Parties are descending to Baku, Azerbaijan, for the 29th Conference of Parties (COP29). Dubbed the “Finance COP”, the conference is due to decide on the New Collective Quantified Goal (NCQG), a key element of the 2015 Paris Agreement and designed to set a new financial target to support developing countries in their climate actions post-2025.
The NCQG seeks to fill persistent gaps in climate finance, replacing the existing $100 billion annual goal set in 2009 that is due to end in 2025, and aiming to provide a more realistic and ambitious financial framework.
Climate finance is one of the most important means of implementation in the international climate process.
Climate finance is one of the most important means of implementation in the international climate process. The new funding goal is crucial to:
i. address the climate finance gaps;
ii. ensure that developing countries, who are paying the price of a climate crisis they are least responsible for, receive the support they need to build resilience and protect their communities;
iii. improve accountability and transparency in climate finance;
and iv. foster a global partnership for climate action whereby developed countries can demonstrate solidarity and responsibility in addressing a global problem affecting everyone.
While there is consensus on the need to agree on the NCQG, this is as far as the consensus gets. Negotiations show disagreement on the amount, the framework, the modalities, and the contributors and their share to the funding goal.
What is CARE calling for?
In its policy paper for COP29, CARE will demand developed countries to scale up climate finance, providing $1 trillion in annual public support to the post-2025 funding goal. The goal should be rights and needs-based, disbursed primarily in the form of grants to avoid increasing financial burdens on indebted nations. There must be no double-counting: the funding should be additional to the existing official development assistance (ODA).
Whilst this is an ambitious target, the demand is supported by scientific analysis. The 2021 needs determination report by UNFCCC’s standing committee on finance (SCF) tallied the money required by developing countries to fund actions listed in their current climate plans (NDCs) and concluded that a total of $5.8-5.9 trillion will be needed up to 2030.
CARE demands developed countries to scale up climate finance, providing $1 trillion in annual public support to the post-2025 funding goal.
Should funding were to start in 2025, these asks are in line with the cost estimates of $ 5 to $ 6.9 trillion for implementing developing countries’ nationally determined contributions (NDCs) by 2030, according to the UNFCCC’s second needs determination report (NDR2), issued in September 2024. However, the actual needs are undoubtedly much greater, as the report only reflects costed NDCs and many NDCs do not yet sufficiently reflect planned adaptation actions and efforts to address loss and damage, let alone figures for the funds needed to implement them.
In 2022 the ‘Stern-Songwe report’, compiled by UN-backed Independent High-Level Expert Group on Climate Finance, summed up the needs to around $1 trillion a year. A review of literature by CAN also sets the needs at the same figure, breaking it down to the needs of loss and damage (400 billion), adaptation ($300 billion), and mitigation ($300 billion).
Why are others calling for $5 trillion?
Climate justice activists, including the Climate Action Network (CAN), have called for governments from the Global North to provide at least $5 trillion per year in public finance to developing countries to cover needs for mitigation, adaptation, loss and damage and just transition. The sum, civil society claims, mirrors the significant climate debt that developed countries owe to developing ones and civil society highlights that it is an achievable target through tax justice, wealth and polluter taxes.
The final technical meeting of Parties to the United Nations climate negotiations held in Baku in early September showed that an agreement over climate finance is far from within reach as developed countries show up at the table with empty pockets. The lack of any meaningful offer from developed countries is concerning, so pushing for an ambitious target is legitimate. However, the $ 5 trillion is a political climate justice demand, but it lacks sufficient evidence and data to justify support and its related advocacy efforts.
Climate justice activists, including the CAN, demand $5 trillion/year from Global North to support developing nations' climate action needs.
The $1 trillion is a figure that CARE feels more comfortable engaging with as it is science-based and evidenced in various sources, including NAPs, and adaptation gaps reports. It is also felt to be a politically more feasible outcome, and will more easily position us within government facing advocacy, which CARE tends to lean on in order to achieve our goals.
How could this finance be raised?
Research has shown that there is no shortage of public money available for Global North countries to pay their fair share for climate action at home and abroad. Developed countries could raise over $5.3 trillion per year for the NCQG through windfall taxes on fossil fuels, ending harmful subsidies and a wealth tax on billionaires. While mooting sums much lower than the $1 trillion ask, developed countries are discussing potential new forms of finance, such as a levy on shipping and on frequent flyers.
Research has shown that there is no shortage of public money available for Global North countries to pay their fair share for climate action at home and abroad.
Alternative sources of funding were at the centre of the high-level climate summit French President Emmanuel Macron called in Paris in 2023. Proposals included international taxes on shipping, aviation or even financial transactions. While possible solutions, however, they remained hollow conversations, which have not progressed: the prospects of getting every country to back such measures are dim (starting for example from securing the support of the 170-member International Maritime Organisation, which will determine whether a levy can be adopted). Brazil, which currently has the presidency of the G20, is pushing for a wealth tax of about 2% on billionaires.