COP29 ends in a $1.3 trillion disappointment. But there may still be hope

New Delhi: The 29th edition of the UN climate change conference in Azerbaijan emerged from a deadlock with an annual climate finance goal of $1.3 trillion for developing countries, much to the disappointment of the Global South.

On Friday, the closing day of COP29, a revised five-page text on the climate finance package, or the world’s new collective quantified goal (NCQG) on climate finance, was issued specifying two separate goals.

The first states that “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 $1.3 trillion per year by 2035”. 

The second goal mentions that developed countries must take the lead in mobilising $250 billion per year by 2035 for climate action by developing countries from public and private, bilateral and multilateral, and alternative sources.

For climate experts, the issue is this: the goals do not specify that the annual $1.3 trillion in climate finance should flow from developed economies to developing countries.

“It’s a good thing that $1.3 trillion is acknowledged, but how that will be met right now is totally unclear,” said Avantika Goswami, programme manager, climate change, at the Centre for Science and Environment (CSE). “It must specify (that) out of $1.3 trillion, $600 billion must come from the government budget of developed countries. That’s what G77 has asked for.”

The G77 is a coalition of developing countries, including India, that now has more than 100 members.

Also read | India at CoP-29: Push for climate finance and strengthen domestic sources

“None of that (G77’s demands) is addressed here, not the scale, not the specific demands around the quality and structure of the goal. This is very far from what developing countries have demanded and it’s completely inadequate,” Goswami told Mint.

“This is basically sticking us with $250 billion between now and 2035, and we don’t even know if the $250 billion is going to be mobilised in the years before. It’s saying by 2035, so it might be a lesser amount in the coming years until 2035,” she added.

Developed nations say they mobilised and transferred $115 billion to developing countries in 2021-22, though the developing world claims the target has yet not been met. As per the Paris agreement, however, a new target above $100 billion must be agreed upon by 2025.

The NCQG refers to finance that will be provided by developed countries to developing countries to help them meet their goals to transition away from the continued use of fossil fuels and curb greenhouse gas emissions. Developing nations have been repeatedly saying that this will cost “trillions of dollars”.

A report from the Independent High-Level Expert Group on Climate Finance last week said if countries do not act now, the climate finance target will need to be raised to at least $1.3 trillion a year by 2035.

‘A sham’

India, on behalf of like-minded developing countries, on 14 November said developed countries need to commit to providing and mobilizing at least $1.3 trillion every year in NCQG until 2030. It added that climate finance cannot be changed into an investment goal when it is a unidirectional provision and mobilization goal from developed to developing countries.

“The $1.3 trillion per year by 2035 for the developing world includes finance from all public and private sources. Investment in RE (renewable energy) technologies in the developing countries was $544 billion in 2022 itself. This figure should automatically reach beyond $1.5 trillion by 2035, accounting for the growth in the sector and inflation,” said Vaibhav Chaturvedi, senior fellow at the Council on Energy, Environment and Water (CEEW). “The $1.3 trillion number is at best a sham.”

At COP29, developing nations mooted for $5-6.8 trillion worth of climate finance until 2030.

“The Presidency text on the NCQG reflects a clear disconnect between ambition and action,” said Suryaprabha Sadasivan, senior vice president at Chase India, a public policy and advocacy advisory firm.

Also read | Climate finance: Deploy the Loss and Damage Fund with care

“The proposed $250 billion annually by 2035 for developing countries falls significantly short of the estimated $455-584 billion annually needed for mitigation and $215–387 billion for adaptation, as outlined in developing nations' costed needs,” Sadasivan said. “Continuing the reliance on loan-based financing, with limited emphasis on grants or low-cost mechanisms critical for countries like India, risks deepening unsustainable debt levels.”

COP29’s revised text also fails to adequately address loss and damage financing, which is needed to reduce high transaction costs, she added. 

Though the timeline of COP29 (11-22 November), finance COP, ended on Friday, a decision is yet to be adopted by member countries.

“We still have 24 hours; It has not come to an end. It comes to an end when the decision is adopted. So, there is still time for developed countries to give a revised number,” said Goswami of CSE. “Otherwise, developing countries should not accept the $250 billion. It’s too low, it’s inconsequential.

Options still open

On Thursday, after a 10-page NCQG draft text was released, India highlighted that grant-based concessional climate finance is the most critical enabler to formulate and implement new nationally determined contributions (NDCs).

“The document needs to be specific on the structure, quantum, quality, timeframe, access, transparency, and review. The goal for mobilisation needs to be $1.3 trillion, with $600 billion of this coming through grants and grants equivalent resources,” India said in a statement.

All 198 members of the United Nations Framework Convention on Climate Change (UNFCCC) are expected to submit their third round of NDCs by February, which will apply till 2030.

If there is no consensus or clarity on the structure, quantum, quality, timeframe, access and transparency on NCQG, there are then two possibilities, said Manish Shrivastva, senior fellow, earth science and climate change, at New Delhi-based The Energy and Resources Institute (TERI).

Also read | AI is giving us a nuclear renaissance: Can it help solve the climate crisis too?

“Either countries will submit a moderated NDC, or they will say that our ambition in NDC is XYZ. But this is absolutely conditional upon developed countries providing adequate additional grant equivalent finance to the scheme of XYZ from this year onwards, or something of that sort.”

India’s first and second NDCs are conditional, subject to developed countries providing necessary financial resources. Some other countries have submitted two NDC targets—one from national resources and the other a conditional resource based on international support. These options will still be open, said Shrivastava.