At the UN COP29 climate summit in Baku, Azerbaijan, Mukhtar Babayev, the environment minister of the host country, emphasized the urgent need for private sector funding to help developing nations transition to a low-carbon economy.
He stated that the burden of financing should not fall solely on governments, and without private sector involvement, global climate goals cannot be met.
Babayev stressed the importance of mobilizing more funds, as the world needs to act faster to address climate change.
History shows that resources can be mobilized, but it requires political will.
The COP29 summit gathers nearly 200 countries, and the main focus is on creating a global framework to provide financial support for developing nations.
These countries seek to increase climate finance from $100 billion annually to at least $1 trillion by 2035.
This ambitious goal could be complicated by the absence of the United States, especially under President Donald Trump, who has expressed intentions to pull out of the Paris Agreement and reduce emission commitments.
Private finance is crucial but risks worsening debt warns climate advocates at COP29 summit.As a result, countries may have to rely more heavily on the private sector to meet these financial targets, but this comes with concerns.
Private sector involvement in climate finance is controversial. While it may provide much-needed capital, it often comes with conditions that could exacerbate debt burdens for the world’s poorest countries.
Moreover, private finance typically focuses on profits rather than addressing the urgent needs of countries suffering from extreme weather events, which requires grants and concessional financing—tools better suited to government-led initiatives.
Many civil society groups argue that relying on private finance could worsen existing financial crises in developing nations.
Mariana Paoli from Christian Aid highlighted that government funding, especially in the form of grants, is the most effective way to tackle climate change.
She cautioned against counting private investments as part of the climate finance goal, emphasizing that such funds are separate from the commitments made under the Paris Agreement.
Despite these concerns, some developing countries acknowledge the necessity of private sector participation.
As Simon Stiell, the UN climate chief, pointed out, relying on fossil fuels will lead to global inflation, and tackling climate change is vital for economic stability.
He underscored that combating climate change is in the self-interest of all nations, particularly the wealthiest ones, and that the time for action is now.