No one left this year’s United Nations climate conference, known as COP29, happy.
Developed countries’ agreement to help raise hundreds of billions of dollars in annual finance for climate efforts in the Global South fell short of demands. A lack of language reaffirming the need to cut fossil fuel emissions angered countries warning of the need for urgent action. And delegates were deeply divided on new rules designed to spur carbon markets. The 5:30 a.m. Baku finishing time on Sunday, after multiple days of round-the-clock negotiating, also didn’t help.
[time-brightcove not-tgx=”true”]“We are extremely hurt,” said Chandni Raina, a negotiator for India, in a speech after the finance agreement was gavelled in. “The Global South is being pushed to transit to no-carbon pathways even at the cost of our growth.”
But, despite the many complaints, it should not be minimized that in the middle of increased populist backlash and rising isolationist sentiment, countries still left the host city of Baku, Azerbaijan, with a deal. Indeed, with the election of Donald Trump as U.S. president casting a pall on negotiations just days before the start of the talks, they could have easily ended in collapse.
“We are living in a time of truly challenging geopolitics, and we should simply not have the illusion that it will soon get better,” said Wopke Hoekstra, the European Union’s commissioner for climate action, at the closing session. “Seeing a deal truly is exceptional.”
So why didn’t the talks collapse? At points, it felt like they might have, but in the end negotiators assessed that an imperfect deal is better than no deal.
Finance has long lingered as a critical tension in climate talks with developing countries arguing that wealthier countries owe them for the damage that they have caused with their historic emissions. The U.S. alone is responsible for 20% of global historic emissions despite being home to around 4% of the world’s population.
In the end, the crux of the finance deal amounts to a commitment for developed countries to help raise $300 billion in annual climate finance for developing countries by 2035 from public sources, namely governments and development banks. While that’s far short of the more than $1 trillion annually in public money demanded by many developing countries, it’s a significant increase from the $100 billion commitment agreed to in 2009 that expires next year. In the face of that expiration as well as the increasing costs of climate change, developing countries insisted that the negotiators urgently replace the $100 billion figure. In the years ahead, developing countries will certainly keep track of whether their wealthier counterparts are meeting the pledge—and hold their feet to the fire if and when they don’t.
For developed countries, the money isn’t just a giveaway. Because the effects of climate change are felt worldwide, cutting emissions in the Global South helps protect wealthy countries, too, from the coming climate extremes. And those investments also help avoid the climate-linked crises that spill over borders—think of the mass migration already occurring in part because of environmental shocks. (It’s also worth noting that much of the money will be provided as loans and investments that earn a return rather than as free grant money.)
Now the key question is whether those rich nations will follow through. It’s worth being cleareyed: the road ahead is a steep one. In Europe, political pressure has led governments to slash international development money. Even if far-right parties are held at bay in countries like Germany and France, governments will face continued pressure to avoid such spending for political reasons. Unsurprisingly, the U.S. picture is even bleaker. The country has struggled to deliver climate finance even under supportive presidents thanks to paralysis in Congress. Trump should be expected to do what he can to slash overseas development money even further.
And then there’s the private sector question. The COP29 finance decision—known formally as the New Collective Quantified Goal—includes a call for $1.3 trillion in annual finance by 2035 from “all actors.” To get there would mean that the $300 billion in public money would be supplemented by private sector investment as well as capital from countries like China that don’t technically count as developed countries in the U.N. framework but still have considerable wealth. To get private sector money moving will require financial innovation and new mechanisms that reduce the risk for private investors.
Such mechanisms were a hot topic in Baku—and indeed they have been frequently discussed in international climate forums in recent years. In an ideal world, government and philanthropic money could be used to reduce the risk of climate adaptation and mitigation projects, thereby allowing money to flow from private sector investors. But, despite all the talk, many in the climate world remain skeptical. Private sector investors simply don’t need to look to the Global South to earn a return, leaving them with limited incentives to engage.
It is certainly true that, no matter the outcome in Baku, the barriers to unlocking trillions in investment remains tough. But, at the very least, Baku gives the world a new North Star. The year 2035 is both very close and very far. When we get there, expect countries to be complaining—or celebrating—how the world responded to the targets set in Baku.
