra and the Director General for Climate Policy Kurt Vandenberghe have already emphasized the importance of including CO2 removals in emissions trading.
The EU Parliament yesterday approved significant changes to the EU regulation on deforestation-free supply chains (EUDR): The implementation deadline will be postponed by one year so that larger companies will have to comply with the rules from the end of 2025 and smaller ones from mid-2026. For products such as cocoa, coffee and soy, it must then be ensured that they do not originate from areas deforested after 2020. Some EU member states, trading partners and affected companies had lobbied hard for the deadline to be postponed.
In addition, the law, which had already been adopted by the Commission, Parliament and Council in 2023, must be reopened for trilogue negotiations. Several of the amendments tabled by Christine Schneider (EPP) received a majority yesterday morning from the EPP, the right-wing parties and some Renew MEPs, including the FDP.
Following an informal agreement with the Renew Group led by Pascal Canfin and under pressure from other political groups, the EPP withdrew six of 15 amendments yesterday morning. These would have gone much further. They would have exempted traders from the rules and postponed the deadline by two years.
The current changes are primarily about supplementing the country benchmarking, on the basis of which the Commission must classify producer countries into three different categories by mid-2025, depending on the risk of deforestation: “low”, “normal” and “high” risk. On this basis, certain control quotas will then apply to the product groups concerned. The EPP has now introduced a fourth category for “no-risk” countries. These are to be subject to significantly less stringent requirements.
“We don’t want to punish those who have already done their homework,” explained Schneider at a press conference. For countries that can demonstrate sustainable forest management, additional verification and documentation is unnecessary.
Social Democrats and Greens, who had voted against all amendments, had warned against such a zero-risk category: The EPP knew that this category “is highly controversial among the EU member states”, said Delara Burkhardt, who had helped negotiate the law for the S&D Group. This is because the EU member states would also be divided into different risk categories, fragmenting the internal market. Burkhardt therefore believes it is impossible for new negotiations with the Council to be concluded by the end of the year. This could mean that the EUDR would initially enter into force in its current form on Dec. 30, 2024.
Anna Cavazzini, Chair of the Internal Market Committee (IMCO), called on the EU Commission to withdraw the proposal for a postponement. With this, Commission President Ursula von der Leyen would have “opened Pandora’s box”.
Cavazzini warned that the exemption for EU member states through the zero-risk category would “backfire and make the regulation incompatible with the WTO“. This would make it possible to cut down old mixed forests in one region and compensate for this by planting monocultures. “This is disastrous for biodiversity,” she said.
Christine Schneider, on the other hand, expressed optimism that the trilogue negotiations could be concluded by Christmas. She received applause from the European trade association EuroCommerce, among others, which particularly welcomed the postponement. “This time is needed to eliminate remaining uncertainties in implementation, reduce complexity and prepare suppliers in our supply chains,” it said in a press release.
Schneider did not seem to find it a cause for concern that the majorities for some amendments were only achieved with the help of far-right votes – including the AfD. “We are all elected members of this Parliament,” she said.
At COP28 in the United Arab Emirates, Germany pledged $100 million to the Loss and Damage Fund, which was launched by the UN Climate Change Secretariat in 2023 – 42 years after countries in the Global South first demanded compensation for the damage caused by the climate crisis. Initially, the fund was hailed as a success for the countries that were most affected by the climate crisis and contributed the least to it. However, a closer look reveals considerable shortcomings.
The Loss and Damage Fund is based on a logic of development aid that involves voluntary aid from countries in the Global North to the Global South. Conditions are often attached. However, over the past 50 years, this form of aid has neither changed the balance of power between North and South nor effectively helped the people affected.
What the countries of the Global South really need is the opportunity for self-determination, which is hindered by the unequal balance of power between their economies and those of the Global North. A significant obstacle to this is currently the debt of the Global South stemming from the colonial past, which institutions such as the International Monetary Fund and the World Bank continue to force them to service.
The problem with development aid and funds such as the Loss and Damage Fund is that they only account for a fraction of the money that flows from the South to the North in the form of debt, interest payments and unequal trade. This unequal exchange means that the North obtains resources at more favorable prices than the South.
This power dynamic is so deeply rooted in the global trading system that the Global North extracts around ten trillion US dollars from the South every year – thirty times the amount of development aid that flows back from the Global North. The Loss and Damage Fund does nothing to change this extractivist logic and does not free the economies of the South from their dependency, as neither debt relief nor the end of extractive relationships are envisaged.
To deal with the climate crisis fairly, we therefore need to move to an approach that focuses on climate reparations. This approach comprises several components:
First of all, an apology is needed for the damage done. Countries of the Global North are primarily responsible for the climate crisis due to excessive CO2 emissions and exceeding a fair per capita CO2 budget. The Global North must recognize this climate debt and take responsibility.
But this is not happening: In the negotiations for the Loss and Damage Fund, the countries responsible even made it a condition that this responsibility or even liability for the damage caused would not be discussed. Without an acknowledgement of responsibility, the money in the fund remains voluntary charity and not compensation for centuries of exploitation.
Secondly, reparations include financial or other forms of compensation. These include:
The current system of development aid continues to maintain the dependency of the Global South and massively limits its ability to decarbonize. A massive expansion of compensation payments is therefore needed to give weight to the Global North’s assumption of responsibility.
Thirdly, reparations require a guarantee of non-repetition. This means an assurance by the countries of the Global North that they will not repeat past offenses such as the massive overexploitation of planetary resources or the exploitation of the Global South.
Settling existing climate debts through reparations is the paradigm that can empower the Global South to tackle the climate crisis. Recognizing the responsibility of the North is the first step. This is followed by canceling the illegitimate debt owed to the Global South. Then we need to find new ways to move from loss and damage to climate reparations.
Lee Amaduzzi’s focus is on the intersection of degrowth and decolonial reparations. Oumarou works on the topics of climate debt and reparations. Both are part of the think tank Konzeptwerk Neue Ökonomie.
The first week of the COP in Baku is drawing to a close and the fuss about the heads of government is over. On the contrary, the undiplomatic outbursts by Azerbaijan’s President Aliyev, for example, have put a strain on the conference climate. Detailed work is now required. As usual, things are tough when it comes to content: Progress on the financial target is barely measurable and the negotiations are far behind schedule. Now and again, elements of a possible agreement emerge, as Nico Beckert reports.
Because things are getting serious, the conference leadership must now take the lead, many complain. Big names in the climate scene, on the other hand, are calling for a completely new negotiating system for climate action. It certainly won’t be boring in the packed corridors in the belly of the Baku stadium. And we also discovered a source of chocolate, but it’s a secret.
Unbelievable for all summit participants: Life outside the COP goes on. And so a proposal is taking shape to fundamentally change EU emissions trading with the new EU Commission: New certificates are to boost the market for negative emissions, writes Lukas Knigge. Proposals to make flying less harmful to the climate by changing flight altitudes have nothing to do with the COP for the time being – until everyone gets back on the plane home in just over a week.
Until then, we will stay tuned for you. Hang in there!
At COP29, negotiators are struggling to find possible pieces of the puzzle for a solution to climate finance. The official negotiations have started in earnest, but are proceeding very slowly and are behind schedule. Sweden provided a positive sign. A new climate fund announced by the COP host was postponed – while a new report by a high-level group of experts once again makes it clear how much money is needed.
Time is of the essence when it comes to the new climate finance target , admitted the COP presidency’s lead negotiator Yalchin Rafiyev on Thursday. The Third Report of the Independent High-Level Expert Group on Climate Finance (IHLEG), which was presented on Thursday and quantified the financing requirements under the leadership of British economist Lord Nicholas Stern, shows just how great the need for and pressure to act on climate finance is:
Meanwhile, the EU negotiators are “very concerned” about the sluggishness of the talks on the NCQG so far and describe the draft, which is still over 30 pages long, as a “step backwards”. The final text should not be more than two pages long, demands the chief negotiator for the European Commission, Jacob Werksman. “We are still a long way from a compromise.” The COP presidency must now intervene, he demanded.
“The NCQG negotiations would now benefit from a boost from the presidency,” says David Ryfisch, climate finance expert at Germanwatch. The technical negotiations should actually be concluded by Saturday. “The presidency could support this with a clear strategy on how to make progress.”
Positive news comes from Sweden. The country has made the equivalent of 725 million US dollars available for the Green Climate Fund (GCF) for the years 2024 to 2027. “With its contribution to the GCF, Sweden is the largest per capita donor among the major donors,” said Sweden’s Minister for Development Cooperation and Foreign Trade, Benjamin Dousa.
Unlike at other COPs, such early high-profile contributions are scarce in Baku. But at this year’s climate conference, “this normal dynamic has been changed by the NCQG,” says Rob Moore of E3G. Countries want to keep their powder dry for the decisive NCQG negotiation days.
This is also evident in the financing of climate adaptation. At the so-called Contributor Dialogue of the Adaptation Fund on Thursday, only $61 million were pledged by ten different donor countries. “This is absolutely sobering. Today’s pledges amount to just a fifth of the self-imposed mobilization target – that sends a bad signal to the COP negotiations,” says Julia Grimm, climate finance and adaptation officer at Germanwatch. Germany’s pledge is still pending and is expected next week.
The COP presidency’s Climate Finance Action Fund (CFAF) was actually expected to be presented at yesterday’s COP Finance Day. However, a high-level event to launch the fund was canceled at short notice, as reported by Climate Home News. The CFAF was to collect voluntary payments from oil and gas states for climate financing and reach a volume of one billion US dollars. According to reports, developing countries shy away from a possible precedent for climate financing. According to Rafiyev, a working group is now to draw up a concept for the CFAF.
To bring the topics of finance, investment and trade closer together, the COP29 host launched the Baku Initiative on Climate Finance, Investment and Trade (BICFIT) on Thursday. It is intended to serve as a dialog platform to promote “climate-positive investments”. The initiative is important for highlighting the importance of trade and investment for climate protection. However, there are doubts as to whether it can resolve contentious trade issues. “The multilateral system still lacks a proper venue to address progress on the more contentious issues at the intersection of climate and trade policy, such as unilateral trade measures,” says Ellie Belton, E3G Senior Policy Advisor. Collaboration: Lukas Knigge
The Director of the Potsdam Institute for Climate Impact Research, Ottmar Edenhofer, presented his proposals in Baku on Thursday on how carbon dioxide removal (CDR) from the atmosphere can become marketable and, above all, profitable. He proposes so-called “clean-up” certificates which, in addition to the conventional CO2 levy of the European Emissions Trading Scheme (ETS), include the promise to remove the emitted CO2 from the atmosphere at a later date. Edenhofer explained his ideas at COP29.
Accordingly, companies covered by the ETS would have a choice. They can either buy regular emission allowances or clean-up certificates, which come with a carbon debt. For the latter, they would deposit collateral with a central body – Edenhofer proposes the establishment of a central carbon bank – which they would only receive back if they ensure that the CO2 emitted is removed from the atmosphere at a later date. A removal certificate would not allow any additional emissions above the ETS emissions cap, but would replace a regular emissions allowance on a one-to-one basis.
According to Edenhofer, this would have several advantages:
Clean-up certificates are interesting for companies that assume that CDR costs in the future will be lower than the current costs of reducing emissions, explains Edenhofer. Risk costs for CDR projects would fall and investments in CDR could increase.
The hope of the approach is that private capital would finance the CDR ramp-up. This is because public funds alone can hardly finance the CO2 removals that are necessary in Europe to achieve the climate targets. In the LULUCF sector, the EU expects a potential of up to 472 megatons of CO2 equivalents. This corresponds to 13% of the EU’s total emissions in 2019. For technological CO2 removals, the EU assumes up to 606 megatons of CO2e; this corresponds to 17% of EU emissions in 2019.
These reductions are needed to compensate for residual emissions, for example from industry or agriculture, even after Europe’s planned climate neutrality in 2050. With estimated costs of up to 400 euros per ton of CO2, countries would have to invest several hundred billion euros a year in carbon sinks.
Discussions on this are ongoing at EU level. Both Climate Commissioner Wopke Hoekstra and the Director General for Climate Policy Kurt Vandenberghe have already emphasized the importance of including CO2 removals in emissions trading.
The EU Parliament yesterday approved significant changes to the EU regulation on deforestation-free supply chains (EUDR): The implementation deadline will be postponed by one year so that larger companies will have to comply with the rules from the end of 2025 and smaller ones from mid-2026. For products such as cocoa, coffee and soy, it must then be ensured that they do not originate from areas deforested after 2020. Some EU member states, trading partners and affected companies had lobbied hard for the deadline to be postponed.
In addition, the law, which had already been adopted by the Commission, Parliament and Council in 2023, must be reopened for trilogue negotiations. Several of the amendments tabled by Christine Schneider (EPP) received a majority yesterday morning from the EPP, the right-wing parties and some Renew MEPs, including the FDP.
Following an informal agreement with the Renew Group led by Pascal Canfin and under pressure from other political groups, the EPP withdrew six of 15 amendments yesterday morning. These would have gone much further. They would have exempted traders from the rules and postponed the deadline by two years.
The current changes are primarily about supplementing the country benchmarking, on the basis of which the Commission must classify producer countries into three different categories by mid-2025, depending on the risk of deforestation: “low”, “normal” and “high” risk. On this basis, certain control quotas will then apply to the product groups concerned. The EPP has now introduced a fourth category for “no-risk” countries. These are to be subject to significantly less stringent requirements.
“We don’t want to punish those who have already done their homework,” explained Schneider at a press conference. For countries that can demonstrate sustainable forest management, additional verification and documentation is unnecessary.
Social Democrats and Greens, who had voted against all amendments, had warned against such a zero-risk category: The EPP knew that this category “is highly controversial among the EU member states”, said Delara Burkhardt, who had helped negotiate the law for the S&D Group. This is because the EU member states would also be divided into different risk categories, fragmenting the internal market. Burkhardt therefore believes it is impossible for new negotiations with the Council to be concluded by the end of the year. This could mean that the EUDR would initially enter into force in its current form on Dec. 30, 2024.
Anna Cavazzini, Chair of the Internal Market Committee (IMCO), called on the EU Commission to withdraw the proposal for a postponement. With this, Commission President Ursula von der Leyen would have “opened Pandora’s box”.
Cavazzini warned that the exemption for EU member states through the zero-risk category would “backfire and make the regulation incompatible with the WTO“. This would make it possible to cut down old mixed forests in one region and compensate for this by planting monocultures. “This is disastrous for biodiversity,” she said.
Christine Schneider, on the other hand, expressed optimism that the trilogue negotiations could be concluded by Christmas. She received applause from the European trade association EuroCommerce, among others, which particularly welcomed the postponement. “This time is needed to eliminate remaining uncertainties in implementation, reduce complexity and prepare suppliers in our supply chains,” it said in a press release.
Schneider did not seem to find it a cause for concern that the majorities for some amendments were only achieved with the help of far-right votes – including the AfD. “We are all elected members of this Parliament,” she said.
At COP28 in the United Arab Emirates, Germany pledged $100 million to the Loss and Damage Fund, which was launched by the UN Climate Change Secretariat in 2023 – 42 years after countries in the Global South first demanded compensation for the damage caused by the climate crisis. Initially, the fund was hailed as a success for the countries that were most affected by the climate crisis and contributed the least to it. However, a closer look reveals considerable shortcomings.
The Loss and Damage Fund is based on a logic of development aid that involves voluntary aid from countries in the Global North to the Global South. Conditions are often attached. However, over the past 50 years, this form of aid has neither changed the balance of power between North and South nor effectively helped the people affected.
What the countries of the Global South really need is the opportunity for self-determination, which is hindered by the unequal balance of power between their economies and those of the Global North. A significant obstacle to this is currently the debt of the Global South stemming from the colonial past, which institutions such as the International Monetary Fund and the World Bank continue to force them to service.
The problem with development aid and funds such as the Loss and Damage Fund is that they only account for a fraction of the money that flows from the South to the North in the form of debt, interest payments and unequal trade. This unequal exchange means that the North obtains resources at more favorable prices than the South.
This power dynamic is so deeply rooted in the global trading system that the Global North extracts around ten trillion US dollars from the South every year – thirty times the amount of development aid that flows back from the Global North. The Loss and Damage Fund does nothing to change this extractivist logic and does not free the economies of the South from their dependency, as neither debt relief nor the end of extractive relationships are envisaged.
To deal with the climate crisis fairly, we therefore need to move to an approach that focuses on climate reparations. This approach comprises several components:
First of all, an apology is needed for the damage done. Countries of the Global North are primarily responsible for the climate crisis due to excessive CO2 emissions and exceeding a fair per capita CO2 budget. The Global North must recognize this climate debt and take responsibility.
But this is not happening: In the negotiations for the Loss and Damage Fund, the countries responsible even made it a condition that this responsibility or even liability for the damage caused would not be discussed. Without an acknowledgement of responsibility, the money in the fund remains voluntary charity and not compensation for centuries of exploitation.
Secondly, reparations include financial or other forms of compensation. These include:
The current system of development aid continues to maintain the dependency of the Global South and massively limits its ability to decarbonize. A massive expansion of compensation payments is therefore needed to give weight to the Global North’s assumption of responsibility.
Thirdly, reparations require a guarantee of non-repetition. This means an assurance by the countries of the Global North that they will not repeat past offenses such as the massive overexploitation of planetary resources or the exploitation of the Global South.
Settling existing climate debts through reparations is the paradigm that can empower the Global South to tackle the climate crisis. Recognizing the responsibility of the North is the first step. This is followed by canceling the illegitimate debt owed to the Global South. Then we need to find new ways to move from loss and damage to climate reparations.
Lee Amaduzzi’s focus is on the intersection of degrowth and decolonial reparations. Oumarou works on the topics of climate debt and reparations. Both are part of the think tank Konzeptwerk Neue Ökonomie.
