Council on Energy, Environment and Water Integrated | International | Independent
The Bonn Conference is a mid-year indicator of where climate negotiations are headed, and critical to answer the question: who pays for climate finance and how much?
As India and other regions in South Asia see sweltering heatwaves and erratic monsoon rains, highlighting the need for urgent climate action, the mid-year review of climate progress is in. At the recently concluded Bonn conference — commonly referred to as the ‘intersessional COP’ — the negotiations once again hit a stalemate. The Bonn conference stands at a critical juncture in the run-up to the 29th Conference of Parties (COP29) in Baku later this year. It tracks progress on previous commitments and paves the way for future ambitious decisions. This is where all technical work happens, from agenzda setting to committee meetings. But after two weeks of intense technical negotiations against the backdrop of rising debt, geo-political tensions and climate emergencies, decisions were entrenched in disagreements, majorly over finance.
We are just five months away from the next Conference of Parties (COP) in Baku, where all eyes will be on defining the new climate finance goal and how the trillions of dollars that the Global South needs to address climate change will be provided. However, the mid-year climate discussions have concluded with limited progress, paving a potentially challenging road to the COP29 summit.
In 2015, parties to the Paris Agreement decided that a New Collective Quantified Goal (NCQG) would be set before 2025 to supersede the earlier target of USD 100 billion per year, taking into account the needs and priorities of developing countries. Discussions on three aspects — quantum, sources and timeline of the NCQG — were on the top of the agenda at Bonn.
The 'quantum' became a fiercely debated issue with developing country groups including the Like-Minded Developing Countries (LMDC) and the Arab and African Group advocating for annual amounts ranging from USD 1.1- USD 1.3 trillion (subject to revision based on updated needs assessments) to be delivered as climate finance. A UNFCCC report on finance suggested countries need USD 6 trillion until 2030 to implement their climate actions (without fully accounting for adaptation). India earlier this year also formally proposed that developed countries should commit to providing at least USD 1 trillion every year after 2025. Instead of engaging in these discussions, developed countries at Bonn chose to sidestep and steer discussions towards defining the multiple "layers" of finance (diverse sources and instruments) rather than the quantum.
Additionally, tough questions regarding the donor base—who should pay for climate finance—became another issue. The developed world suggested adopting a mosaic approach with contributions from the private sector, multilateral development banks and emerging economies. Taking it one step further, the European Union suggested setting criteria for contributions based on economic conditions and current emissions to reflect "new economic realities”, while Switzerland proposed considering countries with space programmes to contribute in order to expand the donor base. The G77+China, however, reiterated its position that developed countries have committed under the Paris Agreement to provide climate finance and must do so in light of historical emissions.
Paradoxically, UNFCCC Executive Secretary Simon Stiell’s opening speech at the Bonn conference emphasised finance being the ‘great enabler of climate action’, but the debate on finance continued. It was expected to give some indicative numbers in light of equity and historical responsibility, determine who should contribute and discuss other key aspects like common definition of climate finance, but it ended with only an input paper. It is important to adopt a New Collective Quantified Goal to replace the USD 100 billion commitment, focusing not only on its quantum but also on setting an incremental trajectory across years towards meeting it, considering the evolving needs of developing countries and clearly highlighting the role of developed countries in mobilising this fund in a timely manner.
Compensation for climate-induced loss and damage has been a long-standing demand of vulnerable countries. The operationalisation of the L&D fund and funding arrangements at COP28 last year was a clear win in this direction. While the fund has been established, discussions on developing the modalities and arrangements for the L&D fund, particularly on accessing finance, were less notable in the Bonn discussions. The discussions circled around three key parameters: inclusion of L&D under NCQG; synergies amongst the key mechanisms - Warsaw International Mechanism (WIM), Santiago Network and LDF; and topics for inclusion in the Terms of Reference (TOR) for the next review of the WIM due to take place at COP29. While the Parties agreed on the TOR, deliberations on other matters were slow.
Adding to the debate, finance remained a focal point across all discussions. There was a clear split between developed and developing countries where the latter, especially the LDCs and Alliance of Small Island States (AOSIS) bloc, suggested adding loss and damage as a ‘sub-goal’ under the NCQG to reinforce the need for finance. However, this was rejected by the developed world stating that there already is a dedicated fund for paying for losses and damages and NCQG should consist of only two categories: mitigation and adaptation. The world has weathered losses and damages worth USD 41 billion in the six months since COP28 and the current amount pledged under the fund stands at a mere USD 792 million, showcasing the reluctance of the rich countries to pay. Developed countries continue to fall behind when it comes to paying their fair share to tackle the climate crisis – a crisis their emissions have caused.
Adaptation was another contentious issue at Bonn from two standpoints: modalities of the work programme to define adaptation indicators and mobilisation of adaptation finance. Adaptation can be understood as the capacity, ability and process to adjust to the current and future climate impacts, which is a key concern for developing countries in light of geo-political realities, low adaptive capacity and developmental priorities. The modalities of the work programme — an overall framework to guide efforts and progress — such as objective and timeline for the Global Goal on Adaptation (GGA) was expected to be agreed upon but saw little progress for a fairly straightforward process. Parties were suggested to identify missing areas under the existing indicators, data availability and applicability to different national contexts amongst other factors to facilitate adoption of indicators at COP30. The objective is to better collect, track and assess countries’ progress towards adaptation and support with second global stocktake.
In addition to this, who should be responsible for mapping indicators across 11 targets decided at COP28 that could range from affected population due to disasters to finance as well as food and water security, saw divergent views. The EU, US and Japan suggested this should be handled by the Adaptation Committee and others, like the G77 bloc, recommended a new ‘expert group’ to undertake this technical effort. All these efforts require finance and developing countries in the G77 and China group strongly pushed for the inclusion of adaptation finance under the GGA, which turned out to be futile. The lack of progress on adaptation shows that the window of action is closing and countries must decide on this before engaging in another series of empty discussions on operational and procedural issues.
Article 6 of the Paris Agreement states how countries can pursue voluntary cooperation to reach their climate targets through carbon credits, such as bilateral transfer (Article 2), a centralised market mechanism (Article 4), and non-market approaches (Article 8). However, numerous knotty issues necessary to operationalise the carbon markets fell short of consensus at COP28. These discussions continued at the Bonn conference, largely revolving around credit authorisation, and modalities for reviewing confidential information. There was some progress. Parties agreed that “emissions avoidance” activities such as avoiding the development of new fossil fuel projects would not qualify for tradable carbon credits. This decision will be revisited in 2028 during a comprehensive reassessment of the mechanism. While closing this door permanently would have been ideal, this decision still prevents dubious approaches that could have generated large quantities of ineffective carbon credits and led to ‘greenwashing’.
Additionally, progress was also seen on confidentiality rules, with ongoing efforts to classify carbon trading information as confidential. Countries gave the green light for the UNFCCC to develop a code of conduct on “treating and reviewing” information identified as confidential by participating countries. While the development of such a code of conduct is a positive step, this code of conduct still needs approval from all countries involved.
Much is left to be discussed and decided after two weeks of gruelling negotiations at Bonn, a midyear indicator of where climate negotiations are headed. Divergences between developing and developed countries continue to be pronounced on key political issues. In one of the finance discussions, the lead finance negotiator for China submitted that the atmosphere was as tense as the 2015 Paris Agreement negotiations. As the clock ticks away, the diplomatic success of the Paris negotiations should permeate the discussions in Baku later this year towards cooperation and meaningful action for two things most required: delivery of finance and accountability of actions.
Jhalak Aggarwal is a Programme Associate and Simran Sukhija is a Research Analyst at the Council on Energy, Environment and Water (CEEW). Send your comments to [email protected]
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