As COP29 climate finance negotiations continue in Baku, negotiators are wrangling with an overlong text with several different proposals for the money contained in the new climate finance goal. But the money is there for real action, a new report finds—and wealthy countries must step up to the plate to deliver it, before it’s too late.
The report, released Thursday in Baku by the Independent High-Level Expert Group on Climate Finance (IHLEG) launched by the COP 26 and COP 27 Presidencies, estimates that, to meet the targets of the Paris Agreement, developed countries need to provide at least $1 trillion per year by the end of the decade, starting next year.
“Any shortfall in investment before 2030 will place added pressure on the years that follow, creating a steeper and potentially more costly path to climate stability,” the report states. “The less the world achieves now, the more we will need to invest later.”
The report is published as countries negotiate at COP29 a “new collective quantified goal” (NCQG) for financial support for developing countries beyond 2025. This new goal is in response to a decision made at the COP21 summit in Paris in 2015. Countries agreed there that the new goal should be set before 2025 from “a floor of USD 100 billion per year.”
In 2022, countries agreed—two years behind schedule—to provide that $100 billion floor for the first time. The ambition needs to scale up substantially, and that figure could keep climbing in the 2030s: the report finds that $1.3 trillion will be needed by 2035.
This figure echoes a similar $1.3 trillion climate finance target called for by the Group of 77 (G77). This proposal, initially put forward by the African Group, is gaining increasing support across the global South. While prior proposals have ranged from $1 trillion to $1.5 trillion, the $1.3 trillion figure represents a critical breakthrough in the discussions.
While $1 trillion each year may sound daunting, there’s plenty of ways to unlock that cash, the report finds. “The large and rapid scale-up of finance to support a big investment push can only be achieved by harnessing all pools of finance,” the authors say.
A dramatic increase in private investment, the report finds, will also be crucial to fill the gap; private funds should account for the majority of investment in renewable energy. There’s real profit to be made for the private sector from these investments: a recent report from Zero Carbon Analytics found that solar and wind alone made up 83% of electricity demand growth in the Global South last year.
Bilateral finance from the world’s most developed countries currently accounts for $43 billion of climate finance each year; that number needs to at least double by 2030, “given the central role that [bilateral finance[ plays in building trust and financing the most difficult needs.” Meanwhile, multilateral development banks like the World Bank need to triple their lending capacity by the end of the decade.
Other external funding factors, like taxing fossil fuel companies, shipping, and aviation, can provide much-needed revenue streams.
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