The compromise pleases no one. And perhaps for this very reason, it might work—at least as a starting point to bridge the divide between the Global North and South.
Two New Targets for Climate Finance at COP29: A Delicate Compromise
At COP29, a compromise proposal on climate finance has set two new targets: one at $1.3 trillion per year, the amount requested by developing countries, and another at $250 billion annually, in line with the figures (ranging from $200 to $300 billion) discussed privately by wealthier nations in the past two weeks in Baku.
The compromise proposal, presented by Mukhtar Babayev, the rotating president of the 29th Climate Conference currently underway in Azerbaijan, on November 22, is a balancing act that could work. It aims to steer the Baku summit toward its most important goal: determining the new framework for post-2025 climate finance. In technical terms, the New Collective Quantified Goal (NCQG).
However, a crucial point remains: the proposed figure of $250 billion per year is objectively too low. According to the UN’s Independent Expert Group tasked with calculating climate finance needs, the NCQG should reach at least $300 billion annually by 2030, and $390 billion annually by 2035.
What does the latest version of the NCQG agreement say? What is the compromise proposed by Azerbaijan’s COP29 presidency? And how does it address the conflicting demands from the Global North and South?
Let’s take a closer look at the new text of the New Collective Quantified Goal. We’ve already discussed the previous draft released on November 21 and the negative reactions from states to that text. Here, we explore the key elements of the NCQG negotiations at COP29, and how they might shape the future of climate finance. We also looked at the outcomes of COP28 in the climate finance negotiation tracks.
Climate Finance at COP29: What Does the Latest Draft Agreement on the NCQG Say?
The trick used by the COP29 presidency is to set both a real target and a “less real” target.
In technical terms, the $250 billion per year target, contained in Article 8:
- Is mandatory,
- Is not limited to developed countries, meaning it is not only the wealthy nations that must contribute. This represents a significant shift, breaking from past approaches and rules. However, wealthy countries are expected to take the lead in the effort.
- Is an extension of the previous $100 billion per year target, with a direct reference to the Paris Agreement text.
- Depends on a “decides”, a strong formulation in climate diplomacy language.
- Must be achieved by 2035.
On the other hand, the $1.3 trillion per year target, contained in Article 7:
- Is not formally mandatory, serving more as a threshold to aspire to,
- Applies to all states, both developed and developing. Like the previous target, but more explicitly phrased (“all actors”). This formulation also includes private entities (e.g., banks).
- Is framed as a minimum threshold to aspire to, but does not directly reference the Paris Agreement.
- Depends on a “calls”, a request, which is much weaker than the “decides” language.
- Must be achieved by 2035.
This compromise, blending both mandatory and aspirational targets, aims to balance the demands of developed and developing nations, while setting the stage for more robust climate finance commitments in the years ahead.
Who Should Pay?
The latest draft represents a revolution in climate diplomacy. It breaks the principle that only the wealthiest countries are obligated to commit resources to climate finance. While it does so in a subtle way, still respecting the principle of common but differentiated responsibilities (CBDR), it marks a significant shift.
Formulating the two distinct targets is a way to satisfy all parties and close the negotiations with a success. At the same time, it sends the message that even developing countries are called upon to contribute. It’s less of an obligation and more of a commitment that leans towards being voluntary.
To make this difficult pill easier for the Global South (particularly for Southern countries with significant economic capacity, such as China, Saudi Arabia, etc.), the proposal in Article 10 specifies that this agreement does not alter their status as developing countries and beneficiaries.
It is by no means certain that this text will be accepted by developing countries. A key point will be observing China’s reaction, as it is officially considered a developing country in climate conferences. Beijing does not want to take on obligations, and the latest draft does not assign any. However, future climate conferences could use this precedent to formally change the rules regarding who should contribute to climate finance.
What Types of Climate Finance Are Allowed?
The compromise proposal maintains the $1.3 trillion target, a figure broadly supported by the negotiating groups representing developing and least-developed countries, the Global South.
However, it frames this target as one to be reached through “all sources of finance”, meaning both private and public funding. It does not make a distinction between finance directly provided by states and finance “mobilized” through other channels, as the Global South had originally requested.
“All Developing Countries Agree on $1.3 Trillion Target, But Want It ‘Mobilized’”.
All developing countries converged on the goal of $1.3tn – but they want that amount "mobilised" i.e. public finance & private finance linked to public investments.
— Josh Gabbatiss (@Josh_Gabbatiss) November 22, 2024
In short, they want this money to be provided on the terms presented here for the $250bn.https://t.co/iw6BnN3myv
As Josh Gabbatiss from Carbon Brief writes in a tweet: “All developing countries have agreed on the $1.3 trillion target, but they want this amount to be ‘mobilized,’ meaning public finance and private finance linked to public investments.” In short, they want this money to be provided under the same conditions outlined for the $250 billion target.
The $250 billion target is also to be achieved with all forms of financing. The text mirrors that of the Paris Agreement, maintaining the current conditions for the $100 billion target.
Grants or Loans?
Compared to earlier drafts, the issue of the form of financing has taken a backseat. The Global South prefers grants or terms similar to grants. The Global North wants to maintain a mix of loans and other forms of financing.
The agreement acknowledges “the need for public resources and grants-based financing, along with highly concessional financing, particularly for adaptation and loss and damage responses in developing countries, especially those that are highly vulnerable and have significant capacity limitations, such as least-developed countries and small island developing states.”
Mitigation and Adaptation
Another issue that has taken a backseat, despite extensive discussions at COP29 in Baku, is the relationship between funding for mitigation actions and funding for climate adaptation measures.
The compromise proposal simply calls for a “balance” between the two areas. It no longer mentions Loss & Damage, the resources for losses and damages caused to vulnerable countries by extreme climate events. Many Global South countries had wanted to include this as a third pillar alongside mitigation and adaptation, specifically for climate finance purposes.
The reactions to the latest New Collective Quantified Goal (NCQG) proposal have been sharply critical from many developing country delegations, as well as from civil society. Meanwhile, a few voices from wealthier countries have described it as a positive first step toward reaching a good agreement.
The Global South: “Unacceptable and Inadequate” Proposal
The African Group of Countries has firmly rejected the proposal. “The proposed goal of mobilizing $250 billion per year by 2035 is totally unacceptable and inadequate,” said Ali Mohamed, Kenya’s representative speaking on behalf of the group.
Two points were particularly contested. First, the figure is considered too low: “The Adaptation Gap Report alone states that adaptation needs amount to $400 billion.” Secondly, the broadening of the pool of contributing countries: “It is no longer just the developed countries that are responsible under this formulation. It is presented as a goal for which all countries are responsible, with developed countries taking the lead. This is unacceptable.”
The AOSIS Group (Alliance of Small Island States) expressed its “deep disappointment” with the latest draft. “This investment target represents a fraction of the $1.3 trillion at least needed to effectively protect our world from the most catastrophic impacts of climate change,” it declared.
A joint statement from Amar Bhattacharya, Vera Songwe, and Nicholas Stern, co-chairs of the Independent High-Level Expert Group on Climate Finance, stated that $250 billion is “too little and inconsistent with honoring the Paris Agreement.”
This UN expert group is tasked with providing an annual report estimating climate finance needs. It is one of the main scientific references for setting the required financial quantum. The authors of the report remind that their latest analysis, updated in November 2024, “shows that the NCQG, based on the components it covers, should commit developed countries to provide at least $300 billion per year by 2030 and $390 billion per year by 2035.“
Australia described the proposal as a “sincere effort” to reach a compromise, while Germany noted, “We are not yet at a landing point, but at least we are not in the air without a compass.”
Civil Society and Observers: “Proposal Too Weak”
Luca Bergamaschi from ECCO, an Italian think tank specializing in energy and climate, described the proposal as “too weak.” “There is plenty of room to aim higher for the next ten years, in line with the demands of African countries,” he added. For Bergamaschi, the ambition on climate finance can be increased beyond the $250 billion target by including all climate finance, including contributions from Multilateral Development Banks, and through new mechanisms like international taxation.
Even more critical is Soomin Han of Climate Action Network – Canada, who called the proposal a “weak and disappointing mix of words.” Han highlighted the worst aspects of the proposal, including the lack of a commitment to resources provided as grants, to increase funds for adaptation, and to boost resources for Loss & Damage. The proposal, Han argued, is “contrary to the spirit of the Paris Agreement” because it shifts responsibility onto the Global South. Meanwhile, Climate Action Network International made its stance clear: “No agreement is better than a bad agreement.“
Climate finance is at the heart of #COP29, but the newest draft #NCQG text completely misses the mark.
— CAN-Rac Canada (@CANRacCanada) November 22, 2024
Our Climate Finance Policy Analyst @soomin_han’s response: pic.twitter.com/86YTl1376L
Power Shift Africa and WWF: “Completely Inadequate”
The comments from the African think tank Power Shift Africa were especially harsh: “Our expectations were low, but this is a slap in the face.” According to WWF, the proposal is “completely inadequate” and “completely misses the mark.” The $250 billion target is “far too low,” and “the wealthy countries aren’t even committing to reaching the goal,” emphasized Mariagrazia Midulla, Head of Climate and Energy at WWF Italy. “We need a core of public funding closer to $1 trillion,” she added.
Similar criticisms came from Climate Analytics, through Bill Hare. The $250 billion target is “weak” because “any type of financing can be counted, and it only needs to be reached by 2035, which means it is essentially a maximum ceiling,” not a starting point. Furthermore, “It also broadens the pool of contributors to include anything financed by multilateral development banks. This means developed countries are not accepting the responsibility they have.”
