At the heart of the 29th annual Conference of the Parties (COP29) summit in Azerbaijan lies a clear message: pay up now to help poorer countries face the worsening climate crisis, or face mounting costs later. Experts warned that developing nations require at least $1 trillion annually by the decade’s end to switch to greener energy and protect against increasingly extreme weather events. As nations continue to negotiate, the success of COP29 hinges on whether the international community can commit to a new, realistic funding target, surpassing the previous, overdue goal of $100 billion a year set to expire in 2025.
With climate change accelerating, negotiators from wealthy and developing countries alike are striving to forge agreements that ensure sufficient, reliable financing flows for climate action. However, tensions and complexities around the table indicate a challenging path ahead.
Finance has become the main focus of COP29. Richer nations, including those involved in development lending and private sector financing, face mounting pressure to increase financial support for developing countries tackling climate impacts. The Independent High-Level Expert Group on Climate Finance, an advisory body to the United Nations, announced that the minimum financial target would need to reach $1.3 trillion a year by 2035, warning that delays would only increase future costs. The report emphasized that any shortfall before 2030 would raise the stakes, creating a steeper and more costly path to climate stability.
“The less the world achieves now, the more we will need to invest later,” the group’s report cautioned.
Despite these clear signals, reaching consensus on a new funding target has been challenging. Initial draft documents indicate broad disagreement on the specifics, reflecting the diversity of perspectives present at the summit. While the stakes are high, wealthy countries have shown hesitance to raise contributions, particularly as ongoing conflicts and economic pressures continue to strain their budgets.
Back in 2009, high-income nations pledged $100 billion per year by 2020 to help developing countries cope with climate change. However, this target was only achieved in 2023, two years late, and mostly through loans, which add to the debt burden of recipient nations. Many low-income countries argue for more grants instead of loans, highlighting the risks of accumulating debt in order to address a crisis they did little to cause. This demand has fueled debate over the structure and sources of climate financing, placing more pressure on wealthier nations to provide a reliable mix of grants and long-term aid without adding to global debt crises.
Tensions around funding are not the only factors complicating talks at COP29. From diplomatic spats to ideological divides, the conference has seen its fair share of conflicts within its first few days.
In a striking move, French climate minister Agnès Pannier-Runacher canceled her trip to Baku following a speech by Azerbaijan’s President Ilham Aliyev. Aliyev, during his opening remarks, accused France of alleged abuses in its Caribbean territories, sparking a diplomatic clash. European Union Climate Commissioner Wopke Hoekstra responded, emphasizing the need for COP conferences to remain inclusive and focused on climate action rather than bilateral grievances.
“Regardless of any bilateral disagreements, the COP should be a place where all parties feel at liberty to come and negotiate on climate action,” Hoekstra stated in a post on X, formerly Twitter, urging the Azerbaijani presidency to maintain a conducive environment for negotiations.
Moreover, Argentina has withdrawn its negotiating team from COP29, although reasons remain unclear. President Javier Milei, a vocal skeptic of climate change, has previously dismissed global warming as a “hoax,” which may have influenced the decision. This absence raises concerns about Argentina’s commitment to climate action, as well as the broader willingness of certain governments to address the pressing needs of vulnerable countries on the front lines of climate change.
As talks continue, alternative funding sources and innovative strategies are emerging. Wealthy nations have called upon multilateral development banks, such as the World Bank, to play a more active role. Ten of the world’s largest development banks are developing a plan to increase their collective climate finance to around $120 billion a year by 2030, with an additional $65 billion expected from private sector contributions.
Another significant proposal involves taxing industries responsible for high emissions, such as aviation, fossil fuels, and shipping. Additionally, some advocates have suggested a small tax on financial transactions, which could generate billions of dollars annually. While these ideas gained some support at COP29, few anticipate that a final agreement will be reached on these proposals at this year’s summit. Still, this framework could provide a valuable foundation for future funding discussions.
One recurring issue involves calls for China to contribute to climate financing. As one of the world’s largest greenhouse gas emitters and a major economy, China’s position as a developing country in the UN framework allows it to avoid mandatory contributions. However, many Western nations argue that China should take on a greater financial role commensurate with its economic stature. China’s inclusion in the pool of donors, rather than solely recipients, could significantly impact the total amount available for climate action. However, China has resisted this shift, arguing that it still faces developmental challenges and that wealthier nations bear historical responsibility for emissions.
For the world’s most vulnerable countries, the question of adequate climate finance is existential. Nations like Bangladesh, the Philippines, and low-lying Pacific islands are at heightened risk from rising sea levels, devastating storms, and extreme weather events linked to climate change. Without substantial funding for adaptation and mitigation, these nations risk being overwhelmed by the mounting challenges.
The growing divide between the countries most affected by climate change and major emitters has led to frustrations. Pacific island nations, African countries, and other developing states repeatedly call for a “loss and damage” fund, a mechanism to financially support countries suffering from climate-induced damage. This fund was approved in principle at COP27 but has yet to materialize into a concrete financing structure. At COP29, these countries are expected to push hard for further action on loss and damage, with hopes of achieving a more defined funding mechanism.
The future of climate finance largely depends on the commitments made at COP29. Experts warn that delays in mobilizing adequate funds could have long-term consequences, increasing the need for higher investments in the future as the climate crisis intensifies. For instance, transitioning to renewable energy in developing countries, protecting vulnerable communities from climate impacts, and building resilient infrastructure are all essential to mitigating the worst effects of climate change.
“If nations fail to provide the necessary funding, they will ultimately face steeper and more disruptive costs down the line,” said Rachael Stewart, a senior climate finance expert. “The reality is that the longer we wait, the more expensive it will be.”
However, the climate financing issue also intersects with global politics, as wealthy nations grapple with economic pressures and the challenge of balancing immediate domestic concerns with long-term global commitments.
