The Presidency of COP29 has released a second text for the New Collective Quantified Goal (NCQG) on climate finance, setting an annual target of $250bn for developing countries by 2035.
“Factoring in inflation, that's a 30% increase on the 2009 target. Not world-changing, and hardly ambitious,” James Reeler, senior manager: Climate Action at the Worldwide Fund for Nature SA (WWF), told Business Day. “We will have to see what Parties say, but I don't think they'll be done today.”
This commitment, while a step forward from the draft, leaves significant gaps compared to the financial needs expressed by developing nations throughout the negotiations.
Gillian Hamilton, an experienced sustainability and climate change consultant and economist with SA's The Green Connection in , told Business Day the mood among delegates returning home from COP29 in Baku was sombre on Friday afternoon.
“The offer on the table from developed countries is neither fair nor ambitious,” she said. “After weeks of delays, they have offered us only a very small percentage of what we, as developing countries, were asking for. In general, this text lacks specificity, for example on exactly how much would be provided vs mobilised and there isn't a clear financial goal for adaptation.
“To say we are disappointed, would be an understatement. For those people who are on the front line, battling with the impact of climate change, this seems more like a death sentence than a lifeline.”
To say we are disappointed, would be an understatement. For those people who are on the front line, battling with the impacts of climate change, this seems more like a death sentence than a lifeline.
— Gillian Hamilton, sustainability and climate change consultant
She says the while the text offers “some effort” to acknowledge challenges with the cost of capital and the enabling environment, it lacks specifics on how it will be provided in grant equivalents.
“It talks about public and private finance but provides no clarity on this. The US, Canada and Japan should be embarrassed about their poor show of leadership: it is time they pay their climate debts to the developing world.”
Ali Mohamed, chair of the African Group of Negotiators said: “The proposed target to mobilise $250bn per year by 2035 is totally unacceptable and inadequate to delivering the Paris Agreement. The Adaptation Gap Report alone says the adaptation needs are $400bn; $250bn will lead to unacceptable loss of life in Africa and around the world, and imperils the future of our world.
“Moreover, it is no longer developed countries who are responsible under this formulation. It is rendered as a target for which all countries are responsible and where developed countries are taking the lead. This is unacceptable.”
However, there are improvements. The text includes enhanced transparency frameworks and a biennial review process to track progress, culminating in a global stocktake to ensure accountability and inform future goals.
The Friday version also highlights the importance of just transitions, calling for international co-operation to address barriers and unlock opportunities for equitable transitions across sectors.
What the Friday version of the NCQG text proposes:
• Annual target of $250bn: The text commits to mobilising this amount annually by 2035 from a variety of public and private sources. This target is intended to contribute to mitigation, adaptation, and loss and damage efforts in developing nations.
• Acknowledgement of financial gaps: The text highlights the gap between climate finance flows and the needs of developing countries, citing costed adaptation requirements of $215-387bn annually and overall climate finance needs of $455-584bn per year until 2030.
• Increased adaptation finance: The text recognises the critical importance of adaptation finance and the need for scaled-up public and grant-based resources, particularly for the least developed countries and small island developing states.
• Focus on debt-sensitive instruments: To address high debt burdens, the text encourages the use of non-debt-inducing instruments and innovative financing tools such as guarantees, first-loss instruments, and local currency financing.
• Improved access mechanisms: The NCQG (Friday version) aims to reduce systemic barriers to accessing climate finance, including high costs of capital and burdensome application processes, while enhancing transparency and efficiency.
What the text falls short on, according to our first analysis:
1. Inadequate financial targets: While the $250bn annual commitment marks an improvement, it remains far below the estimated needs of developing nations, which range between $455—584bn annually by 2030. The text does not reference the larger figure of $1.3 trillion per year previously proposed.
2. No sub-goal for loss and damage: Although the text recognises the need for urgent action on loss and damage, it stops short of establishing a dedicated sub-goal or providing clarity on how much funding will be allocated to this critical area.
3. Ambiguity on grants vs loans: While public and grant-based resources are prioritised for adaptation and loss and damage, the text does not provide concrete guarantees that grants will take precedence over debt-inducing instruments.
4. Voluntary contributions from developing nations: The inclusion of language encouraging developing countries to contribute to the goal through South-South co-operation could dilute the focus on developed countries’ responsibilities.
5. Broad policy adjustments: The text continues to encourage national policy changes to attract climate finance, without offering sufficient safeguards to protect developing countries from disproportionate burdens.
Department of Forestry, Fisheries and the Environment spokesperson Peter Mbelengwa said the minister is studying the second text and will respond in due course.
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