Excitement, high expectations, and a touch of nervousness fill the air as we approach COP29. This year’s UN Climate Change Conference has been dubbed the “Finance COP,” and for good reason. In November 2024, Parties to the United Nations Framework Convention on Climate Change (UNFCCC) will negotiate—and, hopefully, agree on—a New Collective Quantified Goal (NCQG) for climate finance, a crucial step to keep the Paris Agreement within reach. This moment will test the Parties’ commitment to limiting global temperature rise to below 1.5°C and enhancing adaptive capacity as climate impacts become increasingly real and pressing. You may be wondering, though: what exactly is at stake in these negotiations, and why is climate finance so crucial to global climate action?
Broadly defined by the UNFCCC, climate finance refers to “local, national, or transnational financing—drawn from public, private, and alternative sources of financing—that seeks to support mitigation and adaptation actions that will address climate change”.1 But this definition doesn’t capture the full picture. The need for climate finance didn’t arise in a vacuum; it’s not just about calculating the costs of reducing greenhouse gas emissions and adapting to climate impacts.
Climate finance brings up deeper questions: Who should pay? How should these resources be allocated and distributed? To whom, within what timeframe, and through which mechanisms?
In preparation to COP29, I came across a timely research article from a scholar in Colorado University that explores the definition of climate finance justice. The article emphasizes that climate finance acknowledges how the global North benefited from rapid low-cost development fueled by fossil fuel combustion, and environmental degradation and extraction of regions, countries and entire communities. Today, these areas are facing the harshest impacts of climate change, often without the resources to adapt to this new reality.2 Yet, the article also reminds us that while climate finance can be a tool for distributive justice in global policy, it operates through market-oriented solutions and institutions that have the potential to reinforce capital accumulation and concentrate power among elites. With this in mind, let’s break down the NCQG to understand exactly what’s at stake at COP29.
The NCQG is new because it aims to build on lessons learned from the $100 billion annual target set in 2010 at COP16 in Cancun. Unlike this initial goal—which was set mostly as a political agreement intended to trigger climate finance globally—the NCQG strives to better match the actual needs of developing countries. This ambition ties closely to the quantified aspect, as the NCQG seeks a more substantial financial commitment to enable developing countries to step up their climate action. According to the latest report from the Independent High-Level Expert Group on Climate Finance (IHLEG), meeting climate goals in emerging markets and developing countries (excluding China) will require close to $2.4 trillion per year by 2030—four times the current investment level.3
The collective in the NCQG is a big sticking point of this year’s negotiations. Developing countries are suggesting a burden-sharing system among developed nations, arguing that the NCQG should reflect each country’s share of historical responsibility to encourage more ambitious commitments.4 They also contend that climate finance should go exclusively to developing countries, as they bare the harshest effects of climate change with little responsibility on historical emissions. Meanwhile, countries in the global North— particularly the G7 and other European countries- are pushing to expand the contributors base as a pre-requisite for a more ambitious NCQG. That is, emerging economies with the capacity to pay should also contribute with financing resources. Some suggest that developed countries should also be eligible recipients of climate finance.5 This position would follow current financing trends, as Climate Policy Initiative (CPI) reports that recent growth in climate finance has been concentrated primarily in a few regions—China, the US, Europe, Brazil, Japan, and India—which collectively received 90% of recent climate funding increases through investments in mostly clean energy projects.6
The Goal is to be determined, hopefully by November 22nd in Baku. There are several others nuances around the NCQG that need to be addressed, including the role that multilateral development banks and other international financing institutions will play in making climate finance accessible – in both technical capacity and financial terms. Developing countries are also advocating for Loss and Damage funding to be included in the NCQG, emphasizing the need for grants and highly concessional loans due to their limited fiscal space. Additionally, differing views on the role of carbon markets are set to shape the NCQG negotiations.
However crucial these details may be, we must keep the ultimate real goal in mind: to limit global temperature rise and enhance our ability to respond to and prepare for ongoing climate impacts worldwide. If the mechanisms employed for this task exacerbate injustices or perpetuate actions that worsen climate change, we all fail.
If you’re interested in my findings on climate finance, NCQG negotiations, and developments at COP29, keep reading!
Video: Live from Baku, Azerbaijan
November 10-16th in Baku, Azerbaijan
My first day at COP29 was thrilling. A bold message on the wall near the entrance set the tone of the entire event: “COP29: Mobilizing funds and enabling action to keep 1.5°C within reach”. Once in Baku Olympic Stadium, I found my way to the ceremonial opening of COP 29. In the queue, I ran into Sandra Guzmán, founder of the Climate Finance Group for Latin America and the Caribbean (GFLAC). As we chatted about this year’s pressing negotiations, she shared her perspective on the urgent need for structural transformation within the international financial system—a system built around the interests of its primary shareholders, the developed countries, leaving a gap from the perspective of developing nations. Soon after, I joined the audience to hear COP29 President Mukhtar Babayev call on parties to agree to “a fair, new, and ambitious NCQG, at the scale of the emergency and priorities of developing countries”.
Inspired by these statements, I attended a side event organized by the Green Climate Fund (GCF), the largest multilateral fund dedicated to climate. Mafalda Duarte, the GCF’s Executive Director, opened the session by highlighting a stark reality: under the current financial architecture, developing countries spend more on repaying debts to multilateral financial institutions than on climate action or even education. The Prime Minister of Tuvalu, a small island nation in Oceania, shared his country’s urgent need to mobilize resources for climate adaptation. Tuvalu has been severely impacted by rising sea levels, and, as discussed during the panel, there have been discussions about relocating the Tuvalu’s population to Australia, as their land may soon disappear. In contrast, the French ambassador underscored France’s active role in climate finance, nearly a decade after the Paris Agreement was signed, and called for more countries to increase both the quantity and quality of finance provided.
A similar dynamic unfolded during the official negotiations amongst parties to the Paris Agreement. On Tuesday morning, I observed the discussions on a draft negotiating text for the NCQG. The G77 and China group proposed a target of $1.3 trillion USD per year by 2030 for climate action, to be mobilized from developed to developing countries. They emphasized that financial resources should remain operational, affordable, highly concessional, and free of conditionalities for developing countries. These arguments were widely echoed by several other countries and regions, many of whom also advocated for public finance—rather than private or market-based finance that further indebt developing countries—as the primary source of climate finance. The delegate from Samoa, representing AOSIS countries, reiterated that parties should not be allowed to leave the Paris Agreement and avoid contributing to the NCQG.
As these principles were not reflected in the draft, the Arab Group declared that there would be no room for negotiation based on this text. The Environmental Integrity Group, represented by Switzerland, argued that starting from scratch would be a waste of time, as this text was the product of three years of work. Similarly, the European Union, the UK, and the United States stressed the importance of completing the NCQG in Baku, in line with Article 9.3 of the Paris Agreement, which calls for a variety of financial sources, with public mobilization rather closer to the $100 billion per year target.
It would have been naïve to expect a finalized text in the first week of COP. International negotiations are complex and take time. But the impasse in these discussions left me concerned about the lack of urgency and the absence of concrete solutions. While agreeing on a quantum by the end of the two weeks would be a significant achievement, the details of its operability remain critical. With that in mind, I decided to focus on the “how” and attended an event organized by the Germany Pavilion on guarantees.
Guarantees are a financial mechanism that uses public resources to de-risk investments, particularly from the private sector, by providing first-loss capital to unlock additional private capital. While the use of guarantees has been limited thus far, Brazil provided an example of success, where the country managed to avoid accruing additional debt while still leveraging sufficient capital to implement green transition projects.
However, most developing countries not only aim to implement green transition projects but must also prioritize adaptation and loss and damage due to their heightened exposure and vulnerability to climate change. Despite this, significant challenges persist when it comes to financing these areas. Most climate financing instruments depend on some sort of return on investment, which makes it more difficult to attract funding for, for example, local nature-based solutions and disaster relief. In a conversation with a representative from the European Investment Bank, she confirmed that they are expanding their investment portfolio in large-scale resilience projects, such as coastal management and grid resilience, where savings and returns are more quantifiable. However, avoided losses of localized adaptation projects are harder to quantify, and thus to finance.
On a positive note, some countries are already innovating in financing loss and damage:
For example, I learned about Bangladesh’s Community-led Initiatives for Climate Justice project, funded by the Climate Justice and Resilience Fund. This initiative directly provides funds to communities impacted and displaced by natural disasters. Yet the insufficient availability of dedicated public resources to adaptation and loss and damage remains a challenge for developing countries, particularly LDCs (Least Developed Countries) and SIDS (Small Island Developing States). And even when funds are available, these are close to impossible to access directly by communities, as was shared by Luvan Prado Sampaio, an Amazonas’ activist. These challenges were highlighted during discussions on the Adaptation Fund, when the Bhutan delegation reminded parties of the urgent need to fulfill the $300 million USD pledge for the Fund by the end of this year.
After a whole week of engaging in high-level panels, attending technical discussions, and holding conversations with representatives of governments and international organizations, I knew something was missing. What about justice in climate finance? For instance, justice was not a word I explicitly heard. Climate finance is often framed in terms of financial flows, commitments, and mechanisms, but these figures fail to capture the human dimension of the crisis. As much as the discussions centered around large sums of money and global agreements, the underlying issue remains the disparity in how the impacts of climate change are felt across the world and how international systems are not yet prepared to respond collectively.
Civil society-organized demonstrations during COP29 were a crucial reminder that these events do not exist in a vacuum. The scale of these gatherings reflect the growing concerns of people and nations who have contributed the least to the climate crisis but bear the greatest burden. Organized civil society, representing indigenous populations, labor unions, women’s and children’s rights groups, and environmental and social activists, made their voices heard at the heart of the venue through chants and signs reading “Pay up for climate finance,” “Phase out fossil fuels,” “Feminists demand climate justice,” and “No just transition without labor rights”. Indeed, the demand for climate finance justice is not only about ensuring the flow of funds; it’s about making sure the financial mechanisms in place help dismantle systemic inequalities and support the long-term resilience of communities already on the frontlines of climate change. Climate finance must go beyond numbers—it must be about creating real change for those who have been most affected by the climate crisis.
By the time I left Baku, the technical negotiations on the NCQG had concluded, and ministerial negotiations were set to begin in the second week, taking place behind closed doors for observers. While I hope that countries will reach an agreement on the NCQG by the end of next week, my greatest hope is that climate justice will be reflected in the outcome—ensuring that it’s not just about numbers and that people are prioritized over markets. Only then can we begin to close the gap between the pledges made in Baku and the real, tangible impacts needed on the ground.
Those of us in the academic sector have a lot of work ahead of us to help answer the many questions around how to make climate action and climate finance just. Let’s take on the challenge and start driving the change that’s needed!
~ Ana Paola De La Vega
Footnotes:
- United Nations, “United Nations Framework Convention on Climate Change,” 1992, https://unfccc.int/resource/docs/convkp/conveng.pdf.
- Lauren Gifford and Laura Aileen Sauls, “Defining Climate Finance Justice: Critical Geographies of Justice Amid Financialized Climate Action,” Geography Compass 18, no. 11 (2024): e70008, https://doi.org/10.1111/gec3.70008.
- Independent High-Level Expert Group on Climate Finance (IHLEG), “A Climate Finance Framework: Decisive Action to Deliver on the Paris Agreement – Summary,” November 30, 2023, https://www.lse.ac.uk/granthaminstitute/publication/a-climate-finance-framework-decisive-action-to-deliver-on-the-paris-agreement-summary/.
- Laetitia Pettinotti, Sarah Colenbrander, and Tony Mwenda Kamninga, “A Fair Share of Climate Finance? The Collective Aspects of the New Collective Quantified Goal,” ODI: Think change, September 2, 2024, https://odi.org/en/publications/a-fair-share-of-climate-finance-the-collective-aspects-of-the-ncqg/.
- Grupo de Financiamiento CLimático LAC, “La Importancia de Acordar Un NCQG,” https://sustainablefinance4future.org/so/c7PBzWjOS?languageTag=en&cid=f887fbca-a046-469c-864a-f5a1c48d5571®ion=69c301d1-c905-4983-801e-ab8e32b018f6.
- Climate Policy Initiative, “Global Landscape of Climate Finance 2023,” November 2, 2023, https://www.climatepolicyinitiative.org/publication/global-landscape-of-climate-finance-2023/.