Azerbaijan Takes Bold Steps In Global Climate Leadership & Financial Aid At COP29

(MENAFN- AzerNews) Nazrin Abdul Read more

Azerbaijan has stepped up playing a pivotal role as the presidency of COP29, leading the charge on urgent global issues exacerbated by climate change. With a steadfast commitment to confronting these challenges head-on, Baku has prioritized directing financial aid towards viable solutions, particularly for vulnerable small island states. This dedicated focus will be further underscored at the upcoming Baku conference.

Recent data highlights a striking statistic: an overwhelming majority-85%-of the $2 trillion allocated globally for transitioning to clean energy and combating climate change has been channeled towards developed economies and China. Economist Rashad Hasanov acknowledges this allocation, noting its alignment with these countries' significant contributions to the adoption of global clean energy solutions.

In his comment to Azernews on the issue, economist Rashad Hasanov stated that he considers it normal to allocate more resources to countries that play a major role in increasing the share of clean energy in global energy consumption.

"However, it should be taken into account that 70-80 percent of the energy currently produced in the world falls under the share of these developed countries plus China. Therefore, the transition of these countries to clean energy significantly contributes to increasing the share of clean energy in global energy consumption."

The expert noted that as countries that are allocated funds are of the developed ones, they tend to spend the financial aid on their own strategies.

"The second point concerns the allocation of funds-who allocates them? Money naturally flows from developed countries, prioritizing safeguarding their communities and societies. Therefore, a larger portion of the fund is directed towards financing their strategies."

The expert also emphasized that since issues like clean energy are not prioritized by underdeveloped countries, allocating substantial funds for such purposes can potentially lead to corruption.

"The third point underscores that clean energy and similar initiatives are not top priorities for underdeveloped countries, where comprehensive programs are often lacking. In societies facing challenges with basic needs, allocating significant funds for transitioning to clean energy and other related issues may, unfortunately, become susceptible to corruption."

If robust controls can be established over the allocated funds, the expert added, these funds could then be directed to developing countries or third-world countries.

"Currently, however, there is a risk that funds allocated for these purposes might be misdirected or used inefficiently. Therefore, it is crucial to prioritize the establishment of a comprehensive global oversight framework. Once strict guidelines for fund management are in place and countries commit to rigorous accountability measures, it will be appropriate to allocate funds to developing countries and third-world nations. Ultimately, it's important to recognize that our world is interconnected, and events impact everyone globally, regardless of their location."

It should be noted that on July 19, Azerbaijan announced the establishment of the Climate Finance Action Fund (IMFF) to invest in climate action in developing countries. The Fund, founded by Azerbaijan as a donor, aims to build its capital through financial contributions from mining and fuel-producing countries, as well as oil, gas, and coal companies. Member countries and companies will make annual payments based on a fixed amount or production volume.

The creation of the Fund is one of 14 initiatives unveiled today by Azerbaijan under the COP29 Agenda for Action, aimed at increasing ambition and catalyzing action.

The IMFF will serve as a catalyst for public-private partnerships to mobilize the private sector and mitigate investment risks. It will also possess specialized technical capabilities to provide concessional and grant-based support, particularly for swiftly addressing the aftermath of natural disasters in vulnerable developing countries.

Furthermore, the IMFF will secure future product purchase contracts for small and medium-scale renewable energy producers and compensate for initial capital losses in "green" industrial projects. Additionally, the Fund will prioritize the food and agriculture sector to safeguard basic livelihoods and achieve net-zero emissions goals. Profits from projects will be reinvested into the Fund.

The Fund aims to launch with an initial USD 1 billion in funds and 10 shareholder countries as donors.

Half of the Fund's capital will support climate projects in developing countries, focusing on mitigation, adaptation, scientific research, and technological innovation to promote clean energy technologies, enhance energy efficiency, bolster climate resilience among vulnerable populations, and foster advanced technology development.

The remaining half of the funds will facilitate the development of new Nationally Determined Contributions aligned with the 1.5°C target by member countries. Azerbaijan is committed to exemplary leadership in this area and is currently developing a Nationally Determined Contribution document tailored to this goal. The COP29 Presidency encourages all Parties to formulate similar plans.

Additionally, 20% of investment proceeds will be allocated to the Operational Financing Facility (2R2F), providing highly concessional and grant-based support. This mechanism aims to swiftly deliver financial assistance to small island developing states, least developed countries, and other vulnerable communities grappling with the immediate impacts of natural disasters.

It is also noteworthy that during the pandemic, Azerbaijan extended financial and humanitarian aid to more than 80 countries, including approximately 20 small island developing states.

Azerbaijani President has consistently emphasized in his speeches the vulnerability of small island developing states to climate change impacts. These nations, despite having minimal contribution to global climate change, face its most severe consequences, including existential threats. Climate change also poses a significant barrier to their progress toward achieving Sustainable Development Goals.

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