BAKU — The annual United Nations (UN) climate summit kicks off Monday with countries readying for tough talks on finance and trade, following a year of weather disasters that have emboldened developing countries in their demands for climate cash.

Delegates gathering in Azerbaijan’s capital of Baku are hoping to resolve the summit’s top agenda item — a deal for up to $1 trillion in annual climate finance for developing countries.

The summit’s negotiating priorities, however, are competing for governments’ resources and attention against economic concerns, wars in Ukraine and Gaza and last week’s US re-election of Donald Trump, a climate-change denier, as president of the world’s biggest economy.

Conference of the Parties (COP29) host Azerbaijan will be tasked with keeping countries focused on agreeing to a new global finance target to replace the current $100 billion pledge expiring this year.

The Caspian Sea nation, often proud of being home to the world’s first oil wells, will also be under pressure to show progress from last year’s COP28 pledge to transition away from fossil fuels.

The country’s oil and gas revenues accounted for 35% of its economy in 2023, down from 50% two years prior. The government says these revenues will continue to decline, to roughly 32% of its GDP this year and 22% by 2028.

Before the summit talks can even begin, countries will need to agree on an agenda by consensus — including an 11^th hour proposal by China to bring trade disputes into the mix.

The Chinese proposal — made on behalf of the fast-developing “BASIC” group of countries including Brazil, India and South Africa — asked for the summit to address “restrictive trade measures” such as the EU’s carbon border tariffs going into effect in 2026.

Those concerns have been compounded by Mr. Trump’s campaign promise to impose 20% tariffs on all foreign goods — and 60% on Chinese goods.

China’s request showed it was flexing power following Mr. Trump’s re-election, which signaled the United States’ likely disengagement from global climate cooperation, said Li Shuo, director of China Climate Hub at the Asia Society Policy Institute.

Mr. Trump has called climate change a hoax and vowed to withdraw the US from the Paris Agreement, the global treaty to reduce planet-warming emissions.

The European Union (EU), along with current US President Joseph R. Biden’s administration, have been pressing China and Gulf oil nations to join the pool of climate finance donor countries.

“If the EU wants to talk about climate finance with China, if it wants to talk NDCs, part of the conversation should be how to resolve our differences on trade and your tariffs,” Shuo said.

EXTREME PRESSURE
With this year on track to be the hottest on record, experts noted that climate extremes were now challenging rich and poor countries alike — from flooding disasters in Africa, coastal Spain and the US state of North Carolina, to drought gripping South America, Mexico and the US West.

Most countries are not prepared.

“Election results don’t alter the laws of physics,” said Kaveh Guilanpour, vice president for international strategies at the nonprofit Center for Climate and Energy Solutions.

“Unless the world collectively steps up its efforts, the impacts of climate change will become increasingly severe and frequent and will be felt by an increasing number of people in all countries, including in the United States.”

Many in Baku were worried that a US disengagement could lead other countries to backpedal on past climate pledges or to scale back future ambitions.

“That is definitely a risk. People will be saying, well, the US is the second biggest emitter. It’s the biggest economy in the world… If they don’t set themselves an ambitious target, why would we?” Marc Vanheukelen, the EU’s climate ambassador from 2019 to 2023, told Reuters.

GIFT OF GAS
Azerbaijan has spent the last year lobbying governments to accelerate their move to clean energy while touting gas as a transition fuel.

With Azeri President Ilham Aliyev having called its fossil fuel bounty “a gift of God,” Azerbaijan has proposed creating a Climate Finance Action Fund to collect voluntarily up to $1 billion from extractive companies across 10 countries including Azerbaijan.

This year, the country’s gas exports to Europe are expected to exceed 12 billion cubic meters, up from 11.8 billion cubic meters last year, as Europe seeks to reduce its reliance on Russian gas.

The country’s chief COP29 negotiator, Deputy Foreign Minister Yalchin Rafiyev, said gas remained a key part of the energy mix for countries with limited alternatives.

“In this context, we must intensify our efforts to align natural gas usage with greenhouse gas reduction goals,” Mr. Yalchin told Reuters.

Environmental groups and climate scientists have criticized the promotion of gas as a clean energy option, noting that it is a climate-polluting fossil fuel.

Presidential aide Hikmet Hajiyev said that, with its buildup of renewables, Azerbaijan was “moving from fossil fuel exports to green electricity exports.” The country aims to have renewable energy fueling 35% of its power plant capacity by 2030. Last year, this figure was about 20%.

Azerbaijan also has fought criticism for its jailing political prisoners including journalists, and ethnic Armenians that Azerbaijan describes as separatist leaders.

Azerbaijan’s Mr. Aliyev has rejected the criticism and warned that it could undermine the fragile peace negotiations between the two former Soviet republics. — Reuters

TOKYO — Japanese lawmakers voted for Prime Minister (PM) Shigeru Ishiba to stay on as leader on Monday, after his scandal-tarnished coalition lost its parliamentary majority in a lower house election last month.

Ishiba, who called the snap poll after taking office on Oct. 1, must now run a fragile minority government as protectionist Donald Trump regains control in main ally the United States, tension rises with rivals China and North Korea, and domestic pressure mounts to rein in the cost of living.

His Liberal Democratic Party and coalition partner Komeito won the biggest bloc of seats in the election but lost the majority held since 2012, leaving him beholden to small opposition parties to pass his policy agenda.

Underlining that fragility, Monday’s vote in parliament, broadcast on television, went to a runoff for the first time in 30 years, with no candidate able to muster majority support in the first round.

But Mr. Ishiba eventually prevailed as expected, garnering 221 votes in the 465-seat lower house, well clear of his nearest challenger, ex-PM Yoshihiko Noda, the head of the main opposition Constitutional Democratic Party.

Japan will hold elections next year for the less powerful upper house, where the ruling coalition’s slim majority could also be at risk if Mr. Ishiba cannot revive public trust in his administration, which has been roiled by a scandal over unrecorded donations to lawmakers.

His imminent challenge is compiling a supplementary budget for the fiscal year through March, under pressure from voters and opposition parties to raise spending on welfare and take steps to offset rising prices.

Mr. Ishiba also has a slate of international engagements, such as a summit of the Group of 20 big economies in Brazil on Nov. 18 and 19. He is trying to arrange a stopover in the US around the G20 summit to meet Mr. Trump.

Some Japanese officials fear Mr. Trump might again hit Tokyo with protectionist trade measures and revive demands for it to pay more for the cost of stationing US forces there.

These issues were largely smoothed over in Mr. Trump’s first term, from 2017 to 2021, by the close ties between the president and Japan’s then-premier, Shinzo Abe — a bond Ishiba seems keen to re-establish. — Reuters

BAKU — The Asian Development Bank (ADB) will increase its climate-related lending by up to $7.2 billion after the United States and Japan agreed to underwrite risk for some existing loans, an ADB executive said, marking the first-ever sovereign guarantees for climate finance.

The new strategy, shared exclusively with Reuters, offers a potential template for other development banks to follow as the United Nations’ (UN) Conference of the Parties (COP29) climate summit in Baku, Azerbaijan, starting this week focuses on ramping up the amount of finance available to developing nations.

The ADB has set a long-term cumulative climate finance lending target of $100 billion between 2019 and 2030. In 2023, it lent $9.8 billion.

The US election victory last week of Donald Trump, who has vowed to remove the United States from the Paris Agreement on climate, has overshadowed the start of the Baku talks, adding pressure on Europe and China to help get a strong result, negotiators said last week.

Under the ADB plan, the world’s richest country would guarantee up to $1 billion of existing loans from Asia’s top development institution, while Japan would underwrite $600 million, freeing the bank to lend more for climate-related projects.

“The structure is a fantastic way of extending a multilateral development bank’s (MDB) lending capacity without going through the politically difficult situation of a general capital increase,” which would need to come from fresh country donations, Jacob Sorensen, director of partner funds at the ADB, told Reuters.

An ADB spokesperson declined to comment on whether the deals, which were finalized last week, would be affected by the incoming Trump administration.

The extra lending headroom the guarantees generate will be deployed over the next five years, while the duration of the guarantees themselves will be 25 years, according to the ADB.

COOKING OIL TO JET FUEL
One of the first beneficiaries from this new ADB push will be a project in Pakistan to generate sustainable aviation fuel from cooking oil, Mr. Sorensen said. About half of the $90 million needed would come from the ADB scheme with the deal expected to be signed on Nov. 20, the bank said.

The ADB, based in the Philippines, has spent three years developing the guarantee deal with a group of Western governments and hopes other countries will follow soon, he added.

It has also been sharing its experience with the World Bank, Inter-American Development Bank and European Investment Bank as part of broader, collaborative efforts to scale up climate-related lending. “We have been extensively in consultation with multiple other MDBs,” Mr. Sorensen said.

While the deals mark the first use of sovereign guarantees for climate finance, they have previously been used to fund other areas of lending such as education.

Public lending institutions have also begun to guarantee other, third-party investments for climate projects. Earlier this year, the World Bank launched a platform to house all such guarantees for loans and investments from across the various branches of the organization, in an effort to expand their use.

The program was going “very well,” having guaranteed more than $10 billion through the programme in 2023 with a goal of doubling that annual figure by 2030, Axel van Trotsenburg, the bank’s senior managing director told Reuters last month in Washington.

As climate change increases the threat of extreme weather and disaster worldwide, developing countries are forecast to need more than $2 trillion a year by 2030 to transition to clean energy and prepare for the conditions of a warmer planet.

Rich nations are hoping that a financing deal at COP29 goes beyond relying on donations from them for climate finance, and instead looks to development banks as well as private investors for the bulk of the world’s climate cash. — Reuters