BAKU, AZERBAIJAN, 21 November  – In the early hours of the day, the UNFCCC Secretariat released the latest draft text on the New Collective Quantified Goal on Climate Finance (NCQG), a key agenda item at the 29th Conference of Parties (COP29). The new goal will replace the USD 100 billion annual goal established at COP15 in 2009. This amount now pales in comparison to what developing countries say they need to reach their climate objectives, pegged at around USD 1.1 to 1.3 trillion annually.

For nearly two weeks, negotiations laid bare the divide between developed and developing countries over critical aspects of the NCQG. Key areas of debate revolved around the quantum of the goal; whether contributions are mandatory or voluntary; linkage to the Convention or not; whether the goal should include an “investment goal”; contributor base and eligible recipients; role of the private sector, multilateral development banks (MDBs), international financial institutions (IFIs) and domestic resource mobilisation in the achievement of the goal; timeframe and revision of the goal; among others.

The current negotiating draft text still lacks consensus on the quantum—referred to only as “X amount.” Developed countries are resisting setting this quantity in the trillions, which civil society and developing countries alike have been demanding.

The subgoal on loss and damage, likewise, is glaringly missing, despite repeated calls of developing countries to include specific targets for loss and damage, alongside adaptation and mitigation, to ensure a defined and predictable amount for each field of climate action.

Further contention surrounds the contributor base and sources of finance, with developed countries pushing to include so-called emerging economies, as well as leveraging domestic resources of developing countries. The draft text echoes this position, listing a “wide range of sources and instruments” such as bilateral and multilateral channels, private finance, and market-based mechanisms.

Expanding the sources of finance to mean anything beyond public contributions from developed countries would undermine the principles of equity, common but differentiated responsibilities and respective capabilities (CBDR-RC), and the polluter pays principle. These principles place the onus of financing climate action of developing countries squarely on developed countries.

The text also includes delivery mechanisms such as debt-for-climate swaps, green bonds, guarantees, and equities that risk exacerbating the debt burdens of recipients and can drive resources further away from the communities that most need finance.

Even the use of carbon markets to generate finance counted towards the new goal remained in the text. Civil society slammed the use of markets since day one of the conference, citing the historical harms they perpetuate. The use of markets also risks opening the door for more private finance flows that allow developed countries to skirt their obligations to provide adequate public finance.

With these developments, the prospects for an ambitious NCQG appear increasingly dim. Developed countries must demonstrate political will to ensure the final goal measures up to the needs and demands of developing countries. At the same time, developing country governments must stand firm alongside their peoples in demanding accountability and sufficient contributions from developed countries.

All eyes are on Baku as the clock ticks down to November 22, when the final decision on the NCQG is expected to be adopted. #