This year’s international climate talks will focus on challenging negotiations about how Canada and other affluent countries—major historical contributors to global warming—should financially support other nations in combating climate change.
Key questions under discussion include: the amount of money wealthy countries should contribute, which nations should pay, and how funds should be provided. These decisions could influence how much support developing countries receive for projects like renewable energy and wetland conservation.
Failing to establish a new funding goal could undermine global trust and weaken efforts to limit global warming, say experts like Bill Hare, CEO of Climate Analytics.
Understanding Climate Finance
The UN climate talks acknowledge that historically high-emitting, wealthier countries bear a larger responsibility to address climate change. Since the mid-19th century, Canada and 22 other high-income nations have generated about half of the world’s emissions, despite representing only 12% of the global population. In 2009, these countries pledged to mobilize $100 billion per year by 2020 to aid lower-income nations in reducing emissions and managing climate impacts. This funding, a mix of public and private sources, has supported projects worldwide—from solar plants in Samoa to electric buses in Jamaica.
However, the $100 billion goal was only achieved in 2022, two years late, leading to frustration among developing countries. Soomin Han, a climate finance analyst at Climate Action Network Canada, calls a new, fair funding agreement an urgent “moral imperative.”
The Central Role of Climate Finance in COP29
With the deadline to set a new funding goal by 2025 approaching, COP29 will likely be dominated by climate finance discussions. Another milestone deadline looms in 2025 for updated national plans to cut emissions by 2035, aligned with the Paris Agreement’s target of limiting global warming to 1.5 degrees Celsius. Canada's former environment minister, Catherine McKenna, stresses that achieving these goals will require a substantial, realistic financial commitment.
Canada’s Financial Contribution
In 2021, Canada doubled its climate finance commitment to $5.3 billion over five years. Canadian aid groups are urging the government to increase this to $15.9 billion for the next five-year cycle, ending in 2031. Nonetheless, some analyses suggest developing nations need over $1 trillion annually to meet their climate objectives. While Canada hasn’t proposed a specific amount, Environment Minister Steven Guilbeault mentioned the funding goal could encompass contributions from both the public and private sectors.
Who Should Contribute?
The list of 23 contributing countries hasn’t changed in over 30 years. Wealthier nations, including Canada, believe high-emission countries with rapidly growing economies, like China and Gulf states, should also contribute. Some fear, however, that wealthy nations could use this to deflect their own financial obligations. Canada will need to play a constructive role in these discussions, according to Catherine Abreu, director of the International Climate Politics Hub.
Canada’s Role in Climate Finance Negotiations
Canada has been a key player in climate finance talks. Guilbeault said Canada is viewed as a reliable partner and mediator, helping to foster solutions. Canada and Switzerland recently proposed new eligibility criteria to broaden the base of contributing countries to include nations like Russia, Saudi Arabia, and China.
Allocating and Delivering Funds
Naomi Johnson, co-chair of the Canadian Coalition on Climate Change and Development (C4D), argues that how funds are provided is crucial. Developing nations advocate for more grants over loans, as loans can worsen debt burdens. In 2022, some of the poorest nations spent over twice as much repaying debts as they received in climate finance. Canada aims for a 50-50 split between grants and loans in its climate commitments, though advocates prefer a 60-40 grant-to-loan ratio.
Climate experts also urge more equitable funding for emissions reduction and climate adaptation projects. Additionally, there’s debate over whether the new goal should include financing for “loss and damage” suffered by developing countries due to climate change. Canada has pledged $16 million to a separate loss and damage fund but prefers to keep this fund distinct from the broader climate finance goal.
As negotiations unfold, talks will address issues such as tracking contributions and dividing responsibilities between public and private sectors.
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