Azerbaijan Rethinks COP29 Strategy: New Fund Over Fossil-Fuel Levy

Azerbaijan, host of the U.N. COP29 climate summit, has abandoned plans for a fossil-fuel levy proposal. Instead, it aims to launch a new fund for green investments in developing countries. The revised strategy seeks voluntary contributions from fossil-fuel-producing nations and utilizes public-private partnerships to aid poorer regions in cutting emissions.

Azerbaijan, host of this year's U.N. COP29 climate summit, has announced a shift in its climate funding strategy. Initial plans for a levy on fossil-fuel producers have been scrapped in favor of launching a fund aimed at green investments in poorer nations, according to a senior COP29 source.

The source, speaking on condition of anonymity, revealed that the levy idea faced resistance from several countries, necessitating a revision of the proposal. "We had several rounds of engagements with the parties concerned - with the other potential contributors - and we needed to adjust the fund idea to make it also attractive for potential contributors," the source explained.

Azerbaijan intends to be a primary contributor to this new fund, which will also seek voluntary contributions from other fossil fuel-producing countries. Sources familiar with the discussions indicated that resistance came particularly from oil and gas-producing Gulf nations.

The revised proposal aims to establish the fund at the COP29 summit in November. Leveraging public-private partnerships, the initiative hopes to mitigate investment risks and support developing countries in reducing emissions and addressing escalating climate impacts. As the source noted, poorer nations face significant barriers, such as high interest rates and debt burdens, impeding their transition to clean energy. The International Renewable Energy Agency reports that Africa has garnered just 2% of global renewable energy investments over the past two decades.

Finance is poised to be a pivotal topic at the COP29 climate talks in Baku this November, where nations will strive to set a new global climate finance target for affluent countries to assist poorer countries starting in 2025.

(With inputs from agencies.)