Azerbaijan Launches $1 Billion Climate Fund Ahead of COP29

Azerbaijan will launch a $1 billion climate fund to support developing countries' climate targets. The fund, located in Baku, will be backed by fossil-fuel rich countries and companies. The focus of COP29 will be on climate finance, with Azerbaijan initiating contributions and emphasizing rapid response to climate disasters.

Azerbaijan, the host of the upcoming U.N. COP29 climate summit, announced on Friday the creation of a $1 billion climate fund to assist developing countries in meeting their national climate targets.

Slated to be headquartered in Baku and managed by a multi-national board, the fund aims to secure contributions from ten fossil-fuel producing nations and major oil and gas companies. Initially, Azerbaijan proposed a levy on fossil-fuel production to generate funds but faced resistance from some countries.

COP29 President-Designate Mukhtar Babayev stated, “Countries rich in natural resources should lead in addressing climate change,” and urged donors to join Azerbaijan in enhancing ambition for COP29's climate action plans.

Finance is poised to headline the COP29 talks in November, where nations will negotiate a new global climate finance target for wealthier countries to support poorer ones post-2025. Though exact contributors were not disclosed, Azerbaijan committed to being a founding contributor.

The fund will allocate 20% of investment-generated revenues to a Rapid Response Funding Facility to aid the most vulnerable nations facing climate disasters. Officials claim it will be more agile than traditional banks and global facilities, with direct investment decisions by shareholders.

A working group of economists and experts will soon develop a contribution formula for donors and access protocols for developing countries. While geared towards the Paris Agreement goal of limiting temperature rise to 1.5C, officials did not rule out supporting certain fossil fuel projects.

Last year’s UN climate summit in the UAE ended with a consensus on shifting away from fossil fuels to achieve net zero emissions by 2050.