COP29: The clock is ticking as the money talk intensifies

Apart from an early success claimed by the Azerbaijani presidency – an intergovernmental agreement on a global system of carbon credits – the lack of any other major advances at the UN climate conference was “unnerving at times” for Clare Shakya, global climate chief at The Nature Conservancy.

“The pace of negotiations in week one reminds me how climate COPs felt before the Paris Agreement reinvigorated these UN talks,” Shakya said.

The climate campaigner was referring to the two decades that preceded the breakthrough moment in Paris in 2015, which gifted us an agreement to “strive towards” limiting global heating to 1.5 degrees.

The New Collective Quantitative Goal is the main event

The NCQG, as it is known in the world of climate diplomacy, is the main event at the Baku summit, and the reason it has been dubbed the ‘finance COP’.

The idea is that the $100bn (€95 billion) a year that a handful of developed countries and the EU agreed in 2009 to mobilise by 2020 – a deadline they missed by two years – must be hugely increased from 2025.

But the EU, for one, has made it clear it first wants the donor base broadened to include the likes of China. For the purposes of the COP, China still considers itself a developing country. Halfway through COP29, there are signs of tension.

In the closing plenary session of week one on Saturday night, Bolivia’s chief negotiator Diego Pacheco complained that developing countries had been bombarded with “outlandish proposals” for more ambitious climate action targets while there had been “no progress” on finance.

Pacheco was speaking on behalf of some two dozen like-minded developing countries – known as the LMDCs and one of the key negotiating blocs in the climate talks.

“There is still only a zero in the NCQG discussions,” Pacheco said. “No number, no ambition,” he warned. “Let us remember that this is a finance COP, and we expect developed countries to deliver.”

This apparent ultimatum is significant. The LMDCs represent over half the world’s population. This includes Saudi Arabia and other petrostates as well as China and India – many of whom the EU and others believe should be contributors rather than beneficiaries.

Negotiators started with a nine-page draft NCQG agreement that quickly ballooned to 35 pages, peppered with caveats and multiple options for as-yet unagreed wording.

Recent estimates suggest developing countries will need trillions of dollars of investment over the coming years.

What form is climate finance likely to take?

Whatever the overall ‘quantified goal’ in the NCQG ends up being, it will not be a simple transfer of money in the form of direct grants by governments. As the numbers go up, the balance is set to tip towards ‘mobilising’ finance rather than simply ‘providing’ it.

Negotiators are looking at a hodgepodge of measures to, for example, reduce the cost of borrowing, de-risk private sector investment and increase the role of multilateral development banks (MDBs).

For Eleonora Cogo, senior associate for international finance at the Italian climate change think tank ECCO, it was a “big step forward” when the World Bank and others said on 12 November that they planned to collectively increase climate finance for low- and middle-income countries.

“The MDBs have already signalled they can scale up by 2030 to 120 billion [dollars], so it’s a very big step forward from the 75bn that we had,” Cogo told Euronews in Baku. “I think it’s a very encouraging signal because, if they can do it, all of a sudden it makes the bigger core goal less scary.”

On the table at the start of the second week is a revised, 25-page draft of the NCQG agreement, published on Saturday.

It still has dozens of options and sub-options and over 400 alternative wordings and blanks to be filled in. How much of the core goal is to be mobilised private sector finance, and how much to be provided, and by whom, remains to be hammered out. Developing countries want at least a trillion dollars a year.

Discussions will move to the political level this week as ministers descend on Baku for the finale. According to the schedule, they have until Friday 22 November to find a compromise – though at a COP, overtime is always a possibility.