Looking beyond COP29: How to create a roadmap for sustainable climate finance

After two long weeks of deliberations and negotiations, the 29th Conference of the Parties (COP29) ended on November 24, 2024 in Baku, Azerbaijan. Many call it a failure or a missed opportunity because the result falls far short of the requirements to achieve the climate target. The global North and South are once again fragmented and lacking trust. It will take time for the wounds to heal.

Developed countries agreed for the first time to jointly mobilize resources of $100 billion per year by 2020 at COP15 in Copenhagen in 2009 to meet the climate needs of developing countries. It took them 15 years to revise the target with a new collective quantified target (NCQG), although the commitment has only increased by $200 billion per year to $300 billion per year by 2035.

While the COP presidency rejoiced at the agreement between the richest countries, the emerging and developing countries (EMDEs) criticized this commitment as their voice was ignored.

Questions vs. consent

EMDEs are expected to require between $5.8 and $5.9 trillion to implement their declared Nationally Determined Contributions (NDCs), while adaptation financing needs are estimated at $215 to $387 billion per year through 2030.

The G77 countries and China called for the NCQG to be $1.3 trillion, with $600 billion provided through grants and grant-equivalent resources by 2030. It also called for most of these funds to be provided in the form of grants, as in the previous commitment of $100 billion, about 70% of the funds were provided in the form of loans.

It talks about $1.3 trillion, but it calls on “all actors,” including public and private, to “work together” to reach that level by 2035. Therefore, developed countries have no obligation or moral responsibility in terms of concrete, actionable steps, while developing countries are left to fend for themselves.

The crucial question is whether it is fair and just, as developing countries are not historically responsible for the current crisis, but are bearing the brunt of the devastating effects of climate change in the form of increasing floods, heatwaves, etc. Friendship with what we have in common but differentiated responsibility seems to be missing. This has led developing countries to feel that their demands on countries that have contributed to emissions in the past should do the most to support the global climate goal.

Something to look forward to

Although the mood at the end of COP29 was not ideal, some important decisions were also announced that point to a brighter future. Nations have reached a crucial agreement to create a global carbon market under Article 6.4 of the Paris Agreement. This framework sets standardized rules for the creation, trading and registration of carbon credits and aims to improve international cooperation in reducing greenhouse gas emissions. This will boost climate finance by mobilizing significant investment in emissions reduction projects worldwide.

Additionally, the United Kingdom, Brazil and the United Arab Emirates announced revised, ambitious Nationally Determined Contributions (NDC) targets, putting countries on an accelerated path to net zero. However, the failure to mobilize funds for developing countries raises the big question as to whether they will present more ambitious NDCs next year.

The way into the future

There is a large gap between the scale needed and what is provided for effective climate change adaptation and mitigation. All eyes are already on the COP30 in Brazil to decide on the mechanisms of flow of these funds to developing countries. There is also a need to discuss and include new innovative sources of financing such as global solidarity levies, more ambitious multilateral development banks, financial transaction taxes and taxes on the richest assets, as mentioned by the G20.

In addition, agreement on activities eligible for climate finance must be a priority and legitimate institutions for data collection on climate finance must be formed to create greater transparency. Finally, cumbersome bureaucratic processes, often created under the pretext that borrowers do not follow certain governance practices, should be abandoned to speed up the disbursement of climate finance to developing countries.

Developed countries must keep their promises and timetables must shift. Furthermore, the concessional financing element is crucial and its absence will push EMDEs further into debt.

The world cannot afford another missed opportunity. It has taken almost three years for countries to find what they need to meet climate targets in the global south, but the result feels like a betrayal to many. However, time is of the essence here and we hope for greater global cooperation in sharing technology and deploying concessional capital towards a stronger goal of limiting global temperature to 1.5°C.

This article was first published in Outlook Planet.