TWN Info Service on Climate Change (Feb25/03)
13 February 2025
Third World Network

COP 29 FINANCE OUTCOME UNDERWHELMING, SAY DEVELOPING COUNTRY REPRESENTATIVES

New Delhi, 13 Feb (Radhika Chatterjee): The UNFCCC’s COP 29 outcome from Baku, Azerbaijan, on climate finance was “underwhelming” and “does not respond to the needs of developing countries.”

These remarks were made by Ambassador Wael Aboulmagd, the Egyptian Assistant Minister of Foreign Affairs for Climate, at a meeting convened by the UN Trade and Development [UNCTAD] in Geneva on February 7, 2025, to discuss the COP 29 outcomes.

In his intervention on the outcome on the new collective quantified goal on finance [NCQG], Aboulmagd said that “it would be safe to conclude that the decision falls short on every front and represents an underwhelming outcome that will not, by any stretch, respond to the needs of developing countries to make their indispensable contributions to the global effort.”

On the issue of the contributor base to the NCQG, he said that the developed countries concern was that they could not be “carrying the responsibility alone” and that they were asking for “developing countries in a position to do so,” mentioning China and Gulf countries contributors. To address these concerns, he said, the “tactic that was used was to count outflows from international financial institutions. So now, developing countries are contributing to achieving this US$300 billion target. It is not a responsibility anymore of developed countries.” He also pointed out that several aspects of the NCQG decision are going to be “problematic” because “there’s a lot of ambiguity in understanding the text and in how it’s going to work in reality on the ground.” These fights he said would be witnessed in the subsidiary sessions to be held in Bonn, Germany [in June] and at COP30 this year.

Aboulmagd also expressed worry over the withdrawal of the United States from the Paris Agreement, adding that “there are other countries, indeed a sizable developing country [in an apparent reference to Indonesia] which said, why should we stay in there?” Aboulmagd commented that “this process is a very fragile one. It doesn’t have a strong compliance mechanism; hence it is highly dependent on buy-in and goodwill from all Parties. If Parties start to gradually feel we’re losing a lot, and we’re being asked to do very much with very little support, I worry for the multilateral process.”

Aboulmagd’s views were shared by Chandni Raina, from the Indian Ministry of Finance, who also said that “the goal [NCQG] of US$300 billion which would be mobilized from a wide variety of sources including developed countries, but largely from the private sector and the multilateral development banks [MDBs] of which developing countries are significant shareholders.” She added further that “there’s an assessment and back of the envelope calculations which say that the MDBs are planning to increase flows to US$120 billion by 2030, of which actually US$30 billion could actually be attributed to the developing countries”, stressing that “developing countries would be contributing to this US 300 billion goal”, which “would also include loans.”

These remarks were made in the panel discussion on climate finance, whose focus was particularly on the NCQG decision.

[The main highlight of the decision adopted were in paragraphs 7 and 8. Paragraph 7  “calls on all actors to work together to enable the scaling up of financing to developing country Parties for climate action from all public and private sources to at least US$ 1.3 trillion per year by 2035”, while in paragraph 8, it was decided “to set a goal, …, with developed country Parties taking the lead, of at least US$ 300 billion per year by 2035 for developing country Parties for climate action – (a) From a wide variety of sources, public and private, bilateral and multilateral, including alternative sources;…; (c) Recognizing the voluntary intention of Parties to count all climate-related outflows from and climate-related finance mobilized by MDBs towards achievement of the goal set forth …”

The event was opened by UNCTAD’s Secretary General, Rebeca Grynspan, while Yalchin Rafiyev, representing the COP 29 Presidency from Azerbaijan also delivered his remarks through virtual participation. Also speaking at the event was Dr. Abbas Kadam Obaid, from the Iraqi Ministry of Finance, who is the new chair of the Group of 77 and China, and Vitor Mattos Vaz, from the Ministry of Foreign Affairs from Brazil. Brazil will be the host of COP 30. [ See further details below].

HIGHLIGHTS OF THE INTERVENTIONS

Rebeca Grynspan said that while “significant progress” had been made at COP29 with the NCQG, “the real work begins now with the ‘Baku to Belém Roadmap to USD1.3 trillion’, adding that “we are at a delicate moment that requires both ambition and realism.” Gyrnspan elaborated that the US$300 billion target represents important progress, but the gap to what’s truly needed remains substantial. “Our research clearly shows that the financing need is indeed above the trillion-dollar mark. But this isn’t just about increasing numbers – it’s about creating effective mechanisms for delivery.”

She said there is a “need to show developing countries that commitments will translate into real and affordable financial flows, while assuring developed countries that their investments will drive genuine transformation.” Cautioning against the problem of double counting, she said, “we must also tackle double counting, and avoid falling back into old formulas that simply have not delivered. In particular, we need to be clear on the role of private capital and the need to make it flow to the places that need it most. We know that without strong structural reforms in the international financial architecture, this won’t happen on the scale needed. We also need to understand the role of the different instruments, like blended finance, sustainable finance, and de-risking. But at the same time, we cannot ignore the fact that the private sector are not signatories to the [climate] Convention, so responsibility cannot shift.”

Gyrnspan also stressed on the need for “stronger, networked multilateralism that connects different pieces of the puzzle – trade, investment, technology, and development. This means thinking about how trade policies can support climate goals and development at the same time; how investment frameworks can drive green transformation and diversification, and how technology transfer can be expanded to accelerate progress. It means breaking down silos between institutions and building bridges between different areas of expertise. Only by connecting these dots can we create solutions bigger than the sum of their parts.”

Yalchin Rafiyev, laid out the key achievements of COP29, stressing in particular outcomes in “climate finance and carbon market mechanisms”. He said, “we agreed on a Baku Finance goal of US $300 billion per year by 2035, a crucial step in mobilizing resources for the global south. To address these goals, we launched a ‘Baku to Belém roadmap to [USD]1.3 trillion’, a process aiming to scale up climate finance to at least US$1.3 trillion per year by 2035,” adding that the roadmap will be the guide for further work in climate finance and “its progress will be reported at COP30”. He said the finalization of key rules for carbon markets under Article 6 of the Paris Agreement would enable “high integrity crediting systems. This breakthrough will unlock new investments, lower the costs of implementing climate plans and help us transition more quickly to cleaner energy solutions. It comes just in time to support enhanced ambition in our next round of nationally determined contributions [NDCs]. Alongside finance and carbon markets we advanced adaptation and resilience measures.”

Aboulmagd acknowledged the difficult geopolitical circumstances in which the NCQG outcome was achieved. Calling climate finance as the “the indispensable catalyst”, he said, “we can raise the bar as much as we want on mitigation action and make commitments in NDCs and on adaptation as well, but absent the requisite finance, we’re not going to go very far. The current global climate finance landscape leads much to be desired.” He referred to an UNCTAD paper produced prior to Baku, which he said estimated the needs of developing countries at US$1.1 trillion starting from 2025, and some US$1.8 trillion by 2030. He laid out five benchmarks for assessing the NCQG outcome: adequacy of the quantum, quality of finance, accessibility, transparency, and “upholding the principles of the UNFCCC process of common but differentiated responsibilities and respective capabilities [CBDR-RC.]”

He said further that “the reality of the global climate finance landscape is not in a good condition. Developed countries had pledged to deliver US$100 billion annually up to 2025. This pledge was hardly ever fulfilled. The very countries that committed to this amount acknowledged that much, and assert that the figure was exceeded, perhaps, in 2022 and again in 2023.” Referring to an Oxfam International report, he added that the report begged to differ and said, “it depends on the counting, and that’s something about the definition of finance …and the issue of double counting.”

On the quality of finance, he stressed the need to keep in mind the fact that the US$100 billion goal included “public monies as well as other amounts mobilized.” Highlighting the lack of balance in funding received for mitigation and adaptation, he added, “mitigation finance represented around 70% of the total, while adaptation, which is the utmost priority of urgency to developing countries, has barely reached 30% of that amount in the later years after lagging at 10% to 20% earlier.” In terms of instruments used for reaching the US$100 billion goal, he said loans represented the largest percentage, which is also linked to the “issue of debt”.

He said developing countries went to the Baku COP “with a view to correcting the course and addressing the predicaments of climate finance”, based on the lessons learnt from the way in which the US$100 billion goal was delivered. Recalling the outcomes of COP28 at Dubai, he said countries celebrated an “exceptional raising of the bar on the expectation of ambition when it comes to reduction of emissions” in the global stock take outcome, especially its paragraph 28, which “indicated an expectation that all countries, almost without any differentiation, are expected to triple their share of renewables and to double energy efficiency, to phase out fossil fuels, to phase down coal” and so on. The expectation at Baku therefore was “that there will be a commensurate addressing of finance to enable us all to move forward on the requirements of added ambition.”

Regarding the quantum [of finance], he said the NCQG decision mentions US$1.3 trillion and added it “is charitably described as an aspirational target” and that it lacks a mechanism. With respect to the reference to US$300 billion, he said a careful reading of the text would show that public money would constitute only a part of this goal, while “the overwhelming majority of it will probably come from money mobilized.”

On the issue of timeline of the goal, he said the US$300 billion was not “due for another 10 years” and called the timeline of 2035 “very concerning and disconcerting”, and also asked, “what is US$300 billion in real terms in 2035? If you use a very modest, reasonable assumption of 5% inflation, … it adds up to maybe US$175 billion by today’s standards.”

On the positive aspects of the NCQG outcome, he mentioned the ‘Baku to Belém roadmap’, the acknowledgement of addressing issues of access and instruments in the decision, and paragraph 16 of the decision “which decides that a significant increase of public resources should be provided through the operating entities of the financial mechanism, which are the Green Climate Fund, the Global Environment Facility, the Adaptation Fund and those other entities because they are doing a tremendous job with very limited resources.”

He concluded by expressing his worries for the multilateral climate process and said, the process is “our last best hope to work collectively with goodwill. It lacks the requisite trust… I don’t think there’s enough empathy. Empathy is an important word. It means you really understand the predicament of a highly indebted sub-Saharan African or a small island state when you sit at the table and understand that we should leave no one behind. I think it is very much lacking in that regard.”

Raina explained that the context in which India was negotiating at Baku was that the NCQG outcome was supposed to enable the meeting of the objectives of the Paris Agreement, including keeping the temperature rise to well below two degrees and to strive for 1.5 °C. She pointed out that in 2023, the world had already reached 1.1 °C above the pre-industrial period and cautioned that if we go on as business as usual, the world is to exceed warming levels beyond what had been agreed to. She said further that “the goal that we’ve set is about US$300 billion per year, which is only by 2035” and is “completely inadequate to meet the commitments that we need to give, to be able to keep the temperature levels within limits”. She also lamented the problems faced in the delivery of the US$100 billion and said, “we know that this amount is an extremely debatable one because we don’t have a definition of climate finance. We don’t know what is really flowing in. And there is assessment to show that much of it is actually in the form of loans. It creates debt and that impacts the ability of countries to absorb such resources.”

Raina said that the goal of US$300 billion which would be mobilized from a wide variety of sources including developed countries, but “largely private sector and the MDBs of which developing countries are significant shareholders.” Expressing India’s disappointment with the goal, she said, “we see the NCQG outcome as an indication to developing countries” that “much of it has been left to them” and to “do on their own, or do through their own support in South-South cooperation.” She called this indication “extremely worrying” and a “clear warning”. Regarding the insistence of developed countries for expanding the contributor base, she said, at the moment, the fact is that developed countries happen to be the biggest contributors to carbon emissions and they have been “the greatest users” and “beneficiaries of the carbon budget, which has actually depleted substantially now” with very little space being “left for the developing countries.”

In the ‘Baku to Belém roadmap’, she said, it would be important to note how much is mobilized, how much is the contribution from developed countries’ public sector, because “if it is left to the private sector, then the resource flows would be at a cost that would absolutely not be viable for developing countries to take action on the level that they need to do.”

David Bailey, from the United Kingdom’s Foreign, Commonwealth and Development Office said that the UK Foreign Secretary “recommitted to meeting the target of spending £11.6 billion international climate finance between April 2021 and March 2026, as well as reconfirming our £1.62 billion commitment to the Green Climate Fund’s most recent replenishment.” Regarding the ambition of the NCQG goal, he said, “one of our aims was clearly articulated in the US$1.3 trillion” and the ‘Baku to Belém roadmap’ “is going to be absolutely critical in this year in making much clearer how that US$ 1.3 trillion will be reached.” He further added that “we cannot and will not meet global needs through public finance alone. The private sector has to step up, and others have to step up.” He said further that the ‘Baku to Belém roadmap’ is important for rebuilding bridges and restoring trust, adding that “our real focus now is, …about driving for outcomes, making sure that the climate finances actually delivering the change that we want and need to see. Finance and reaching a finance goal should never be the end. It should not be an end in and of itself, it’s a means to an end.”

Dr. Obaid the Chair of the G77/China said that “2025 is a significant milestone because it marks the 10^th anniversary of the Paris Agreement” and that, “in this agreement, developing countries accepted the responsibility for climate action [within the context of] CBDR, without undermining historical responsibilities.” He added that the Paris Agreement was accepted due to its ambitions regarding “climate finance, technology transfer, capacity building, loss and damage, and enhancing resilience to climate challenges.” He said that on this anniversary, “partners need to bring us back on the right track by the fulfillment of their commitments.” He said that the NCQG outcome “was not a perfect deal” but it brought a “commitment to mobilize US$300 billion annually to developing countries and roadmap to reach US$1.3 trillion by 2035.” He also added that while he appreciated the setting up of the Fund for Loss and Damage in Philippines, he cautioned about the various problems that the fund still faced regarding the lack of “adequate and predictable funding” and asked “what is the benefit of having an institution for loss and damage in light of the scarcity of its resources?”

Vitor Mattos Vaz, the Brazilian Trade and Climate advisor shared the “conceptual scaffolds” of Brazil’s vision for COP30, and that central to the “vision is to preserve a process that represents our best shot against an existential threat,” and “that involves mainly progress across all five pillars of the climate process, which is mitigation, adaptation, climate finance, technology and capacity building”.

He also said that COP30 “will be the reconcilement COP”, explaining that “if we think about the need for implementation and the bottom-up approach that it implies, the question becomes what levers can we pull to bring the diplomatic community, the financial, the private sector, the civil society into a reconcilement around implementing what science says is our best way to preserve our future and current generations.”

On the ‘Baku to Belém roadmap’, he said Brazil would approach it by “thinking about what it must not be.” He said that discussions on the roadmap “cannot be a rehash of the conversation that we had in Baku,” adding that “the conversation must be different…You want this to connect with reality; to connect with actual support for climate ambition and action, especially in developing countries and especially in places where it’s not getting at, like adaptation.”

He said Brazil would be looking at the conversation they had in the G20 process that assessed how financial flows could be aligned to the goals of the Paris Agreement, and which can respond to “the big question of how do we turn US$300 billion into US$1.3 trillion.”

Mentioning Brazil’s role as the president of BRICS [Brazil, Russia, India, China and South Africa], Vaz said, while looking at this challenging background of the climate regime, “there is also as an opportunity in the sense that as a few of the Parties withdraw from their responsibilities and their roles in the climate regime, there is a space for the global south to amplify their voices and have more of a say in how the climate is addressed around the world.”

Vaz also said that “we will be looking at arrangements to facilitate access to technology through intellectual property, assessing the experiences that we had during the COVID-19 pandemic and see whether that can be applied. These innovative arrangements that we have come up with, patent pools, cross-licensing exercises and how we can apply it to the landscape of low emission technologies.”

Explaining further Vaz said that “we will be looking at the relationship between trade and climate and how measures …between the trade and climate regimes can impact developing countries and how they can assess that impact in a way that is coherent between them and opens a platform for them to coordinate so that they can best capitalize on the opportunities generated by those measures and minimize negative spillover results.”