The COP29 deal is even smaller than it looks

In the decade since the first global climate finance target, $100 billion, was set, countries like Vanuatu have had a front-row seat to everything that can go wrong as rich countries work toward the headline number. And the agreement reached in Baku isn’t very reassuring that things will be better this time.

First, there’s the number itself. Inflation and the ever-escalating costs of climate impacts mean the number gets less impressive over time; so even though the target is nominally higher than the current goal, some delegates in Baku saw it as a step backward. Economists also doubt that $300 billion in government funds is anywhere near enough to “leverage” an additional $1 trillion from the private sector; historically, $1 of public finance unlocks an average of 22 cents from private investors, according to the think tank ODI. And in any case, the actual amount of funding developing countries need for climate action is closer to $2.3 trillion, economists said last week.

That means the $300 billion number will need to be increased. The Baku agreement punted this discussion to next year’s COP in Brazil, so the money fight is far from over. In the meantime, raising funds will get a lot harder once Donald Trump takes office; in his last term, the US kept up some climate finance through its contributions to development banks but cut off most other channels.

Then there’s the critical question of how the funding is tallied. Depending on who’s counting and how, especially whether loans are given equal standing with grants, the actual amount raised now is somewhere between $28 billion and $116 billion. The Baku decision leaves a lot of ambiguity about what exactly will count, and cues up what is sure to be a titanic political fight in 2028 when the COP’s finance committee will have to deliver a progress report.

Finally, the Baku agreement does little to open the myriad bureaucratic bottlenecks that today keep a lot of climate finance from reaching its intended recipients in a timely manner, if at all. The most important test for the new goal is whether it can work better. But to that end, the agreement is filled with weak language: When it comes to improving access, the agreement “urges,” “welcomes,” and “encourages” parties to do better, rather than stronger commands such as “instructs” or “decides.”

One key demand of the negotiating blocs representing small island states and the least developed countries in Baku was that the new finance goal include a specific minimum percentage that should be set aside for them. At the moment, only about 1% of climate finance reaches small island states, said Colin Young, executive director of the Caribbean Community Climate Change Center, which coordinates between Caribbean countries in the negotiations. Such countries lack the staff and expertise to manage the mountains of paperwork required to submit funding proposals, and most climate finance is available on a first-come-first-served basis, advantaging middle-income countries with more developed bureaucracies.

But minimum allocation requirements were cut from the Baku agreement, which led the island state bloc to temporarily walk out of the talks. Ultimately, they relented. But “there is very little in the agreement,” Young said, “to deal with the systemic inequities that continue to stymie the flow of climate finance to the most vulnerable countries.”