The 29th Conference of the Parties (COP29) to the United Nations Framework Convention on Climate Change (UNFCCC) held under Azerbaijan’s presidency marks a pivotal moment in global climate diplomacy. The summit occurred in the aftermath of a year marked by unprecedented climate events; extreme heat records and devastating wildfires, floods, and hurricanes wreaked havoc across continents.
In response to this escalating climate crisis, COP29’s central focus was on ramping up financial support for the world’s most vulnerable countries, helping them mitigate the impacts of climate change and adapt to its worsening effects. This conference named as climate finance COP, established a new, more ambitious financial target, aiming to replace the $100 billion annual commitment made in 2009. COP29 accomplished significant breakthroughs as setting new climate finance target, completing carbon market standardization, long awaited operationalization and implementation of Loss and Damage Fund, and adaptation policy, establishing its status as a historic UN climate event. In the context of UN climate negotiations, the term “climate finance” refers to the financial support provided by developed nations, those historically responsible for the bulk of global emissions to assist developing countries in their climate efforts. This funding is essential for enabling poorer nations to meet their climate objectives, covering both mitigation measures to reduce greenhouse gas emissions and adaptation strategies to cope with the already inevitable impacts of climate change. At COP29, nations reached a significant agreement on a new framework for climate finance, known as the “New Collective Quantified Climate Finance Goal” (NCQG). This ambitious goal sets the target of tripling annual climate finance to developing countries, aiming for $300 billion by 2035. Additionally, the plan includes a broader goal of mobilizing $1.3 trillion each year from both public and private sources by 2035 to support climate action in these countries centering nature, people and their livelihood.
This new climate finance goal for $300 billion annually for vulnerable communities etc. however, won’t suffice the purpose. Climate change has hit the developing nations worth more than trillions. Even if more than $3000 billion could have proposed at COP29, still it would not be sufficient to fulfill the gap what developing nations would need. Only Pakistan has suffered around $30 billion loss in floods last time equivalent to one tenth of total new climate finance proposed this time. One can imagine this is only for one developing nation and what about rest of developing nations? The Arab and African Groups put forward proposals for climate finance targets ranging from $1 trillion to $1.3 trillion per year, emphasizing the urgent financial needs of developing countries facing the brunt of climate change. Pakistan, taking a more ambitious stance, suggested a minimum target of $2 trillion annually, though not specified a timeline. Meanwhile, needs determination reports from the UN Standing Committee on Finance, based on self-assessments from developing nations, reveal a stark gap between current financial pledges and actual needs. The committee estimates that developing countries will require between $5 trillion and $6.9 trillion over the next five years to effectively address climate impacts. This highlights the inadequacy of the $300 billion annual target set at COP29, underscoring that it falls far short of the true financial demands of vulnerable nations. Another problem that persists with NCQG set at COP29 is how that finance will be channeled to developing nations for their climate change adaptation etc. New developing countries have expressed a preference for climate finance primarily consisting of public funds from developed nations, believing this approach to be more equitable and sustainable. In contrast, developed countries have proposed a broader approach, which includes financing from a range of sources such as global investment flows rather than relying solely on public funds. They argue that the focus should be on creating opportunities for developing nations to “earn” the funds, rather than offering them as direct aid. However, this divergence in interests has led to a fundamental clash of interests; while developing countries seek direct, predictable financial support, developed countries are more inclined towards models that involve private sector investments and market-driven solutions thus, derail meaningful progress in addressing the climate crisis. The G77 and China, representing a broad coalition of developing nations, unanimously rejected the proposed framework, with concerns about its reliance on loans and investments rather than grants. They called for a revised framework that prioritizes the direct financial contributions from developed countries and excludes certain types of loans, which they view as exacerbating debt burdens rather than facilitating climate action.
It seems that developing nations are right to much extent. Climate finance must be affordable, equitable, available, and accessible to developing countries. For instance, if funds are channeled through loans and not through grants, this would more indebt the developing nations and make their conditions more miserable. Furthermore, the true benefits of climate finance could be realized if constraints, challenges, systemic inequities and barriers to access to climate finance could be relaxed, such as high cost of capital, co-financing requirements and burdensome application processes. It urges all climate finance actors to strengthen their efforts to enhance efficient and effective access to bilateral, regional and multilateral climate finance for developing countries, in line with country-driven strategies and plans to eliminate conditionalities for access. It was also questioned about mitigation outcomes from the last COP28 held in UAE i.e. transition away from fossil fuels. The director of the International Climate Politics Hub expressed disappointment over COP29’s failure to secure a deal on advancing fossil fuel displacement and halting deforestation. Despite this setback, the COP29 president proposed revisiting the UAE dialogue at the Bonn talks in June 2025, aiming for an agreement at COP30 in November 2025. However, with two years to wait, concerns arise about the feasibility of meeting climate goals in such a limited time, raising doubts about the effectiveness of delayed action in addressing the escalating climate crisis.
Finance has always been the divisive issue of international climate politics. Who would contribute and how much and through which channels! Such issues have hindered the progress of achieving climate finance goals and tackling the climate change issue. US has its own interests and more of its industry is based on burning fossil fuels and all the domestic companies as well as global exporters of oil and gas to US will surely be against any policy that could harm or hinder their production or consumption of fossil fuels. The world talks about US as high developed country but such economic development has come from major fossil fuel chunk. Problem right now developing nations are facing is the amount of finance! and developed countries have this finance as affluent countries in the world. Do you think they will advance this money without any interest or compensation? Certainly not. It has been witnessed in history that they don’t want to see the developing nations prosper i.e. making them dependent on developed nations all the time and on the other hand waving the flag taking credit, how well they have contributed towards tackling the climate change! Anyone can guess the mindsets of developed countries representing at COP29 that at first, they were not putting reasonable numbers on table for climate finance. Developing countries were unhappy about the lack of numbers on climate finance and almost all present called for clearer language on climate action. After extensive negotiations, a proposed figure of $200-300 billion emerged, leaving developing country representatives incredulously laughing at its inadequacy, although it has been widely understood that amount required for developing nations to tackle climate change is not in billions but in trillions.
Moreover, Negotiations at COP29 were dominated by the reelection of Donald Trump, as he pledged to reverse climate initiatives and potentially withdraw the U.S. from the Paris Agreement once more, jeopardizing global climate progress. Oil-rich Gulf nations, particularly Saudi Arabia, pursued their interests aggressively, seeking to dilute commitments to fossil fuel reductions. Reports surfaced that Saudi delegates had run a yearlong campaign to undermine existing fossil fuel provisions, diverting discussions toward climate finance instead of transition away from fossil fuels. Notably, allegations emerged that a Saudi official tampered with crucial negotiating texts on COP29’s closing day, underscoring a troubling pattern of interference. One interesting fact can signify the huge politics behind climate action that investigations from Global Witness and corporate watchdogs revealed an alarming presence of 636 fossil fuel lobbyists at COP27, even more number in COP26, emphasizing the self-serving motives behind these negotiations. This raises a provocative question:
“Can we effectively tackle climate change in such a politically compromised environment?”
Achieving a successful global climate strategy demands an unwavering commitment to “climate justice”. Essential to this objective is the intertwining of climate finance and solid mitigation strategies; financial support must be directed toward actionable climate efforts. Without coordinated mitigation, financial investments risk being futile. This interrelationship lies at the heart of the Paris Agreement. Only a concerted and “Just” financial approach will address the looming climate crisis and lead to meaningful change, as merely dispersing climate finance in isolation is insufficient for real progress. Whatever the debates and explanations in place, however, climate finance goal of $300 billion has set anyway. The question is, whether this amount (although far less than expectations and need) be spent on climate action activities to get the desired results tackling climate change or not? Pakistan has to do much efforts channeling that climate finance, once need or approved, only for climate action efforts so that we could save the country’s GDP from further decline due to catastrophes and harms by climate change. We will have to recognize the importance of continuous efforts towards capacity-building and transparency too in implementation phase. This way, long term sustainability in terms of crops saving, food security, farmer income steadiness etc. and as a whole economic prosperity could be achieved rather than placing itself on never ending conveyor belt of receiving aids and finances all the time. Our government intentions, private parties’ vision, and general public response, and most importantly time will tell the story.
Prof. Dr. Muhammad Shahbaz Muhammad Kashif
School of Economics School of Economics
Beijing Institute of Technology Beijing Institute of Technology
Beijing, China Beijing, China
Email: [email protected]
