COP29 venue entrance in Baku. Photo: Jane Birch, SEI
COP29 venue entrance in Baku. Photo: Jane Birch, SEI
The 29th UN Climate Change Conference of the Parties (COP29), a key global event in addressing climate change, began with high hopes of transforming climate finance discussions into concrete actions. However, after two weeks of exhausting negotiations it ended up with only a faintly optimistic tone. Financing was the buzzword of the year, but how are the outcomes relevant for countries like Bosnia and Herzegovina?
Missed opportunities at COP29
Rich countries pledged to contribute at least $300 billion annually to the global fight against climate change as UN climate talks came to a contentious end early Sunday morning in Baku. Lower-income countries who had sought over $1 trillion in assistance called the agreement “insulting” and argued it did not give them the vital resources they required to truly address the complexities of the climate crisis.
Moreover, the pledged contributions should still significantly rely on loans and debt financing, exacerbating debt crises in vulnerable countries. The world’s poorest and most climate-vulnerable countries are spending more than twice as much to service their debts as they receive to fight the climate crisis, according to new analysis by IIED. The analysis states: “every dollar that these countries are spending on loan repayments is a dollar not being spent on hospitals or schools, or funding climate-resilient infrastructure”.
On the other hand, traditional climate finance providers argue that the global landscape has shifted over the past 30 years. Countries like China and Saudi Arabia, once considered poor, are now major economies and significant emitters. As a result, they believe these nations should contribute to climate finance rather than continue to receive it.
There was a lack of explicit fossil fuels discussions at the COP, which is especially concerning since, at the so called “United Arab Emirates dialogue” at COP28 last year, a key result was the joint commitment to move away from fossil fuels. At this year’s COP there were several attempts to obstruct constructive dialogues on this topic and to move away from this commitment. Doing so is absurd - that was the message from António Guterres, Secretary-General of the United Nations, to leaders this week. The International Energy Agency (IEA) is clear on this: fossil fuel use needs to fall by almost 30% by 2030 and by 55% by 2035 to achieve the net zero targets.
Why this matters for Bosnia and Herzegovina
Bosnia and Herzegovina (BiH) is classified as a transition economy with a strong need to modernize its energy infrastructure and reduce its dependence on coal. Transitioning to a sustainable and carbon-neutral economy is an urgent priority for BiH.
Recent SEI analysis showed that from 2008 to 2020, BiH and its Western Balkan neighbours received significant international development financing for energy projects, primarily from bilateral and multilateral sources. However, a large portion of these funds was directed towards coal-based projects, underscoring the need to shift towards renewable energy. During this period, BiH received $680 million for energy sector decarbonization, which is far below the $9.3 billion needed from 2020 to 2030 to support a net-zero transition.
Furthermore, the analysis showed that Bosnia and Herzegovina had the highest per capita ODA (official development assistance) loan indebtedness. Incurring further debt through ODA loans can only hamper the country’s future economic development. The European Union and its member states were the most relevant development finance providers, which is signalling that the European Union is committed to supporting development of the BiH.
China became a significant player investing in coal-associated infrastructure projects in Bosnia and Herzegovina, with US$1.2 billion. This is double of the clean energy investment and this contrast highlights the need for more balanced and sustainable investment strategies.
The analysis did not find evidence that signing the Paris Agreement in 2016 increased development finance funding flows, at least not for renewable energy infrastructure, and this needs to be acknowledged. This lack of increased finance represents a reputational flaw for COP, and the lower-income countries need to "walk the talk" to maintain credibility.
The road ahead
As the SEI climate finance expert Katherine Browne puts it in a Q&A published on the SEI website earlier this year: “All in all, we need a huge amount of money to support climate action. But current levels of finance are nowhere near this…. Many developing countries commitments to reduce their emissions (NDCs) are contingent on receiving financial support. This means if they do not get the money needed, they cannot reduce their emissions. Climate finance is therefore vital for keeping warming at manageable levels.”
For the future it is important for:
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