Washington: Azerbaijan, host of the UN COP29 climate summit, announced Friday it will launch a new climate fund that will aim to mobilize $1 billion to support developing countries' new national climate targets.
The climate summit host hopes the new fund, which will be housed in the capital city of Baku and overseen by a multi-national board of shareholders, will be capitalized with contributions from 10 fossil-fuel producing countries as well as oil and gas companies.
Azerbaijan had initially sought a levy on fossil-fuel production to raise funds for tackling climate change, but changed course after facing resistance from some countries.
"Countries rich in natural resources should be at the forefront of those addressing climate change,” said COP29 President-Designate Mukhtar Babayev. "We are calling on donors to join us so that we can fulfil the COP29 plan to enhance ambition and enable action."
The issue of finance is set to dominate the COP29 climate talks in Baku in November, where countries will try to agree a new global target for climate finance that rich nations will transfer to poorer countries each year from 2025.
Babayev did not say which donor countries or companies have been approached at a media briefing on Friday but said Azerbaijan will be a founding contributor with an as-yet decided initial contribution.
The fund would receive annual transfers from its contributors, and would dedicate 20 per cent of revenues generated from investments to a Rapid Response Funding Facility that would help the most vulnerable countries respond to climate disasters.
Azeri officials said the fund would be more nimble than multilateral development banks and other global facilities because shareholders would directly decide in which projects to invest.
In the coming weeks, Azerbaijan will launch a working group of economists and other experts to create a formula for potential donors to decide how much they will contribute and a process for how developing countries can access the fund.
Officials told reporters the that countries' new national climate plans that they must submit to the UN next year, known as NDCs, should be aligned with the Paris agreement goal to limit the global temperature rise to 1.5C but did not rule out funding certain fossil fuel projects.
Last year's UN climate summit in the United Arab Emirates ended with a global agreement calling for "transitioning away from fossil fuels" to reach net zero emissions by 2050.
The UN's climate chief Simon Stiell said on Friday that success at COP29 hinges on progress around boosting climate finance.
"Progress in Baku isn't just about green new numbers. It's about improving climate finance delivery so that it meets developing countries needs now and in the future," he said.