THE history of fossil fuel industry has come full circle. The climate summit begins on Nov 11 in Baku, Azerbaijan, which was one of the first major centres of commercial oil extraction during the Industrial Revolution. Nobel Prize founder Alfred Nobel and his brothers made their money by establishing Branobel, which became one of the largest oil producers in Baku. It introduced several technological innovations including the first oil pipeline in Russia, and railway and commercial shipping lines to facilitate oil transportation. Climate leaders from across the world will congregate in Baku at COP29 to agree on global financial targets and to tackle the ever-increasing ecological footprint of the Nobel brothers’ technological innovations.

A complex agenda awaits Pakistan’s delegation at the upcoming climate summit. It is structured around two main pillars, both central to Pakistan’s climate resilience and economic development: first, enhancing ambition with an emphasis on deep, rapid, and sustained emission reductions to keep the global temperature rise below 1.5 degrees Celsius; second, enabling action by mobilising the finances necessary for reducing climate emissions, adaptation, and addressing loss and damage.

Both pillars are mutually reinforcing, and progress in one supports advancements in the other. COP29 is an opportunity to showcase how Pakistan is setting high-ambition climate targets and where and how we can become a destination for international climate finance. Our climate challenges are spread over a diverse ecosystem that can potentially offer a wide range of opportunities to pilot innovative climate solutions.

The main components of how COP29 plans to tackle climate finance include: i) the establishment of a New Collective Quantified Goal (NCQG) for climate finance, ii) enhanced commitments from countries through updated Nationally Determined Contributions (NDCs), and iii) the operationalisation of effective mechanisms for the Loss & Damage Fund (LDF). All three have particular significance for Pakistan.

A complex agenda awaits Pakistan’s delegation at the upcoming climate summit.

The NCQG will help create a new financial goal for evolving global financial needs. India and some other countries want an annual mobilisation target of $1 trillion, compared to a commitment of $100 billion per year, initially set for 2020. Some studies have projected even higher estimates at $5.8tr to $13.6tr by 2030. Developed countries are not inclined to commit to financial contributions that are obligatory, predictable, and accessible, let alone such large sums. Nor have they agreed to link NCQG with the LDF, as argued by Pakistan’s stalwart ambassador, Nabeel Munir as head of the all-important Subsidiary Body for Implementation.

The ask from the developing countries is desperate: at least 50 per cent of climate finance should shift from loans to grants to alleviate debt burdens. And for this, they seek balanced funding across the board for adaptation, mitigation, and loss and damage. In a nutshell, the biggest challenge for the Baku summit is to finalise the NCQG for the post-2025 period. Without this building block, the targets of NDCs can hardly be enhanced, nor can LDF be scaled up. The submission of the revised NDCs is due in February 2025.

The NCQG framework has expanded to include nontraditional donor countries, including some of Pakistan’s Arab friends. Several additional challenging financial instruments are also being discussed, including debt swaps, blended finance, green bonds, payment for environmental services, special drawing rights, policy-based guarantees, and carbon-pricing mechanisms. Each new source of financing will entail new complexities and conditionalities. Most importantly, this menu underlines the need for institutional readiness, legal reforms, and engagement with the private sector.

Pakistan actively engaged on the NCQG during COP28 and several UNFCCC meetings since then, advocating for a comprehensive approach that integrates social concerns, particularly emphasising the need for developed nations to take greater responsibility in providing financial support for adaptation efforts. Pakistan’s pivotal role in operationalising the LDF helped secure pledges amounting to $792 million. Following this success, it advocated for the integration of loss and damage considerations into broader climate finance frameworks, including the NCQG.

Pakistan’s significant role in shaping the Global Stocktake of the Paris Agreement’s implementation and in the Mitigation Work Programme has significantly influenced its approach to the NCQG. Through its integrative approach, Pakistan seeks funding mechanisms that are responsive to immediate resilience needs, emphasises grant-based resources, and integrates long-term considerations for loss and damage. The LDF’s operationalisation is seen by Pakistan as a crucial step towards achieving equitable climate finance that aligns with the objectives of the NCQG.

Pakistan’s role in operationalising the LDF has positioned it as an important actor, allowing it to collaborate within various groupings such as the G77 and China. This collaboration strengthens the collective bargaining power in negotiations related to both LDF funding and the NCQG, and collaboration with other developing countries from Bermuda to the Philippines.

Looking ahead, Pakistan will engage in ongoing discussions at COP29 and beyond, ensuring that any financial goals set are realistic and reflective of desperate needs.

Finally, the COP29 presidency will launch the Climate Finance Action Fund. Ironically, it will be capitalised by voluntary contributions from fossil fuel-producing countries and companies. The fund’s aim is enticing: catalyse investments across mitigation, adaptation, and research and development initiatives. The CFAF has announced allocating 50pc of its capital towards climate projects in developing nations, with an emphasis on supporting their next generation of NDCs. It’s still unclear who from Pakistan will engage on CFAF, particularly since it is expected to provide rapid response funding for climate-triggered disasters affecting vulnerable communities.

It is encouraging to see a growing interest in Pakistan for participation in COP29, shown by several provincial governments, private sector, financial institutions, and civil society. How would Pakistan’s contingent engage with the international community to help finalise the NCQG Framework, get specific figures agreed for increased financial commitments, strengthen mechanisms for fund distribution, and enhanced monitoring and accountability? The challenge for the delegates is to meaningfully and coherently engage with the future architecture of international climate finance.

The writer is an Islamabad-based climate change and sustainable development expert.

Published in Dawn, November 7th, 2024