New finance target in COP29 outcome could help developing countries set stronger targets: Grace Fu

The new climate finance target agreed upon at UN climate conference COP29 will provide developing countries with capital to implement their green plans, and could help them set more ambitious emissions-cutting goals when new targets are due in 2025.

“For Singapore, we are very focused on (achieving our climate targets),” said Minister for Sustainability and the Environment Grace Fu. “We are very focused on implementation, but we also like to see the rest of the world equally committed to their targets.”

She was speaking on The Straits Times’ Green Pulse podcast, in an episode aired on 2 Dec – about a week after COP29 concluded on 24 Nov in Baku, Azerbaijan.

“COP29 was a critical COP because, for many years, developing countries have been asking, ‘Where is the money? I have all these targets that you want us to achieve, but how do I get the means of implementation? How do I get the technology?’”, Ms Fu said, when asked about the significance of the summit’s outcomes for the region.

The outcome of COP29 – which included an agreement from developed countries to channel more money to developing nations – was important because it will likely affect the next round of nationally determined contribution submissions, she added.

“Implementation of targets hinges on the availability of finance and technology,” she said.

Ms Fu was referring to the next set of climate change targets that countries must submit to the UN in 2025.

Under the Paris Agreement, countries must submit new national climate action plans – dubbed the nationally determined contributions – every five years, with each plan more ambitious than the previous one.

The next round of submissions, which details climate targets for 2035, is due in February 2025.

At COP29, developed nations agreed to channel at least US$300 billion (S$404 billion) a year to developing countries by 2035 to support their efforts to tackle climate change.

This figure is an increase from the previous US$100 billion per year target.

But developing countries were still disappointed with the figure, saying that developed countries– which have been growing their economies at the expense of the environment – should contribute more to the trillions of dollars needed by the poorer countries to reduce their emissions and cope with escalating climate impacts.
 

Negotiators at the COP29 summit also agreed on a call to raise US$1.3 trillion each year from a wider range of sources, including private investment, by 2035.

“I think if the world has a higher number to work with, it gives us more confidence,” said Ms Fu, when asked if the COP29 outcome would affect climate action in Southeast Asia, which is a bloc of developing countries.

“But I think US$300 billion is a good place to start from.”

She said that given the scale of investments needed in the Southeast Asian region, it was important to also bring other players into these discussions.

“We need some grants. We definitely need MDBs (multilateral development banks) to be on board – MDBs that will disburse money in Southeast Asia and in Asia. We definitely need investors, bankers, as well as philanthropists, to be part of this ecosystem.”

An April report on Southeast Asia’s green economy published by Bain & Company, GenZero, Standard Chartered Bank and Temasek found that US$1.5 trillion is needed between now and 2030 to fund the region’s green transition.

“So I think we need to find a most effective way to finance this in the most innovative way, so that we can crowd in players that are not normally on the table to be also interested in the projects,” Ms Fu said.

“Only then can we find the hundreds of billions or trillions that we need to decarbonise Asia.”

Singapore, too, is doing its part. Classified as a developing country under the UN, Singapore is not obliged to contribute to climate finance but is doing so voluntarily.

For example, the Republic announced on 12 Nov that it would commit up to US$500 million to a national initiative to channel financing to decarbonise Asia.

The US$500 million from the Government will come in the form of concessional funding, such as grants and loans provided at more favourable terms and below market rates.

This funding will match, dollar for dollar, concessional capital from other partners, including other governments, multilateral development banks and philanthropic institutions.

Funding from these bodies can help to soften investors’ risks in financing green projects, which can often be deemed too risky or unprofitable.
 

Source: The Straits Times © SPH Media Limited. Permission required for reproduction.