Under the agreed text, governments set a goal for developed countries to support developing countries with at least $300bn a year in climate finance by 2035. Nominally, this represents a tripling of climate finance commitments. However, the $300bn figure is widely acknowledged to be only a fraction of what is needed. Developing countries demanded a goal of $1.3 trillion per year based on their calculated financial needs for mitigation and adaptation.
The Challenge of Need-based Goals
The idea of a needs-based goal for climate finance faced numerous challenges. Developed nations had tight purse strings and offered a target of just $250bn. This led to a walk-out by the small island developing states group. Eventually, the offer was raised to $300bn with a vague mention of "scaling up" financing to $1.3 trillion. There is still no clarity on how this goal will be achieved or how climate finance commitments will be divided among developed countries. It is even unclear which countries should be classified as "developed" and responsible for providing climate finance.Oxfam estimates that the Global South's true climate finance requirement is $1.5 trillion per year by 2030. Funding must come largely in the form of grants, especially for adaptation, to avoid plunging developing countries into greater indebtedness. While the COP29 text acknowledges the need for grant funding in some contexts, it fails to exclude the possibility that interest-bearing loans will be counted as climate finance.
The Outrage among NGOs
The outcome of the NCQG talks prompted a wave of anger among NGOs in Africa. David Abudho, climate justice lead for Oxfam in Africa, described the $300bn deal as "unserious and dangerous." He added that poor countries were "bullied" into accepting the outcome and that the text is "a soulless triumph for the rich, but a genuine disaster for our planet and communities."There is little clarity on how the goals set in Baku will be met. The final outcome was an agreed text rather than a real agreement that commits specific actors to take specific action. The path to reaching $300bn, let alone $1.3 trillion, is unclear. And the text neglects to mention how or by whom private finance will be mobilised.
The Relevance of COP
Even before the talks in Baku began, questions were raised about the continued relevance of the annual COP gathering. The mood was dampened by the re-election of Donald Trump, who led the US out of the Paris Agreement in his first term. During the summit, a group of climate leaders called for reform to the COP process, including the creation of a mechanism for tracking climate finance disbursements.South African businessman Ivor Ichikowitz described the COP29 deal as a "complete con." He argued that African and other Global South governments must take control of the process as the countries with the highest emissions are in control of the negotiating process. "The only way that this is going to be resolved is if the absorbing countries start becoming vocal and start driving the process instead of being compliant and allowing themselves to be bullied into bad deals," he said.
Mobilising Private Finance
The debate on the future of the climate agenda will intensify. Marco Serena, chief sustainable impact officer at the Private Infrastructure Development Group (PIDG), acknowledges that Africa "cannot see COP as a full success." However, he believes the deal provides "something to build on." The $300bn goal is a start, but plans must be put in place to deploy funds quickly.PIDG looks to mobilise private finance for infrastructure by de-risking the project pipeline. This involves investing in blended capital structures and funding projects at the earliest, highest-risk stage of development. Holger Rothenbusch, managing director at the UK's DFI, British International Investment, agrees that mobilising private capital must be a priority. He suggests that public finance must step in for adaptation as it requires highly subsidised funding that is difficult to obtain through commercial channels.