Oil-rich Azerbaijan has taken a preliminary step toward climate finance in anticipation of the UN COP29 summit it will host in November, aiming to raise a minimum of $500 million for environmentally friendly projects.
Climate Investment Fund for the Future
Under the working title of the “Climate Investment Fund for the Future,” Baku plans to launch the venture with a contribution from the state oil company, SOCAR, according to a senior COP29 official. The fund seeks to attract additional capital from other fossil fuel producers.
The amount is notably smaller than the $30 billion fund announced by the United Arab Emirates at COP28 in Dubai, which aims to mobilize $250 billion of private sector investment in climate action by 2030.
A Starting Point for Fossil Fuel Companies
However, COP29 officials emphasized that the Azeri fund is intended as a starting point for fossil fuel companies to contribute to climate finance, providing a mechanism for them to donate lump sums or portions of revenue.
This initiative follows Azerbaijani President Ilham Aliyev’s defense of the country’s “god-given” oil and gas reserves earlier this year. Aliyev argued that these resources are essential to meet European energy demand in the foreseeable future.
Concerns Over Azerbaijan’s Commitment to Climate Action
Some diplomats and negotiators have expressed private concerns about Azerbaijan’s reluctance to address the issue of transitioning away from fossil fuels, given its heavy reliance on oil and gas revenues.
At COP28 in Dubai, nearly 200 countries agreed to move away from fossil fuels “in a just, orderly, and equitable manner” to achieve net zero emissions by 2050. However, progress toward this goal under the UN climate process has been minimal since then.
Details of the Climate Fund
The senior COP29 official explained that returns on investments from the climate fund would be reinvested, and discussions are ongoing regarding whether 50% of the capital should be reserved for developing countries most affected by extreme weather events.
“Once the concept is finalized, we will reach out to parties we believe could be potential contributors… We will be inviting all countries that produce and use fossil fuels to participate in the initiative,” the official stated, clarifying that the fund would not impose a levy on fossil fuel companies.
Tensions in UN Climate Talks
UN climate talks in Bonn in June, midway before COP29, concluded with disagreements between developing and developed nations regarding a new climate finance target.
The previous $100 billion annual target set in 2009 was finally met last year, albeit two years behind schedule and after reclassifying existing aid.
Disagreements on Contributions
Major donors like the EU and the U.S. have called on economically advanced countries like China and Saudi Arabia to contribute more to future climate finance.
However, this push has faced resistance due to arguments that historical emissions benefiting wealthier nations are the root cause of climate change.
Challenges for COP29 Climate Targets
This stalemate has left UN climate negotiators frustrated about the prospects of upgrading climate targets at COP29 to effectively address the consequences of global warming.