The world is again confronted with the stark reality of global climate inequity as the 29th Conference of the Parties (COP29) to the United Nations Framework Convention on Climate Change (UNFCCC) culminated in Baku, Azerbaijan last year.
The build-up to COP29 was fraught with controversy. Protests erupted globally over the host nation Azerbaijan—a petrostate accused of ethnic cleansing of Armenians—and the increasing influence of oil lobbyists in climate discussions. Eminent figures like Jayati Ghosh, Professor emeritus JNU, and former UN Secretary-General Ban Ki-Moon, in an open letter, condemned the choice of the presidency and called for an overhaul of the COP process, accusing it of succumbing to the interests of global capital (Club of Rome 2024). These tensions were further amplified by global crises such as the ongoing wars in Ukraine and West Asia, the genocide in Gaza, and Donald Trump’s return to the U.S. presidency
The conference, dubbed the “Finance COP,” for its focus this year on increasing climate finance to help developing countries mitigate the challenge of exacerbating climate disasters, was supposed to be a turning point for climate action worldwide. Still, the big issues remained unresolved even till its end. More than the problem of an impasse over financing goals, the talks underscore an even bigger problem—how the mechanisms, decisions, and approaches at the heart of this summit are perpetuating systemic inequalities that prevail in the geopolitics between the Global South and the Global North.
The Uncomfortable Reality of Climate Finance
The primary agenda at COP29 is climate finance—a contentious issue ever since the Paris Agreement. At COP15 in 2009, developed nations pledged $100 billion annually to assist developing countries by 2020, but the target was reached only in 2022—and inadequately. Now, at COP29, countries like India and China have pushed for a new annual goal referred to as the New Collective Quantified Goal of $1.3 trillion. Yet, negotiations on this front remained deadlocked, highlighting the flaws in existing mechanisms: to date, most of the funding received by poor nations in the Global South under the COP15 pledge has been in terms of loans with market interest rates or grants with strings attached. This is a clear violation of the norms for climate-related funding, which is supposed to carry low or no interest rates.
The reality of climate financing is best illustrated by the fact that between 2015-2020, wealthy nations have lent over $18 billion to developing countries at market rates and many of these loans were counted toward developed nations’ pledge to send $100 billion a year to poorer countries. Japan leads the pack with a loan of $10.2 billion, followed by France, Germany, and the United States.
Shockingly, some funds, about 3 billion dollars worth, were even diverted to projects unrelated to climate action, such as coal plants and luxury infrastructure( Reuters Review 2024) These types of loans often come with binding conditions, such as requiring countries to purchase goods or services from donor countries.
Moreover, high market interest rates create a repayment burden on vulnerable economies in the Global South that limits their ability to invest in climate solutions, while extreme weather causes severe economic losses, often leading them to borrow more. These conditions eventually spiral into a vicious cycle of debt. As a result, the debt crisis in the Global South has worsened.
At COP29, the Like-Minded Developing Countries (LMDC) bloc, led by India, called for climate finance to be delivered as grants or non-debt-inducing instruments without conditions that stifle growth. As India’s lead negotiator Naresh Pal Gangwar emphasised, “Climate finance must cater to the evolving needs and priorities of developing countries without growth-inhibiting conditionalities” (PIB 2024).
In light of the facts above, the current stalemate at COP29 over defining, identifying the sources and deciding on the amount of climate finance shows the power dynamics at work in the COP negotiations. In the Global North, there is this desire to maintain the status quo; where they shrug off their responsibilities as historical emitters by evening withholding more finance to the developing world and asking emerging economies from the Global South to participate in climate financing. At the same time, they continue to profit from interest payments from the minimal funding they give in terms of loans to poor countries. In this sense, unregulated disbursement of climate finance gives the Global North an upper hand to plunder from the Global South under the guise of environmental responsibility.
A New Form of “Climate Protectionism”
The case against the Global North for maintaining the status quo can be further consolidated by considering the sharp attacks by the BASIC bloc ( Brazil, South Africa, India and China) at COP29 over the European Union’s Carbon Border Adjustment Mechanism (CBAM). This policy, operating in a transitional phase till 2026, applies a carbon price equivalent to the internal EU regulatory price charged for carbon to imports of carbon-intensive goods – such as cement, iron and steel, and aluminium, through a border adjustment tax. It requires countries exporting to the EU to provide data on their embedded carbon emissions during the production process so that tax can be levied on imports that don’t meet the EU’s emissions standards.
While this may sound like a climate-conscious measure, it facilitates a regime of trade protectionism. Compliance with the CBAM regime will be costly for countries in the Global South. Smaller countries may lack economies of scale or regulatory capacities, which are necessary to satisfy the compliance and certification requirements of the EU. Moreover, there is no global consensus on measuring embedded carbon, allowing the EU to enforce its standards unilaterally. This puts countries like India and China at a disadvantage as production in these countries is predominantly fossil fuel-oriented, making their exports liable to be taxed heavily.
The EU’s protectionist CBAM undermines the competitiveness of economies in the Global South as they must comply with the emissions restrictions of a wealthy bloc that has already reaped the benefits of industrialisation. Once again, the Global South suffers the weight of measures that purport to tackle climate change but are, in reality, a veiled form of economic imperialism.
India’s Struggle for Fair Climate Finance
In contemporary geopolitics, India is a key player in the Global South, with the third largest carbon dioxide emissions globally. Owing to its contribution to emissions, India did make some ambitious promises at COP26 in Glasgow, including reducing the emissions intensity of its GDP by 45 per cent by 2030, achieving net-zero emissions by 2070, and sourcing 50% of its energy from renewables by 2030 (PIB 2021).
While it is on track to achieve its renewable energy targets by 2030 with investment in solar and wind energy, achieving net zero emissions by 2070 comes a little too late in the wake of rapidly rising global temperatures. While a lot of neglect for the climate crisis in our country can be blamed on the lack of political will, achieving net zero emissions can’t be possible without huge investments. At COP29, India has time and again adamantly pushed for its need for 1 trillion dollars per year to effectively tackle the challenges of climate change (PIB 2024).
Breaking away from a stalemate in relations after a series of border disputes, India also joined hands with China this COP to criticise the CBAM policy demanding adherence to the principle of “common but differentiated responsibilities” outlined in the Paris Agreement, which acknowledges the historical emissions of developed nations (The Hindu 2024). Yet, the developed nations continue to fall short, offering loans rather than grants and shifting the focus on emissions reduction targets without providing access to technology or finances to achieve them.
On November 21, just a day before COP29’s conclusion, Deputy Leader of the Indian Delegation, Ms Leena Nandan, voiced India’s frustration with the Global North for evading their climate finance responsibilities. “We feel disappointed by the fact that we continue to shift focus when the time has come to ensure that mitigation actions are fully supported through adequate finances,” she stated ( PIB 2024) India further called for a ‘Balance in Climate Discourse’ i.e. ensuring that the necessary enablement supports climate action expected out of the developing world.
Lost Cause
Amidst the calls for balance in climate discourse from India, COP29 concludes, this time also following the trajectory of past conferences—failing to address the structural inequalities in global climate governance. When it comes to carbon emissions, COPs forget to put the emphasis on historically informed cumulative carbon emissions instead of putting it on countries that are currently significant emitters in the aggregate, even if not per capita. This conference, like previous COPs, exerted pressure on all countries to achieve “net” zero emissions as part of their new Nationally Determined Contributions (NDCs), without regard for the disproportionate share of the global carbon budget appropriated historically by the Global North in their quest for development.
For the Global South, the narrative remains the same: promises of support from the Global North fall short, leaving vulnerable economies to bear the brunt of a climate crisis they did not create unless wealthy nations step up and enable equitable transitions, COP29 risks being remembered as yet another missed opportunity for meaningful climate action.
Written by Shatakshi Srivastava (intern at PRC).
