New Delhi

As the UN climate summit COP29 approaches, Azerbaijan, the host nation, is unveiling a range of voluntary initiatives to supplement the official agenda, and enhance the climate summit's outcomes. These initiatives include calls for ceasefires in conflict zones across the world, commitments to reduce methane emissions and pledges to boost global energy storage.

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With COP29 just two months away, one key proposal is a new 'climate finance action fund'. Intended to raise $1 billion from fossil fuel producers to support developing nations.

But what is climate finance?

It is the buzzword in this year's negotiations, but there isn't one agreed definition of climate finance. In general terms, its money spent in a manner consistent with a pathway towards low greenhouse gas emissions and climate-resilient development.

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This is as per phrasing used in the Paris agreement.

It includes government or private money channeled into low-carbon investments in clean energy like wind and solar, technology like electric vehicles, or, adaptation measures like dikes to hold back rising seas. Azerbaijan, heavily reliant on fossil fuels, is expected to make the inaugural contribution.

Next question. How much money is needed?

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Well, the climate policy initiative, a nonprofit research group, estimates that $10 trillion per year in climate finance will be needed between 2030 and 2050.

This compares to around $1.3 trillion spent in 2021-2022. However, core negotiations on climate finance have hit roadblocks.

The $100 billion annual pledge for developing countries promised by wealthy nations was only met in 2022. COP29 aims to set a new target beyond 2025, but deep divisions remain.

Developing countries are projected to need $2.4 trillion annually by 2030 to address climate change. Yet, discussions are stalled over how much should be provided and by whom.

Controversy surrounds the division of financial responsibility.

India has called for a ten-fold increase to $1 trillion annually. But disagreements persist with new powers like China and gulf countries reluctant to contribute.

In addition to direct contributions, there are proposals for global taxes on billionaires, aviation and maritime transport.

Some advocate redirecting fossil fuel subsidies towards clean energy. The 'loss and damage' fund from COP28. Designed to support nations affected by extreme weather has only received $661 million so far.

Highlighting ongoing funding challenges for consumers. These negotiations and pledges could eventually influence climate policies and financial decisions that affect energy costs and environmental regulations.