In less than 48 hours, COP29 should be over. But negotiations on the central issue of the summit, climate finance, have not yet made significant progress.
An agreement at COP29 on climate finance still seems far off, with less than 48 hours remaining until the end of the negotiations. Two major opposing options are still on the table, representing the positions of developed and developing countries. There is no common ground between the negotiating options, making it difficult to make progress. A new draft is expected on the evening of November 21, containing a synthesis proposal prepared by Azerbaijan’s COP29 presidency.
After 11 days of negotiations on climate finance at COP29 in Baku, the situation has nearly returned to square one: the Global North versus the Global South, developed countries versus developing countries. The new text presented on the morning of November 21 includes two opposing options, with little or no common ground. There is a lack of necessary synthesis work and compromise-seeking, at least on the most contentious issues. Although both options (in their own way) finally address trillions of dollars as the scale for the new Quantified Collective Goal (QCG) for climate finance.
Another draft, containing a synthesis proposal from the Azerbaijani presidency of the Baku climate conference, is expected by the evening.
Let’s take a closer look at the status of the climate finance agreement at COP29, the positions of the wealthiest countries and the developing nations, and the proposals on the table about who should pay, how much, by when, and with what methods of resource disbursement.
But how did we get to this point? We previously discussed the key elements of the negotiations on the new Quantified Collective Goal (QCG) at COP29. Here, we talked about the results of COP28 in the climate finance negotiation tracks.
How the Latest Draft Was Constructed
The latest draft of the COP29 climate finance agreement, dated 3 a.m. on November 21, arrives after several days of waiting, over 24 hours later than the initial timeline. Why?
The delay reflects the complexity of the negotiations in Baku on the most crucial item on the agenda. Despite efforts, there is still no real compromise in sight.
Compared to the previous version, this latest draft is much more streamlined (reduced from 25 to 10 pages) and has fewer open issues to discuss (46 brackets and 15 options, compared to 180 and 90 in the first version). However, it is still not a synthesis; it’s a simplification of opposing positions.
The draft clearly states in its header: “Streamlined collection of proposals serving as a transition to the Presidency’s draft decision text, including options derived from ministerial consultations.”
The new text is the result of technical discussions during the first week of COP29, following consultations between ministerial delegations. Since Monday, November 18, the environment ministers have also been present in Baku.
The political input has streamlined and simplified the options under discussion, reducing them to two major blocks. However, these are “extreme” positions, reflecting the desires of developed and developing countries, and still lack common ground.
The only concrete progress came from the G20 meeting in Rio earlier in the week: now, even the wealthiest countries are talking in terms of trillions, thousands of billions.
Let’s take a closer look at the options being discussed in this final stretch of COP29 in Baku.
The Two Options for the COP29 Climate Finance Agreement
The two options for the COP29 climate finance agreement still differ significantly on all the major points.
Funding Sources
Starting with the total amount constituting the new Quantified Collective Goal (QCG). Both options leave the exact figure undefined but mention trillions of dollars. However, there is a vast divide between the two parties when it comes to the sources of these resources.
Developing countries want to specify the annual share of public resources to be provided by developed countries, and a separate share for mobilized resources, which includes private investments. On the other hand, wealthier countries oppose setting such specific targets for shares and ask for “domestic resources” to be counted as part of the contribution.
Who Pays for Climate Finance?
One of the most difficult issues to resolve is the question of who contributes.
Developing countries want to maintain the current obligation for only the wealthiest countries to contribute, without altering the existing framework or reopening discussions on Article 9 of the Paris Agreement and the classification of countries established in 1992 by the UN Framework Convention on Climate Change (UNFCCC).
Developed countries have always called for countries like China and Saudi Arabia to be included, as they have economies capable of contributing to the goal but are still classified as developing countries. In this draft, that request is present, although it is somewhat softened: these countries are not explicitly named, but the text states that all should contribute.
Will China Contribute to Climate Finance?
Moreover, the proposal from developed countries calls for more transparency, stating that any country contributing, even voluntarily, should submit a detailed biennial report. This is a strategy to put pressure on countries like China. Currently, China is not obligated to contribute and claims to do so voluntarily, but there is no transparency about how much it contributes or in what form. In the case of China, wealthier countries want to highlight how China uses debt, making the amount of resources provided as loans, with the subsequent interest payments, public.
These differences highlight the ongoing challenges and the complexity of finding common ground between developed and developing nations regarding climate finance.
Other Points of Disagreement
Beyond the two options on the key elements of the post-2025 climate finance framework, there are other parts of the text where no agreement has been reached yet.
Article 20 offers two alternative versions regarding the previous goal of $100 billion per year by 2020 and until 2025.
- The first version simply acknowledges that the target was met and exceeded in 2022, reaching $115.9 billion. It does not address the “arrears,” meaning the missing billions in 2020-2021 when the $100 billion target should have already been reached.
- The second version calls for these arrears to be paid by the richer countries by December 31, 2026.
Another contentious issue remains the sources of resources and the way they should be provided, as specified in other articles of the draft.
- Article 29 talks about balancing mitigation and adaptation (a point that may be agreeable to all), but it also mentions including loss and damage, which richer countries oppose.
- Article 39 presents two alternatives for the allocation of resources among recipient countries. Both proposals appear to come from developing countries. The first version specifies vulnerable countries with significant economic constraints, such as LDCs (Least Developed Countries) and AOSIS (Alliance of Small Island States). The second version allocates $39 billion to small island states (AOSIS) and $220 billion to the least developed countries (LDCs).
Reactions to the New Draft COP29 Climate Finance Agreement
The European Union expressed the most decisive reaction, with Climate Commissioner Wopke Hoekstra labeling the latest draft as “imbalanced, unfeasible, and unacceptable” during a plenary session.
The text currently on the table at @COP29_AZ is clearly unacceptable as it lacks the ambition we need. pic.twitter.com/ZA0dFD7tTN
— Wopke Hoekstra (@WBHoekstra) November 21, 2024
The agreement text on the Mitigation Work Program (MWP) is also on the table. Developed countries want to follow through on the “transition from fossil fuels” decided at COP28, and the Azerbaijani presidency has reopened the issue—stalled last week during technical negotiations—as a “counteroffer” to push through a deal on climate finance. The terms of the unspoken deal are: more ambition on mitigation in exchange for concessions on climate finance. The problem? Developed countries deem the MWP text inadequate. They accuse the Azerbaijani presidency of including only the perspectives of Arab countries and the Like-Minded Group, with the reference to the fossil fuel transition notably absent.
UN Secretary-General Antonio Guterres has tried to inject optimism, claiming that there is an “appetite for an agreement” in the corridors of the Baku climate conference. However, this is the only optimistic voice heard so far.
The Group of 77 and China, represented by Uganda, also criticized the NCQG text during plenary. They took issue with the reference to “domestic finance” proposed by developed countries, which could likely dilute the amount of new and additional resources. They also criticized the idea of an investment target.
The African Group once again highlighted their reluctance to accept the distinction between provisions (public finance) and mobilization (private finance). In plenary, they explicitly stated their financial needs: $1.3 trillion in total, with $600 billion per year in public finance (provisions) and in the form of grants.
#AGN @COP29: #NCQG IN FOCUS
— AGN Chair (@AGNChairUNFCCC) November 21, 2024
Africa is eagerly awaiting for your draft proposal on moving the #NCQG to a decision-making point. Let me reiterate our expectations for your draft:
· The NCQG must deliver a responsive finance goal for developing countries that responds to our the… pic.twitter.com/BMBtB2OROz
Criticisms, in some ways, are also supported by observer organizations such as Climate Action Network (CAN). In a press conference on the sidelines of the plenary session, Jacobo Ocharan of CAN stated: “We have a text without numbers. The missing quantum is the elephant in the room: without it, the ambition is unclear.” He further added that the option favored by developed countries “risks turning the NCQG into a global private finance target, sidelining justice for developing nations.”
