The Finance Conference of the Parties
A pivotal moment for climate action as finance for developing markets to rise
The core agenda at COP29 revolves around redefining the New Collective Quantified Goal for climate finance.
As COP29 approaches in Baku, Azerbaijan, from 11 to 22 November, the summit – often called the "Finance COP" – stands as a critical test for global financial commitments to climate action.The primary focus at COP29 is revising the New Collective Quantified Goal (NCQG) for climate finance, initially set in 2009 at U$100 billion annually to aid developing nations with climate mitigation and adaptation.
Although this goal was met for the first time in 2022 with U$116 billion, there is a strong consensus that funding must be significantly increased – potentially by five to ten times – to address rising climate challenges.
UN Climate Change Executive Secretary Simon Stiell highlighted this urgency at a pre-COP event, stating that an ambitious new goal serves every nation's interests. Stiell’s remarks reinforce the need for substantial financial support if the Paris Agreement targets of keeping global temperature rises below 2°C (and ideally under 1.5°C) are to be met.
Recurring concern
The delay in funding has been a recurring concern, as highlighted in the first global stocktake report, which assesses current climate actions and identifies gaps. Released last year, the report stresses that existing climate efforts are inadequate, underscoring the need for stronger financial commitments that deliver measurable results.
Another key agenda item is operationalising the Loss and Damage (L&D) Fund, introduced at COP27. This fund aims to support nations severely impacted by climate change, with discussions expected to finalize its funding mechanisms to ensure equitable distribution by 2025.
COP29 will also address renewable energy goals set under the UAE Declaration at COP28, aiming to triple global renewable energy capacity to 11,174 GW by 2030. In 2023, only 473 GW was added, far short of the necessary annual average of over 1,000 GW, highlighting the financial and policy gaps COP29 must tackle.
Carbon markets, a focus of Article 6 of the Paris Agreement, are gaining attention as a way to attract capital through standards for project development under the Paris Agreement Crediting Mechanism. This is essential to creating a viable global carbon market, offering debt-free funding for climate projects.
Historical responsibility
The discussions at COP29 also involve the structure of financial contributions – whether through grants, loans, or other instruments. Developing countries are pushing for more grants, citing developed nations' historical responsibility for climate change. This debate is key to building trust and ensuring financial support fosters effective climate resilience and mitigation.
Beyond finance, COP29 is about setting a path for ambitious and actionable climate efforts. Nations are expected to submit updated climate action plans, or NDCs 3.0, by COP30, aiming to initiate transformative climate action. COP29’s outcomes could reshape economic policies and global relations, potentially marking a turning point in the pursuit of a sustainable future.