Azerbaijan, the host of the 29th UN Climate Change Conference (COP29) in November, called on fossil fuel producers on Friday to contribute to a new “concept” fund it aims to create.
This fund would finance energy transition and climate change adaptation in developing countries.
$1 Billion Target and Voluntary Contributions
The initiative, announced during a press conference broadcast from Baku, aims to raise an initial $1 billion through “voluntary contributions” from countries and companies extracting oil, gas, and coal.
Contributions could be in the form of a lump sum or proportional to production volume.
Climate Finance Action Fund (CFAF)
Azerbaijan, a major oil and gas producer, did not disclose its own contribution to this proposed “Climate Finance Action Fund (CFAF),” nor whether other fossil fuel producers had expressed interest.
“At this stage, it’s an initial concept,” said Ialchin Rafiev, chief negotiator for COP29. The fund would only launch once the financial target is met and ten countries commit to annual contributions.
Funding Renewable Energy and Climate Resilience
The future fund would finance renewable energy projects, green industries, support and decarbonize agriculture, and respond to climate disasters through concessional loans or grants, according to the COP29 presidency.
“This will not be an Azerbaijani fund, but a multilateral fund,” Rafiev promised, assuring that the management “will include representatives of the contributors,” including private and public oil and gas companies, under the supervision of an “independent audit committee.”
Mixed Reactions and Concerns
Li Shuo, a climate negotiation specialist at the Asia Society Policy Institute, called it an “interesting attempt to make the ‘polluter pays’ principle a reality.”
It’s also a “clever way to start the conversation about ‘who will pay’ before the major confrontation” on climate finance.
Greenwashing Accusations and Calls for Real Action
Nearly 200 countries hope to agree at COP29 on the amount that wealthy nations will contribute to developing countries for climate action after 2025.
Wealthy nations, historically responsible for global warming, are under pressure from the rest of the world to significantly increase their current aid of $100 billion per year. In response, these developed economies are demanding that other major historical polluters, like China and Saudi Arabia, also contribute.
Emphasizing the responsibility of fossil fuel producers is “at the heart of climate justice,” but “multiplying portfolios doesn’t make you richer,” Joe Thwaites, an expert from the Natural Resources Defense Council (NRDC), told AFP.
Friederike Röder, vice president of the NGO Global Citizen, argued for “a real tax, not just an opaque voluntary mechanism,” noting that “the five major oil and gas companies made $281 billion in profits in the last two years.”
Oil Change International called the initiative “a waste of time” and “greenwashing,” especially since “the idea of taxing polluters and the super-rich to finance the trillions needed for the fight against climate change is gaining momentum.”
The topic is high on the agenda of the G20, whose finance ministers are meeting in Rio on July 25-26.