Azerbaijan has unveiled plans to launch a “Climate Investment Fund for Future” with an initial $500 million contribution from its state oil company Socar, aiming to raise further capital from other fossil fuel producers ahead of the COP29 summit it will host in November 2024.
This initiative follows Azerbaijan President Ilham Aliyev’s defense of the nation’s “God-given” oil and gas reserves, despite global calls for transitioning away from fossil fuels. The fund will seek contributions from countries and companies that produce and use fossil fuels.
The fund aims to provide a mechanism for fossil fuel companies to contribute to climate finance, potentially supporting projects that mitigate climate impacts, especially in developing countries most affected by extreme weather events.
However, in a reaction to the development on Thursday, July 11, 2024, climate campaigning organisation, 350.org, raised concerns over the effectiveness and legitimacy of the fund.
The campaigners are demanding urgent accountability measures to ensure fossil fuel companies pay their fair share for the energy transition and transition away from fossil fuels, “instead of establishing ineffective initiatives that distract from the oil and gas industry’s continued irresponsible expansion plans”.
Andreas Sieber, Associate Director of Policy and Campaigns, 350.org, said: “Azerbaijan’s ‘climate investment fund for the future’ is a smoke screen, allowing fossil fuel giants to profit from climate finance instead of paying for the damage they have caused. The role of a COP presidency is to drive forward highly concessional climate finance, not profit from it. We demand accountability through tax levies, not token charity, in this climate emergency. Those responsible for the climate crisis must pay for what they have created.”
“The announcement of this fund comes at a critical time, as the world grapples with the escalating impacts of climate breakdown. However, the involvement of fossil fuel companies in climate finance with voluntary and very limited contributions raises serious concerns about the genuine commitment of these corporations to addressing the crisis.”
According to the organisation, the Climate Investment Fund is inadequate as it is:
- An insignificant contribution: The $500 million fund constitutes only 0.025% of last year’s $1.8 trillion clean energy investment in 2023. Furthermore, such funds only spend a fraction of their capital annually.
- Commercial by nature: This is a commercial fund. To genuinely impact the energy transition, the fund needs to provide highly concessional finance and grants to countries with limited fiscal space and high costs of capital. We must distinguish profit-driven investments from genuine efforts.
- A diversion tactic: Countries and national companies, like Azerbaijan’s SOCAR, that plan to expand fossil fuels, are using this fund to distract from their deadly reluctance to transition away from oil and gas.
Already, officials are discussing whether to allocate 50% of the fund’s capital to developing countries. The plan’s success depends on attracting further investments and navigating international climate finance negotiations.
“We will be enquiring of all countries that produce and use fossil fuels to be part of the initiative,” a senior COP29 official stated.
It will be recalled that the UAE announced a $30 billion fund at COP28, aiming to mobilise $250 billion in private sector investment by 2030.
