Azerbaijan’s New Climate Fund

About

The proposed fund will be called the Climate Finance Action Fund.

The fund will operate in parallel with all the other mechanisms that constitute the UN's financial system, among others, Global Environment Facility, Green Climate Fund, Special Climate Change Fund, and Adaptation Fund.

Headquarters

The headquarters will be in Baku, Azerbaijan and the secretariat will also be based there.

Financing

The fund is to be financed by oil and gas producing countries, and corporations, but in a voluntary manner. 

Allocations

The fund shall be accessible to all developing countries.

50% of contributions will be allocated to supporting the member states to achieve their Nationally determined contributions (NDCs) and pursue the 1.5°C limit.

20% share of investment revenues will be used for a Rapid Response Funding Facility (2R2F) to assist the most vulnerable countries in responding to climate-related disasters.

Governance Structure

A Board of Directors will consist of representatives of donor countries. 

An independent audit committee would be established and responsible for the submission of quarterly financial reports and also assessments of project implementations.

Decision-Making

Shareholders will make decisions collectively; management and financing structures will be prepared with experts from international working groups in finance.

The 29th Conference of the Parties (COP29)

It is the 2024 United Nations Climate Change Conference, which will be held in Baku, Azerbaijan from November 11–22, 2024. 

The conference will focus on the goals of the United Nations Framework Convention on Climate Change (UNFCCC) and the Paris Agreement, including: 

• Limiting global warming 
• Adapting to the impacts of climate change 
• Mobilising financing for these activities

The conference will include several key meetings, including:

• The 29th session of the Conference of the Parties (COP 29) 
• The 19th meeting of the COP as the Meeting of the Parties to the Kyoto Protocol (CMP 19) 
• The sixth meeting of the COP as the Meeting of the Parties to the Paris Agreement (CMA 6)

PRACTICE QUESTION

Q.Consider the following statements about the “Climate Finance Action Fund” recently seen in the news: 

1. The fund will be a part of the Global Environment Facility and Green Climate Fund.
2. It will be financed by oil and gas-producing countries and corporations but in a voluntary manner. 
3. 50% of contributions will be allocated to supporting the member states to achieve their Nationally determined contributions (NDCs).

How many of the above statements is/are correct?

A.Only one

B.Only two

C. All Three

D.None

Answer: B

Explanation:

Statement 1 is incorrect: 

The Climate Finance Action Fund was proposed by Azerbaijan.

The fund will operate in parallel with all the other mechanisms that constitute the UN's financial system, among others, Global Environment Facility, Green Climate Fund, Special Climate Change Fund, and Adaptation Fund.

Statement 2 is correct: 

The fund is to be financed by oil and gas producing countries, and corporations, but in a voluntary manner.

Statement 3 is correct: 

The fund shall be accessible to all developing countries.

50% of contributions will be allocated to supporting the member states to achieve their Nationally determined contributions (NDCs) and pursue the 1.5°C limit.

20% share of investment revenues will be used for a Rapid Response Funding Facility (2R2F) to assist the most vulnerable countries in responding to climate-related disasters.