Negotiators at COP29 after a grueling overnight session presented another updated draft on climate finance for developing nations. This draft, significantly condensed from 25 pages down to 10, seeks to outline the opportunities for funding climate action in vulnerable regions. Nevertheless, significant gaps persisted, particularly in reference to certain obligations from developed countries. As the UN climate conference is reaching its end with less than two days left, the task of finding a middle ground on which both developing and developed countries can agree.
Challenges in Establishing Climate Finance Commitments
The main issue at the center of this controversy is the question of financial responsibility. Emerging economies have repeatedly brought up the need for an annual funding of at least $1.3 trillion from 2025 to 2035. This demand sharply contrasts with the vague financial commitments by the developed nations who have yet to specify how much funding they are prepared to provide.
This discrepancy has caused frustration among developing nations, which regard the current proposals as insufficient and evasive. Harjeet Singh, a veteran climate activist and Global Engagement Director for the Fossil Fuel Non-Proliferation Treaty Initiative, critiqued the draft for its lack of concrete financial goals. “The revised draft text, while more streamlined, presents a spectrum of options—some good, some bad, and some outright ugly,” Singh said.
The draft recognizes the necessity for public financing from the developed nations while placing significant financial obligations on the developing countries. This approach has received criticism for failing to address the intensifying present and future needs in sectors like mitigation, adaptation, and compensation for the loss and damage caused by climate change impacts. Singh highlighted the need to have sufficient public finance to support a just transition from fossil fuels, cautioning against reliance on “empty promises.”
Divergent Views on Climate Finance Goals
The draft reflects a deep divide between the perspectives of developing and developed nations. Two primary viewpoints dominate the discussions:
1. Developing Nations’ Stance
Developing countries argue that developed nations should provide 1.3 trillion dollars annually from 2025 to 2035. This funding should primarily consist of grants or grant-equivalent public funds, ensuring that private financing does not create additional debt burdens.
Furthermore, they propose voluntary contributions from wealthier developing nations to support their peers. However, these voluntary contributions should remain outside the official climate finance package. To ensure equitable burden-sharing, they advocate for a mechanism that considers historical emissions and GDP per capita when determining contributions from developed nations.
2. Developed Nations’ Perspective
Developed countries present two options:
The first suggests a trillion-dollar annual target by 2035 with the funds coming from various sources, including public and private funds, and even contributions from wealthier developing nations. This approach, however, ignores Article 9 of the Paris Agreement, which obligates only developed nations to provide financial support to developing countries.
The second option incorporates Article 9 and proposes a collective target exceeding USD 100 billion annually by 2035. This funding would come from various sources and instruments, blending public and private contributions.
Despite these proposals, both options fail to specify any exact figures or timelines, leaving room for significant ambiguity and frustration among developing nations.
Allocation of Funds and Inclusivity
The draft explicitly states that climate finance should benefit all developing countries. However, it does not address how funds will be allocated to the most vulnerable groups, such as least-developed countries (LDCs) and small island developing states (SIDS). These nations are disproportionately affected by climate change and urgently require targeted financial support.
Adding to the complexity, developed nations are advocating for economically advanced developing countries, such as China and the Gulf states, to contribute to the climate finance pool. They argue that these nations, despite their 1992 classification as developing, have undergone significant economic transformation and should now share financial responsibilities.
Developing nations, however, view this proposal as an attempt to dilute accountability for historical emissions. By shifting the financial burden to recently industrialized nations, developed countries risk undermining the principle of equity that underpins international climate agreements.
Trust Deficit and Historical Commitments
Trust remains a critical issue in climate finance negotiations. In 2009, developed nations pledged to mobilize USD 100 billion annually by 2020 to support climate action in developing countries. However, this target was only met in 2022, and even then, approximately 70% of the funds were provided as loans. For developing nations, this reliance on debt-financed support exacerbates existing economic challenges and undermines the spirit of international cooperation.
Developing countries have called for direct funding from public budgets in developed nations, rejecting an over-reliance on private-sector contributions. Private financing, they argue, often prioritizes profitability over accountability, making it an unreliable solution for addressing urgent climate needs.
The Way Forward
With less than 48 hours remaining in COP29, negotiators must intensify efforts to bridge the gaps between these conflicting priorities. David Waskow, Director of WRI’s International Climate Initiative, highlighted the urgency of the situation, stating, “Time is very tight, and to get to bridging texts, even bridging texts with options, is going to take quite a lot of work.”
Rob Moore, Associate Director at E3G, echoed these concerns, emphasizing the need for concrete proposals and numerical commitments. “The road to agreement will need to see rapid and candid engagement, with numbers on the table,” Moore said.
The presidency and ministerial pairs leading the negotiations face immense pressure to deliver a meaningful outcome. A consensus must balance the urgent financial needs of developing countries with the political and economic constraints of developed nations.
Balancing Competing Priorities
At the core of these negotiations lies a fundamental tension: how to equitably distribute the financial responsibility for climate action. Developing nations argue that the historical emissions of developed countries necessitate substantial public funding commitments. Conversely, developed nations advocate for a more inclusive approach, involving contributions from wealthier developing nations and leveraging private-sector resources.
A successful outcome at COP29 will depend on the willingness of all parties to make concessions. For developing nations, this may mean accepting a broader definition of climate finance that includes private contributions. For developed nations, it will require acknowledging their historical responsibilities and committing to substantial public funding.
The released simplified draft text at COP29 revealed the complexities and stakes involved in climate finance negotiations. On name having an understanding structure for dialogue, it still has significant gaps in terms of concrete commitments and equitable burden-sharing.
The final stage of the conference puts negotiators to the leadership and collaboration test to bring society towards a sustainable and equitable future. The outcome of these talks will not only determine the financial resources available for climate action but also set the tone for international cooperation in addressing one of the most pressing challenges of our time.