Unlocking finance for developing countries to advance climate action is taking centre stage on the agenda of the Egyptian delegation at the Conference of the Parties to the UN Framework Convention on Climate Change (COP29), which is being held in the Azerbaijani capital Baku from 11 to 22 November.

One of the main goals of the conference, called “Investing in a Livable Planet for All” and dubbed the “Financing Conference”, is to emphasise the indispensable role of climate finance in supporting developing nations and the most vulnerable communities in adapting to the adverse impacts of climate change.

Heading the Egyptian delegation at the COP29 is Prime Minister Mustafa Madbouli on behalf of President Abdel-Fattah Al-Sisi. Minister of Environment Yasmine Fouad is co-chairing consultations on financing alongside her Australian counterpart. Representing the voice of the developing countries, Fouad is tasked with highlighting their urgent financial needs to address the far-reaching consequences of climate change.

During her participation in the high-level roundtable meeting on “Transforming Ambition into Action: Increasing Adaptation Financing to Achieve the Global Goal on Adaptation”, Fouad said that adaptation is a cornerstone of the global response to climate change and a priority for the developing nations, particularly the African countries.

She noted that the Economic Commission for Africa 2023 report had said that the adverse effects of climate change, particularly on the agriculture, energy, water, and transportation sectors and on ecosystems, are projected to cost the African economies five per cent of their GDP on an annual basis.

She added that the COP29 is a crucial platform to secure commitments to close the adaptation finance gap in the developing countries. The COP27 Conference, held in Sharm El-Sheikh in Egypt in 2022, had introduced financing mechanisms to address loss and damage resulting from climate change, she said, as well as the Sharm El-Sheikh Adaptation Agenda that sets out 30 adaptation goals to accelerate adaptation through food and agriculture, water and nature, coasts and oceans, human infrastructure, and settlements.

Recent reports from the UN Environment Programme (UNEP) estimate the financial needs of the developing countries to adapt to climate change at $360 billion a year up until 2030, Fouad said.

She outlined key areas requiring support to advance climate action, including the need to ensure the implementation of the 2015 Paris Agreement. This entails holding the developed nations accountable for their financial commitments to assisting the developing countries.

She stressed the need to achieve the goals of access, transparency, and reporting, particularly in facilitating financing opportunities. Despite efforts to meet the $100 billion annual financing target set out in prior agreements, many countries still face significant challenges in accessing these funds due to bureaucratic obstacles, Fouad stated.

She called for measures to strike a balance between development priorities and obligations under the Paris Agreement, especially for the middle-income economies.

According to Special Envoy on Financing the 2030 Agenda Mahmoud Mohieldin, the $100 billion per year financing set out by the COP Conference in Copenhagen in 2009 has been diluted due to increased costs and the widening gap between financial flows and emissions reduction and adaptation needs.

In statements made during the Baku conference, Mohieldin said that annual external financing needs for the developing economies, excluding China, now come to $1 trillion, half of which should come from public funding and multinational development institutions and the other half from private investment, incentivised and mobilised through public funding as a partner, facilitator, guarantor, and risk reducer.

Negotiators from the UN Arab and African Group are aiming for a target of $1.1 trillion to $1.3 trillion a year of climate financing for the developing countries until 2030, of which $440 billion would be in the form of concessional public financing, Mohieldin wrote recently in an article published in Al-Ahram Weekly.

“A figure of $300 billion or less, to replace the old 100 billion, would be disappointing, especially given the high rates of inflation since 2009 and the cumulative effect this has had on the real value of the contributions since then,” he said.

In the interactive dialogue series session on “Providing Access to Green Finance for Egyptian SMEs for Sustainable Growth”, Ali Abu Senna, head of the Egyptian Environmental Affairs Agency, spoke about Egypt’s Industrial Pollution Control Project, which offers loans and grants to help small and medium-sized enterprises (SMEs) to achieve environmental compliance.  

He said that the fourth phase of the project, titled “Green Sustainable Industry”, will target emerging sectors, innovative technologies, sustainable energy production, and green hydrogen. It will offer grants covering up to 20 per cent of the costs of projects and loans in foreign currency that can be repaid in Egyptian pounds.

Abu Senna said that the Ministry of Environment is supporting the revolving loan provided by the Federation of Egyptian Industries’ Environmental Compliance Office with LE150 million through the Environmental Protection Fund.

The fund provides loans of up to LE10 million at a 3.5 per cent interest rate to attract a large number of beneficiaries, he said, also lauding the Environmental and Climate Investment Unit at the Ministry of Environment for encouraging environmental investments and providing the necessary data for projects.

Mohamed Moatamed, assistant minister of the environment for planning, investment, and institutional support and head of the Environmental and Climate Investment Unit, said the unit was established to overcome obstacles facing this promising sector and to contribute to Egypt’s transition to a sustainable economy that enjoys climate resilience.

The unit’s e-platform is an information hub that includes many investment opportunities, including eight initial feasibility studies on several types of environmental investments, over 40 investment ideas, and Egyptian success stories in environmental and climate investment, Moatamed said.

Key strategies for mitigating risks and accelerating climate and green investments include ensuring that SMEs and green enterprises have access to accurate information to enable them to achieve their targets and meet the needs of green technologies, including renewable energy, sustainable energy production, and biotechnology, Annachiara Scandone, director of the UN Industrial Development Organisation’s (UNIDO) Inclusive Green Growth Project in Egypt, said during the conference.

She said that a persistent challenge that many SMEs face, particularly in the industrial sector, is securing suitable financing. To address such issues, the UNIDO project has partnered with several national financial institutions to enhance services tailored to green SMEs.

* A version of this article appears in print in the 21 November, 2024 edition of Al-Ahram Weekly under the title: Green Investment at the COP29