COP29: New report makes five bold recommendations for successful negotiations on the new climate finance goal

A new report by the IMAL Initiative for Climate & Development has outlined five recommendations that will help to boost confidence and build trust among countries in the ongoing negotiations on the New Collective Quantified Goal (NCQG) ahead of COP29 in Baku, Azerbaijan.

The report, ‘‘Rebuilding Confidence and Trust after the $100 billion: Recommendations for the New Collective Quantified Goal (NCQG)’’, recommends how to plug the ‘‘trust deficit’’ that has historically plagued climate finance negotiations.

"This report comes at a crucial time in the negotiations over the NCQG. Countries must seize the opportunity to learn the lessons of the $100bn before it is too late. Not doing so risks a breakdown of trust in the post-Paris regime and a failure to deliver international finance as required to achieve climate change mitigation, adaptation, and a just response to loss and damage," said Iskander Erzini Vernoit, director of IMAL and co-author of the report.

This year has been billed as the ‘‘year of finance’’, with efforts ongoing under the United Nations Framework Convention on Climate Change (UNFCCC) to find consensus on the NCQG, the new climate finance goal.

Countries globally, also known as Parties, are required to agree on the climate finance goal at this year’s COP29 in Baku. If agreed on, the new fund will effectively replace the $100 billion per year goal introduced at COP15 in Copenhagen, Denmark, in 2015.

The NCQG process has failed to yield a common position so far, triggering fears that COP29 might end without an agreement.

Failure by developed countries to provide adequate finance for adaptation and mitigation and loss and damage under the NCQG could upend the outcome of COP29, and consequently, have serious implications for the UN climate regime that has come under sharp scrutiny in recent years.

To repair trust and rebuild confidence among Parties in the ongoing NCQG debate, therefore, the report recommends the following: A needs-based approach to setting the quantum: ‘Taking into account the needs and priorities of developing countries’; a constituent structure of thematic subgoals: Mitigation, adaptation, and loss and damage; the commitment for climate finance to be ‘‘new and additional’’ has been interpreted differently, and so a common definition is needed; Developed nations must clarify ‘the “fair share’’ of climate finance per country, to address laggards; countries should have a common understanding of the balance of finance between concessional loans and grants versus non-concessional loan-based finance instruments.

The authors of the report emphasise that parties must be vigilant to avoid a repeat of the events at COP15 in Copenhagen where the talks collapsed in what is now widely regarded as the ‘‘most acrimonious moment’’ in the history of the UNFCCC.

"Our report explores critical areas where differing interpretations of the $100 billion climate finance commitment have eroded trust in developed countries among developing nations, especially on issues like additionality, fair shares, and concessionality,” said Skounti, Researcher at IMAL and co-author of the report. “We propose a needs-based NCQG must include a core provision goal measured in grant-equivalent terms, with clear subgoals for adaptation, mitigation, and loss and damage, aiming to rebuild confidence and establish a more transparent climate finance framework."

Climate Finance Needs

Today, the total climate finance needs in developing countries are estimated to be more than $1 trillion in public finance support per year until 2030. This money is required to finance mitigation, adaptation and loss and damage as enshrined under the Paris Agreement.

These developing countries, many of them in Africa, face acute poverty, underdevelopment and mounting public debt, thus limiting their ability to invest in climate action.

At the same time, commitments by wealthy nations to provide $100 billion annually to poor nations have been in many respects unmet, even as the effects of climate change continue to devastate populations and livelihoods in the Global South.

Experts warn that further delays and ambiguities in the negotiations will have far-reaching implications for vulnerable and poor nations that urgently need finance to develop and build the resilience and adaptive capacity of their communities.

The report argues that ambiguities surrounding the $100 billion commitment are significantly to blame for a breakdown in trust in developed countries among developing countries.

Further, the report identifies five areas of the $100bn commitment where interpretations have diverged, thus undermining trust and compromising finance flows: These are: Different interpretations of the commitment that climate finance be ‘new and additional’; Divergence on the fair share of climate finance from individual developed countries; Misunderstandings on achieving a balance in finance between different thematic areas of climate action; Divergence on concessional debts and grants versus non-concessional debt-based finance instruments; The appropriate institutional channels for finance, including multilateral development banks (MDBs).

‘‘In addition to delays, debate over fundamental accounting issues for this finance also contributed to frustrations. Driving scepticism about the developed countries’ commitment to the Paris goals, the $100bn experience has contributed to the unfortunate end of the ‘esprit de Paris’ spirit of collaboration,’’ write authors Said Skounti and Iskander Erzini Vernoit.

If humanity is to overcome climate change, the world must “unlock action at a scale commensurate with the climate crisis”, insist the authors.