The UN Cop 29 climate summit technically achieved its aim of settling the details of a new climate finance goal, but it represents a huge compromise for poorer developing countries and the finance may take some time to reach them.
Almost 200 countries agreed — although this was later disputed by some — on a goal that will see developed countries "take the lead" on providing "at least" $300bn/yr in climate finance to developing nations by 2035, to support the latter to decarbonise and implement their energy transitions.
It is the new iteration of the current climate finance goal, under which developed countries agreed to provide $100bn/yr to developing nations over 2020-25.
The new goal trebles the previous target, but falls short of what developing countries were pushing in Baku — $1.3 trillion/yr, including $440bn-600bn/yr in public finance mostly in grants and concessional finance.
Other key aspects of the goal — the contributor base and the structure — remain largely unchanged. It only "acknowledges the need for public and grant-based resources and highly concessional finance", stopping short of calling for grants rather than loans. Developing nations have long emphasised the need for grants and concessional loans, to avoid increasing their debt burdens. The deal does not take inflation into account, and does not define climate finance. Civil society and non-governmental organisations largely dismissed it as weak.
Several developing nations and groups have decried the amount, saying it does not meet the minimum requirement to support their energy transition and adapt to the effect of climate change, and that it could further hinder their economic development.
For the least developed countries and small island developing states, in particular, the pill is hard to swallow. The goal does not include the sub-targets that they had called for. Some developed parties said that these nations needed more support. But specific targets proved a step too far, with a delegate from Somalia telling Argus that "rich" developing countries did not support such carve-outs.
Some ground may have shifted slightly on the contributor base — also a long-running bone of contention. UN climate body the UNFCCC works from a 1992 list of developed and developing countries, but the former group argues that economic circumstances have changed for many countries since then.
The Cop 29 finance text "encourages developing country parties to make contributions… on a voluntary basis", much like the Paris Agreement. But it clarifies that any provision of finance would not change a country's status. There was a notable focus during Cop 29 on China's climate finance contributions — which is likely to have supported developed countries' argument for a wider donor base.
From billions to trillions
The Cop 29 finance text acknowledged the need for trillions of dollars, calling on "all actors… to enable the scaling up of financing to developing country parties for climate action from all public and private sources to at least $1.3 trillion per year by 2035". There was also reference to a "roadmap" for reaching that level, but the wording avoids calling for finance from any particular source.
EU climate commissioner Wopke Hoekstra said that, with the help of the multilateral development banks (MDBs) and with the deal's structure, the bloc is confident that $1.3 trillion/yr of climate finance could be reached. But he also pointed to a challenging global context. "This is a significant leap forward in exceptionally difficult geopolitical times," Hoekstra said. The EU is the largest provider of bilateral climate finance, contributing €28.6bn ($30.1bn) in 2023.
In the end a "bad" deal proved better than no deal for the least developed and most vulnerable countries. The election of Donald Trump as president of the US will add a new layer of uncertainty to the climate talks next year, and the geopolitical context shows no sign of easing.
But some developing countries worry that the finance may take a long time to reach them, if at all. Developed countries have a contested track record for the $100bn/yr goal, which they only met for the first time in 2022. The new deal has a 10-year timeframe, for the $300bn/yr from developed countries, and for the larger $1.3 trillion/yr aspiration. How much money will flow to developing nations in 2025-2035 is anyone's guess, but work on improving access to funds will be crucial in the meantime.
