BRUSSELS — Rahman Mustafayev, the soft-spoken, Moscow-educated ambassador from Azerbaijan to the Netherlands, sat in a hotel restaurant near the European Parliament recently and shared his thoughts about the United Nation’s climate summit in November, called COP29, which will be hosted by his home country.

He discussed not only how to boost climate funding for developing countries — the theme of the summit — but also how to make the cash more accessible.

“[Financing] is insufficient, but the issue is also how to get access” to it, he said, pointing to the high interest rates poorer countries receive. “Azerbaijan will raise the issue of … more suitable and accessible funding mechanisms for developing countries.” 

Azerbaijan is a country of 10 million inhabitants straddling Eastern Europe and West Asia that increased its standard of living in recent decades due to its vast fossil fuel reserves, which Mustafayev described as a “blessing.” He pitched the country as a well-placed negotiator for the summit because “we’re in between the East and West, North and South.”

Rahman Mustafayev, ambassador from Azerbaijan to the Netherlands. Photo courtesy of the Embassy of Azerbaijan to the Netherlands.

The stakes are mounting, as wealthy countries are under pressure to significantly boost the amount of money they’ve pledged to help developing countries fight global warming. But the challenge is more complex than just agreeing on a final number and access to financing, Mustafayev told me. It’s also about transparency. 

Yes, international banks and donors need to give low- and middle-income countries better conditions to use the cash and draw in more private investment. But, in turn, developing countries need to be more transparent in how they use the money, Mustafayev said.

Beyond the figure

Rich countries — responsible for the bulk of historical greenhouse gas emissions — pledged in 2009 to help low- and middle-income countries fund efforts to fight global warming and adapt to a changing climate. At the time, wealthy countries pledged to provide $100 billion a year to this effort starting in 2020. They met the promise two years late, mostly in the form of loans. That agreement runs out in 2025.

Low- and middle-income countries want the new climate finance goal to be in the trillions. But early negotiations so far have ended in frustration and stalemate, with negotiators from wealthier and poorer countries trading fiery remarks last month at the UN climate meeting in Bonn, Germany, a precursor to the November summit.

On top of that, “don’t forget Azerbaijan is an oil and gas-producing country,” the ambassador said. “We have very close connections and partnerships with oil-producing countries, which are rich countries” and have “better opportunities” to help provide funding to poorer countries. He offered Saudi Arabia, Qatar, Kuwait and the United Arab Emirates as examples. 

Azerbaijan last week announced it will launch a new climate fund to mobilize $1 billion in climate finance for developing countries with contributions from 10 fossil-fuel producing countries as well as from oil and gas companies, Reuters reported.

The host country is also planning to bring together the shareholders of multilateral development banks (MDBs) and international financial institutions on the sidelines of Climate Week and the UN General Assembly in New York at the end of September, a senior COP29 official said.

Not a one-way street

While the need for more, and more accessible, climate financing is clear, Mustafayev also warned that the “climate change issue is not a one-way street.”

Developed countries are asking for something in return, he said. 

“To move forward, we need, of course, the richest countries … to unblock funds. The private sector should provide investments,” the ambassador said. “At the same time, yes, it’s really legitimate that developing countries, those who receive this investment, they should provide more accountability. This is a normal request.”

By the end of this year, developing countries must submit their first so-called Biennial Transparency Reports (a mechanism established under the 2015 Paris Climate Agreement), which need to include information on countries’ progress to meet their decarbonization goals, the policies they use, an assessment of local climate change impacts and adaptation, as well as levels of financial support. 

Mustafayev said the Azerbaijani COP team is asking developing countries to try to submit the report by the beginning of the summit in November to help facilitate negotiations.

But putting those reports together won’t be easy, since “there is literally a lack of money to hire people to do the reporting, and lack of money and time to train the people they do have to do the reporting,” said Ana Mulio Alvarez, researcher at environmental think tank E3G.

She also pointed out there isn’t one internationally accepted definition and methodology on what qualifies as climate finance and what doesn’t, describing the issue as “contentious.”

“I think it’s tricky to ask developing countries with limited capacity to report on the finance received and disbursed when developed countries themselves have failed to come up with a climate finance definition and reporting system,” Mulio Alvarez said.

Green at the end of the tunnel?

During our interview, Mustafayev was keen to talk about Azerbaijan’s renewable energy ambitions, but also defended the country’s fossil fuel legacy.

“All gas for us is a blessing,” Mustafayev said.

I asked Mustafayev about the controversy of having another petrostate host the climate change summit. He was unconcerned, describing the country’s fossil fuel reserves as a “gift from God,” mirroring recent words from his country’s president, Ilham Aliyev.

The former Soviet republic, bounded by the Caspian Sea and the Caucasus Mountains, unveiled last year the country’s first large-scale solar plant expected to power 110,000 homes. The project developer is Emirati company Masdar, whose CEO, Sultan Al-Jaber, also led the COP28 climate summit in Dubai last year. (Al-Jaber also heads the Abu Dhabi National Oil Company, which last year bought a share of one of Azerbaijan’s main gas fields for further development).

Azerbaijan announced two more solar plants and one wind plant in June, all meant to help the country get 30% of its electricity needs from renewables by 2030. Currently, more than 90% of the country’s power needs come from gas, according to the International Energy Agency.

Azerbaijan is a critical piece of Europe’s energy infrastructure; it is one of the bloc’s main natural gas exporters and plans to increase its gas production further. Azerbaijani President Aliyev said recently that the country “will defend the right of [fossil fuel] countries to continue investments and to continue production.”

But is that in line with the COP28 agreement for the world to transition away from fossil fuels? Mustafayev argues the stance aligns with present-day economic reality. 

“We need it for our economy … Europe is in need,” he said. However, Mustafayev argues it is also what provides the possibility for change.

“This, in fact, gave us the opportunity to develop our industry, to provide European energy security, to establish connections, to build pipelines,” he explained. “This was the source, which we have used in full to start now the process of the green energy transition.”