The new climate finance goal agreed at COP29 is a betrayal of developing countries

At COP29 in Azerbaijan, a global climate finance goal needed to be agreed to meaningfully provide the finance needed by developing countries to address the climate emergency not of their making.

While countries and communities continue to pay the price of climate change with their lives, livelihoods, homes, and children’s futures, provision of finance from those countries that got wealthy based on a fossil fuel economy, while failing to transition quickly enough, is fundamental to global cooperation, limiting global temperature rise to 1.5°C, and to delivering climate justice.

The new collective quantified goal (NCQG) was three years in the making, and though there were various negotiating sessions and multiple technical expert dialogue, the very first actual negotiating text with a quantification of the goal only appeared in the afternoon of Friday 22 November – the scheduled end day of COP29. No meaningful negotiations took place on this text and no adequate or justice-based goal was offered, instead backroom discussions pushed developing countries into a take-it-or-leave-it offer. This abysmal decision was gavelled through with scant changes in the early hours of Sunday morning, in a highly problematic process, leading to powerful statements of objection from developing countries including India, Bolivia, Nigeria and others.

Cuba profoundly regrets the insufficient outcomes regarding climate finance … Those who contributed the least must shoulder the burden … Ecological debt to humanity must be paid.

Cuban delegation

This is an insult to what the Convention says… That the developed countries are saying they are taking a lead with $300bn til 2035, is a joke, and is not something we should take lightly … I am saying that we do not accept this.

Nigerian delegation

Developing countries have been forced to accept half-measures COP after COP, but at COP29 these half measures push the costs of climate change onto the people least responsible but who are suffering the worst consequences.

Unpacking the myths behind the headlines

Myth 1: The Goal is $1.3tn a year

The goal is “at least USD 300 billion per year by 2035”. However, the decision calls on “all actors to work together to enable the scaling up of financing to developing country Parties for climate action from all public and private sources to at least USD 1.3 trillion per year by 2035”.

This is not a goal, this is merely a general call to action, particularly for investment. The decision is non-binding and no one is responsible for delivering this. This is not money developing countries are assured of, and worse, it risks putting the blame on developing countries for not doing enough to attract investment if flows do not reach this level.

It is important to make sure the focus stays on “financing to developing country Parties”, since some Parties in the negotiations wanted a global investment target. However, global flows are already at this level according to the Climate Policy Initiative Global Landscape of Climate Finance 2024 report, and would therefore represent no increase in ambition or finance. To put the numbers in context, the Climate Policy Initiative report also notes that:

a further fivefold increase is actually required to reach the $7.4tn needed on average each year through 2030 to limit global temperature rise to 1.5°C,
the costs of inaction on climate change will be five times greater,
LDCs receive only 2.7% of current global flows, and SIDS only 0.5%. This is why an investment target approach has not been popular with developing countries, since it is less likely to reach them and to meet their needs.

Myth 2: Developed countries will provide $300bn in public finance

Sadly not. The goal calls for developed countries to “take the lead”, but for the finance to come “from a wide variety of sources, public and private, bilateral and multilateral, including alternative sources”. It also will count “all climate-related outflows from and climate-related finance mobili(s)ed by multilateral development banks” which we know are often not all that climate-related and are certainly not the best way to get climate finance to communities on the frontline.

This also means that there will be more loans in the mix – counted at face value – than the grant finance needed by countries facing climate change impacts and unsustainable debt burden. MDBs announced at COP29 that they expect by 2030 to channel $120bn a year in climate finance to low- and middle-income countries while mobilising $65bn from the private sector, representing the majority of the new goal. Of course, this money doesn’t come from the sky, and clearly means a diversion of finance away from other SDGs and vital priorities. Developed countries are hiding behind an expanded role for MDBs to avoid their responsibilities to pay up and to provide grants-based public finance. South-South cooperation will also be counted, further lowering developed countries responsibilities.

Overall, then, we can expect to see very little increase on the low levels of provision (just $41bn in 2022) from the countries with the greatest historical responsibility for the climate emergency and the greatest ability to pay. Indeed, Secretary of State Miliband is already reported as saying the new goal doesn’t commit the UK to contribute more climate finance, but is actually a “huge opportunity for British businesses” to invest in other markets. Yet we know that a significant uplift in public grant finance provision is what developing countries need most to effectively tackle climate change and escape spiralling debt.

Myth 3: This triples climate finance

While $300bn is indeed three times more than $100bn, it is far from accurate to say climate finance is being tripled. At the most basic level, inflation needs to be taken into account between a previous goal set in 2009 and a new goal not due to be delivered until 2035. In addition, other existing finance flows that didn’t used to ‘count’, now do. For example all climate-related outflows from MDBs, not just those attributable to developing countries, and developing country contributions (south-south flows) count. All contributing to this lowering of responsibilities by developed countries to provide an uplift in climate finance.

How does it stack up against our demands?

Is it needs-based?

Categorically not. Despite the decision stating upfront the minimum scale of needs, the goal utterly fails to meet it. Paragraph three “highlights” that the “costed needs” (understood to contain considerable gaps to to be an underestimation of actual needs) of developing country Parties’ Nationally Determined Contributions (NDCs) are $455bn – 584bn per year, and adaptation finance needs are $215bn–387bn annually until 2030. Wider studies put the overall climate finance needs of developing countries at between $1tn-$10tn a year. This is the context in the decision text for the $300bn a year target only to be reached by 2035. It is clear why developing countries have branded it a joke, an insult, and a betrayal.

Is it grants-based?

Again, no. The goal mixes together public finance and mobilised finance from a wide variety of sources, meaning grants, low interest loans, non-concessional loans, and private finance leveraged with public finance can all be counted. While paragraph 14 recognises the need for public and grant-based resources and highly concessional finance, particularly for adaptation and responding to loss and damage in developing country Parties, it does nothing to ensure it.

Does it deliver for adaptation and loss and damage?

No specific provision is made for adapting to climate change or addressing the loss and damage from climate change within the $300bn goal, despite stating that “if climate goals are to be achieved, both adaptation and mitigation financing would need to be increased manyfold”, there is nothing in this decision to make that happen. The same language to “achieve a balance between adaptation and mitigation” is used again despite it failing to deliver adequate adaptation finance in the $100bn goal. Despite the creation of the Fund for Responding to Loss and Damage (FRLD), the inclusion of finance for loss and damage in the goal is not explicit, it merely “acknowledge the significant gaps that remain in responding to the increased scale and frequency of loss and damage” and many Parties will count loss and damage finance as adaptation, meaning less finance for both.

Is it additional finance?

Mention of additionality of climate finance was removed from the text, paving the way for a continuation of developing countries double counting ODA as climate finance, rather than providing the new and additional resources needed to tackle the climate emergency alongside other development and humanitarian challenges.

Does it prioritise the UN Climate Funds?

The exact opposite. Instead of strengthening the role of the climate funds specifically set up to enable climate action in developing countries and with more democratic and transparent governance structures, the decision expands the role for MDBs ill-suited to climate finance delivery. There is a decision to increase public resources to be provided through the climate funds and “to pursue efforts to at least triple annual outflows from those Funds from 2022 levels by 2030”, however since outflows in 2022 were only $1.7bn (down from $3.3bn in 2021), a tripling would be only $5.1bn and therefore a mere 1.7% of the global climate finance goal – so not a significant role at all, in spite of their importance to developing countries as the only funds dedicated to climate action and where they actually get a seat at the table.

What does it mean for UK climate finance?

This appalling outcome at COP29 will not prevent civil society and developing countries continuing to call for developed countries to fulfil their obligations to provide climate finance in the spirit intended under the Paris Agreement, and to meet the actual needs of developing countries. The text makes clear the need for public grant-finance at scale, particularly for adaptation and for loss and damage, and we will continue to demand high quality finance provision by the UK.

The UK’s current International Climate Finance (ICF) commitment to provide £11.6bn over five years will come to an end in March 2025, and will be replaced with a new commitment by this new UK government. We call for ICF4 to:

Provide a substantial increase from the current commitment, in line with the rapidly increasing impacts of climate change and the urgent action needed this decade if the world is to limit global temperature rise to 1.5°C.
Fulfil the UK’s fair share of the finance gap for mitigation, adaptation, and loss and damage.
Provide climate finance that is additional to the UK’s ODA commitment to ensure climate action is not a drain on resources for other vital development and humanitarian priorities. This can be achieved by implementing fair polluter pays mechanisms that can generate billions of pounds in new finance without unfairly costing UK households.
Provide majority grant finance so as not to fuel the debt crisis, unfairly burden countries least responsible for climate change, or exacerbate the interconnectivity between the debt and climate crises. Given the expanding role for MDBs and greater loans in the global climate finance landscape, this is ever more important.
Reverse the ICF accounting rules changes made in 2023 that have significantly decreased the amount of UK ICF going to recipient countries.
Prioritise and reach those who are most marginalised and have been made most vulnerable to climate change, to leave no one behind in the face of climate change.
Prioritise the UN climate funds, recognising their important role in the global climate finance landscape, and their unique governance structures.

Read CAN-UK and our member’s reaction to the COP29 outcome here.