Colombia is rushing to reach an agreement with the United States that would unlock the first tranches of funds for a $40 billion climate investment plan before Donald Trump takes office. If this push fails, China may be an option.
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(Bloomberg) — Colombia is rushing to reach a deal with the United States that would unlock the first tranches of cash for a $40 billion climate investment plan before Donald Trump takes office. If this push fails, China may be an option.
Susana Muhammad, Colombia’s climate minister, said she will head to Washington in the coming weeks to try to secure initial funding for an ambitious strategy to reform her country’s fossil fuel-based economy in favor of green investments. She added that the prospects for the agreement have now become more complicated after Trump’s victory in the elections that took place this month.
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It is a race against time for the package, which mimics the Just Energy Transition Partnerships signed between rich and developing countries, aiming to accelerate the move away from fossil fuels. Colombia is looking to obtain up to $10 billion from international financial institutions and developed countries. The move could set a model for other countries looking to transition away from fossil fuels.
Colombia’s investment plan aims to replace fossil fuel export revenues that are expected to decline after the country ended new oil and gas exploration two years ago. The country will look for other sources of funding – including from China – if talks in the United States fail, according to Mohamed. President Gustavo Pietro has made climate transition a central pillar of his administration.
“If we cannot now conclude an agreement for Colombia within the next six months, the chances of the plan surviving depend on the next elections and then the uncertainty begins,” she said in an interview at the COP29 climate summit. Colombia is scheduled to hold elections in 2026. President Petro has asked us to start talking to China. Colombia will look north, south, east and west.
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Colombia is just one of the countries currently scrambling to secure climate commitments from the United States in the two months before Trump took office. At the OECD, the Biden administration is making a last-ditch attempt to reach an international agreement restricting export credit agency financing for foreign oil and gas projects, supporting the initial proposal put forward by the European Union.
It is also unclear how Trump views the US role in the various multilateral development banks in which it is one of the main shareholders, such as the Inter-American Development Bank, which is organizing Colombia’s climate financing plan. The United States plays an informal role as the main coordinator.
All of this feeds into larger concerns that climate finance is drying up. Negotiators in Baku are trying to reach an agreement at COP29 to increase the amount of money the rich world gives poor countries to help them transition and protect their economies from the effects of climate change. Developing countries said rich countries had been slow to fulfill previous financing promises.
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While a number of countries have multi-billion-dollar JETP programmes, the system designed to provide a financing model for the future has been plagued by delays and political turmoil. Plan Colombia is seen as one example of how this process can be improved, mainly by having recipient countries identify their precise needs so that investors have clear projects to direct funds to. Other countries, such as the Philippines, are considering similar investor-friendly approaches.
Colombia is among 13 countries that have backed the Fossil Fuel Non-Proliferation Treaty, which calls for an end to the expansion of new fossil fuel projects — something scientists say is essential to meeting global climate goals.
However, the country is taking risks, and failure would send a stark signal to other fossil fuel-producing countries keen to accelerate their green transition.
Colombia’s economy is already suffering after investment declined significantly in various sectors last year and GDP growth was less than 1%.
“We are betting on great progress,” Muhammad said. “This change in policy could delay and disrupt the process.”
-With assistance from Jennifer A. My bucket.
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