Attending COP29 — The “Finance COP”
Adam D. Orford, Assistant Professor of Law at the University of Georgia School of Law, will be attending the 29th Conference of Parties to the United Nations Framework Convention on Climate Change as one of the American Bar Association’s observer delegation and will be sharing his thoughts on the experience here. The views expressed in this post are solely his and do not necessarily reflect the views or positions of the ABA or UGA.
Cross-posted on Environmental Law Prof Blog.
Greetings! In this third post on COP29, I will explore the international climate finance commitments that form a priority negotiating item at COP29. If you missed them, check out my prior posts in this series, introducing the issues under discussion at COP29, and diving deep into the call for 1.5-aligned NDCs.
The post below introduces the party classifications that govern climate finance flows, reviews the finance commitments made by the parties in the original treaty and subsequent agreements, examines the struggle to achieve the current climate finance goals, introduces the controversy over “loss and damage” funding, and examines the treaty’s requirement for agreement to a “New Collective Quantified Goal” (NCQG) for climate finance at this year’s COP29. This latter requirement, particularly, has led to COP29 being referred to as the “Finance COP.”
The Stakes
Climate finance is one of the most politically controversial aspects of the entire international climate response framework. As the treaty parties contemplate significant public spending from industrialized nations, the United States in particular has had an extremely fraught relationship with these programs.
The Trump Administration’s 2020 withdrawal from the Paris Agreement included a cessation of its contributions to associated funding commitments, and a second Trump Administration would almost certainly include withdrawing once again from the Paris Agreement, and potentially even withdrawing from the UNFCCC itself, in large part in order to avoid U.S. participation in climate finance programs. The uncertainty over the future participation of the U.S. in these programs may or may not be resolved before or during COP29, but the outcome, if known, will very likely influence how the negotiations go.
Even without the political uncertainty, however, any proposed major increase in the NCQG also raises the question: since the existing goals have barely been met, what good does it do to increase them now? Read on for the information necessary to follow this critical issue.
Critical Concept: Party Classification
Prior to discussing UNFCCC mechanisms to promote climate finance, it is necessary to break down the treaty’s complex categorization of parties. Finance obligations and eligibilities tend to be classified by party type, and therefore a clear understanding of party classification greatly simplifies any attempt to understand the treaty’s terms.
Party Classification by Level of Economic Development
National economic development level is the most important country classification used in the UNFCCC system. From high development level to low, the terms used in the UNFCCC are:
- High: “developed country Parties,” “developed Parties,” or “developed countries” (e.g., Art. 4.2, 4.3);
- Medium-High: parties “undergoing the process of transition to a market economy” (Art. 4.6, Annex I);
- Medium-Low: “developing country Parties” or “developing countries“ (e.g., Art. 4.3, 4.4, 5(a)); and
- Low: least developed countries (LDCs) (Art. 4.9, 12.5).
Perhaps surprisingly, however, despite using these terms repeatedly, neither the UNFCCC nor any subsequent protocol or agreement has ever defined any of these terms, leaving it to some degree to the parties themselves to self-identify when they engage with UNFCCC mechanisms.
That said, there is wide agreement about what these classifications mean, because each of the UNFCCC classifications has a clear analogue in other classification systems developed by other organs of the United Nations’ economic development mission. For example, the UNFCCC’s classifications mirror those used by the UN Department of Economic and Social Affairs World Economic Situation and Prospects (WESP) reports, which currently classify countries as follows:
- High: “Developed Economies,” including the United States and Canada, Australia and New Zealand, Japan, South Korea, and much of Europe. These countries tend to have the world’s highest Gross Domestic Product (GDP) and Human Development Index (HDI) scores.
- Medium-High: “Economies in Transition” (EITs), including numerous countries in southeastern Europe as well as most of the nations of the former Soviet Union, including Russia and — host of COP29 — Azerbaijan. These countries are still considered “developed” for purposes of analysis, but on the whole have lower GDP and HDI scores and less fully developed domestic market economies. Notwithstanding the name, many of these countries are not actively moving toward westernized free market economies.
- Medium-Low: “Developing Economies,” including many of the countries in Africa, Asia (including China), Central and South America, and the Pacific Islands. These countries tend to have lower GDP and HDI scores, although many have thriving domestic economies and major industrial bases and tend to be improving or stable in other measurements of wellbeing.
- Low: “Least Developed Countries” (LDCs), an official UN designation currently including much of sub-Saharan Africa, several nations in southeast Asia, Afghanistan, and several Pacific Island states. These countries are characterized by the world’s lowest GDP and HDI scores, often suffering deep poverty and institutional dysfunction, amd severe vulnerability to climate change, and are often not improving or actively declining in wellbeing metrics.
These terms are well understood to be problematic overgeneralizations, but are nonetheless widely used internationally. In practice, the UNFCCC development classifications are best understood as generally coextensive with these other, similar UN development classification schemes. They matter for climate finance because the commitments in the treaty tend to be made by more developed nations, for the benefit of less developed nations.
Party Classification by UNFCCC Annex
Although the 1992 UNFCCC regularly describes country parties by development level, it also formally classified parties according to two “Annexes,” which are lists of country parties to which certain treaty responsibilities are assigned. These are:
- Annex I Parties. These UNFCCC parties were the developed countries and economies in transition as of 1992. Confusingly, this is not equivalent to the highest level of economic development.
- Annex II Parties. These were the wealthiest and most developed of the Annex I parties as of 1992. Technically, these were the nations that were part of the OECD at the time . However, although the OECD has expanded since 1992, these nations were never added to UNFCCC Annex II. All Annex II parties are also Annex I parties
- Non-Annex Parties. These are all other parties not included in Annex I or II, and include all the developing countries and LDCs.
Confusingly, the UNFCCC text sometimes mixes the Annex and development level classification systems, for example by imposing finance obligations on Annex II nations for the benefit of developed country parties. Thus, it is necessary to keep both classifications in mind.
Party Classification under the Kyoto Protocol
Although now less widely used, the Kyoto Protocol built on the above classifications by adding a second Annex system to distribute party responsibility for emissions reductions. The Kyoto Protocol “Annex B” parties were, essentially, the developed countries, including the economies in transition, at the time the Kyoto Protocol was signed. The EIT designation was used to assign lower quantified emissions reduction commitments.
Again confusingly, Kyoto Protocol Annex B included the United States. However, although the U.S. delegation signed the Kyoto Protocol, the U.S. Senate never never ratified it, and therefore Kyoto Protocol Annex B set out U.S. emissions reductions commitments that the U.S. never actually agreed to. Furthermore, Canada withdrew from the Kyoto Protocol in 2011, and numerous countries participated in the first Kyoto Protocol commitment period (2008–2012), but not the second (2013–2020).
For purposes of climate finance, these classifications are again relevant as programs developed under the Kyoto Protocol involved finance flows from Annex B nations to developing nations.
Party Classification under the Paris Agreement
Finally, although the Paris Agreement did not alter any of the above classifications, it innovated by abandoning the Annex framework in favor of mostly universal requirements. That is, most of the Paris Agreement’s commitments are applicable to all participating parties, subject only to the overarching principles of “equity and common but differentiated responsibilities and respective capabilities, in the light of different national circumstances” (Art. 2.2). In practice, this means that countries are often able to self-identify what they commit to accomplish rather than attempting to agree in advance to be added to Annexes with specified responsibilities.
However, with respect to climate finance, the Paris Agreement also retains the distinctions between developed and developing country parties, and assigns obligations based on those distinctions. In particular, it creates special finance obligations to developing countries, LDCs, and — for the first time under the UNFCCC — to Small Island Developing States, or SIDS, another classification used elsewhere by the UN. — from developed country parties.
In summary, then, the UNFCCC and its subsidiary protocols have used multiple party classification systems that all remain relevant for understanding climate finance. Today, the legacy Annex classifications still remain in force, but many finance commitments speak in terms of development level, and the parties have largely shifted to the more loosely defined but adaptable economic development classification system for other commitments as well.
Finance Commitments Under the UNFCCC Agreements
With the party classifications in mind, it is much easier to trace the treaty language related to climate finance. For the most part, finance commitments under the UNFCCC agreements flow from the most developed countries to developing countries. But as the UNFCCC system developed, a series of special-purpose funds were created to more clearly manage project eligibility and finance amounts. Over time, this has developed into the present finance system.
The 1992 UNFCCC Finance Commitments
The first foray into climate finance came in 1992 with the UNFCCC parties’ agreement to implement a “financial mechanism” to assist developing countries with various costs related to UNFCCC compliance.
In the UNFCCC, the “developed country Parties” made three separate finance commitments for the benefit of the “developing country Parties,” as follows:
- National Inventory and National Climate Plan Development Aid: First, the developed country parties agreed to provide funding “to meet the agreed full costs incurred by developing country Parties” to create national greenhouse gas inventories and national climate action plans (Art. 4.3, 12.1). This commitment is distinct because it covers the “full agreed cost” rather than full agreed incremental costs, as in the next item.
- Capacity Building Cost Share: Second, the developed country parties agreed to participate in a “financial mechanism” (in practice, a UN-run grant program) by which the developed countries would provide “such financial resources, including for the transfer of technology, needed by the developing country Parties to meet the agreed full incremental costs of” covered activities, including, among other things, sustainable land management programs, national adaptation and coastal zone management planning activities, scientific cooperation, and public education programs (Arts. 4.3, 4.1(d-i), 11). The methodology for determining “incremental” costs was left to be determined later.
- Adaptation Cost Assistance: Third, the developed country Parties agreed to “assist the developing country Parties that are particularly vulnerable to the adverse effects of climate change in meeting costs of adaptation to those adverse effects.” (Art. 4.4). Notably, this agreement to “assist” with adaptation costs is much less well defined and robust than the other two commitments.
A close examination of the language reveals that each of these commitments included important caveats. Developed country parties were responsible only for “agreed” costs, would provide most funding only through a “financial mechanism” to be developed later, and would “assist” — in unquantified fashion — with climate adaptation costs. These caveats reflected the hesitancy of developed country parties to incur potentially unlimited financial commitments on behalf of less-developed countries, a hesitancy that persists to this day.
The 1992 UNFCCC “Financial Mechanism” and Special Funds
The next step was to develop the “financial mechanism” specified under UNFCCC Article 11 that would govern funding allocation under cost share commitment discussed above. This mechanism would eventually grow to encompass numerous other UNFCCC climate finance programs.
The UNFCCC treaty itself designated the UN’s Global Environment Facility (GEF) as the initial, interim manager of the Article 11 financial mechanism (Art. 21.3). The UN had created the GEF in 1991 as a pilot program, and made it permanent at the 1992 Rio Earth Summit, after which it was quickly designated as the primary financing organization for commitments made under both the 1992 UNFCCC and the 1992 UN Convention on Biological Diversity.
In 1995, the UNFCCC parties agreed to an initial set of funding priorities and eligibility criteria for the financial mechanism. The parties were particularly concerned with providing funding for capacity building: “In the initial period, emphasis should be placed on enabling activities undertaken by developing country Parties, such as planning and endogenous capacity-building, including institutional strengthening, training, research and education, that will facilitate implementation, in accordance with the Convention, of effective response measures.” With respect to adaptation, the parties emphasized financial support for national vulnerability studies, adaptation plan development and, again, capacity building.
In 2001, the parties reiterated these general priorities in more detail. But by then, it had also become clear that funding to the GEF was insufficient to meet need. The parties agreed that the Annex II Parties, and “the other Parties included in Annex I that are in a position to do so,” would “provide funding for developing country Parties” through several additional “channels.” Those were:
- GEF Replenishment: First, the parties committed to increasing the “replenishment” of the GEF, meaning adding funds to the GEF to continue to cover the activities discussed above. The GEF replenishment process is discussed further below.
- GEF Special Fund Creation. Second, the parties agreed to create three new special funds. also operated by the GEF, also funded by the Annex II and capable Annex I parties, but with independent eligibility criteria:
- Special Climate Fund. This fund was intended to finance “activities, programmes, and measures … that [are] complementary” to existing funds, with special emphasis on adaptation, transfer of technologies, “Energy, transport, industry, agriculture, forestry and waste management,” and diversification of economies dependent on the production, processing, and export of fossil fuels.
- Adaptation Fund. This fund was created specifically “to finance concrete adaptation projects and programmes in developing country Parties” to the Kyoto Protocol. Its financing, however, came primarily from a percentage of funds raised by Kyoto Protocol compliance mechanisms, and would continue to receive funds under equivalent market-based programs developed for the Paris Agreement.
- LDC Fund. This fund was intended to provide finance to “support a work programme for the least developed countries,” including but not limited to for creating “national adaptation programmes of action.”
- CBIT Fund. A fourth special fund — the Capacity-Building Initiative Trust Fund — was created in 2016 following the Paris Agreement, in order to provide financial support for the Paris Agreement’s expanded transparency requirements.
As is clear from this review, the eligibility criteria for the various UNFCCC climate funds are complex and, particularly for adaptation activities, somewhat overlapping. The management and operation of the GEF itself has required a great deal of attention, and it is clear that no party has ever been entirely satisfied with the results.
Nonetheless, the GEF and its associated funds have financed more than 2000 projects under the UNFCCC commitments.
The Kyoto Protocol Clean Development Mechanism and REDD+ Funding
All of the original UNFCCC commitments contemplated direct public finance commitments from developed nations. The 1997 Kyoto Protocol, however, introduced a significant alternative funding format in the form of market-based financing incentives under the Clean Development Mechanism.
In summary, the CDM programs allowed developing countries to receive finance flows for various land management activities that tended to reduce carbon emissions resulting from land use, land use change, and forestry (LULUCF) activities, as a method for meeting their national emissions reduction responsibilities under the Kyoto Protocol.
In addition, a separate program — “Reducing Emissions through Deforestation, Forest Degradation, and other forest-related activities” (REDD+) — provided direct finance for forest and land preservation, which would not typically be credited as emissions reduction. Although controversial and of questionable efficacy, these programs had received approximately $6.5 billion in voluntary national contributions through 2019.
For purposes of climate finance, the importance of these programs is in their attempt to expand finance targets toward carbon sink protection, and the use of market-based systems to generate climate finance revenues. While these programs have faced significant doubt about their effectiveness, they are an important additional aspect of the climate finance picture to the degree they have influenced both the targets and mechanisms of future public climate finance commitments.
Although all of the above systems still exist and actively fund climate-related activities in developing countries, the total funding amounts were widely understood to be far below what was really needed, particularly accounting for rising adaptation costs as climate change impacts intensify. This led to discussions for a major expansion of these programs.
The $100 Billion Per Year Commitment
By 2009, UNFCCC funding systems existed for treaty compliance, capacity building, adaptation planning, and forest protection. But what this did not include was any substantial assistance for bigger-ticket items like funds for direct mitigation, meaning transformation and deep decarbonization of the industrial and energy systems that contribute to climate change. The famous “$100 billion per year” climate finance commitment was intended to begin addressing this huge finance gap.
By 2009’s COP17 at Copenhagen, UNFCCC climate finance expansion had become a major point of discussion. However, the conference was largely derailed by the collapse of talks to extend the Kyoto Protocol, and there was no official party decision on the subject at that time. Instead, a smaller group of parties reached a side agreement that included the finance commitment that would form the basis of future UNFCCC climate finance action.
The Copenhagen Accord was initially proposed as an agreement for the entire COP, but ultimately only collected support from a smaller group of parties, including, importantly, the United States and China. The accord included a variety of new finance commitments, although since they were not adopted by the full UNFCCC plenary they were more in the forms of proposals than firm agreements. In the Copenhagen Accords, the developed country parties proposed:
- Expanded Direct Funding Commitments. After a $30 billion annual commitment between 2010 and 2012, the developed country parties proposed: “In the context of meaningful mitigation actions and transparency on implementation … a goal of mobilizing jointly USD 100 billion dollars a year by 2020 to address the needs of developing countries.”
- Expanded Adaptation Finance. The developed country parties also proposed to “provide adequate, predictable and sustainable financial resources, technology and capacity-building to support the implementation of adaptation action in developing countries.”
- Expanded REDD+ Mechanisms. They also called for “the immediate establishment of a mechanism including REDD-plus, to enable the mobilization of financial resources from developed countries.”
- New Funding Organization. Rather than keep everything within the GEF, the developed country parties proposed running the new programs through a new “Green Climate Fund” to “support projects, programme, policies and other activities in developing countries related to mitigation including REDD-plus, adaptation, capacity building, technology development and transfer.”
Notably, the Copenhagen Accord parties stated that the new funding would “come from a wide variety of sources, public and private, bilateral and multilateral, including alternative sources of finance.” In other words, they contemplated including some mix of mobilized private finance, market-driven finance, multilateral development bank finance, and voluntary national public funding contribution, to meet their goals.
Some of the basics of this agreement were formally adopted by the UNFCCC parties over the next several years, but in a manner that moved away from the more market-oriented approach of the Copenhagen Accords. At COP18 in Cancun and COP19 in Durban, the parties formally recognized the commitment of the developed country parties to provide $100 billion per year in climate finance, and designated the Green Climate Fund as a new organization for managing the finance flows under this new commitment.
At COP20 in Warsaw, the parties completed a two-year work program on long-term finance that resulted in new requirements that developed country parties submit regular reports on how they intended to achieve their new goal. By COP21 in Paris in 2015, however, the parties proved hesitant to include market-based finance commitments in the climate finance, and repeatedly emphasized the need for direct public finance commitments from developed countries.
The Paris Agreement itself therefore included both a climate finance mechanism (Article 9) and a market-based credit trading program (Article 6) (to be examined in a future post). Paris Agreement Article 9 itself did not include the $100 billion per year goal, but it was recognized repeatedly in Decision 1/CP.21, adopted at the same time. There, the parties “Urge[d] developed country Parties to fully deliver on the USD 100 billion per year goal urgently and through 2025, noting the significant role of public funds,” and “Note[d] with deep regret” that the goal had not yet been met. The agreement also included a variety of reporting and discussion mechanisms intended to to push the developed country parties to explain to the world exactly how they intended to achieve their goal.
Following COP21, developed country parties began delivering plans for achieving their goal, and a small industry of finance commitment analysis arose to track these plans. In a 2016 “roadmap to $100 billion” the parties began emphasizing expanded public and multilateral development bank finance commitments, as well as increasing private finance mobilization. A 2021 “climate finance delivery plan” continued these themes. The current status of these efforts is reviewed below.
The New Loss and Damage Fund
The final UNFCCC financial commitment involves the recent expansion of funding to cover costs associated with responding to the harms of climate change, rather than the costs of adapting to avoid them. The concept of “loss and damage” grew out of developing country parties’ concerns that they are suffering active harms from climate change that they are, in large part, not responsible for causing. After agreeing to two years of discussions in 2013, the UNFCCC parties once developed consensus via the Paris Agreement, which, for the first time, included a direct commitment related to loss and damage.
In the Paris Agreement Article 9, the parties “recognize[d] the importance of averting, minimizing and addressing loss and damage associated with the adverse effects of climate change,.” and agreed to continue working to “ enhance understanding, action and support” for loss and damage going forward. Notably, in an accompanying decision, the parties also agreed that loss and damage commitments did “not involve or provide a basis for any liability or compensation,” i.e., was not an admission of fault for climate change by the developed country parties.
Talks on this topic proceeded very slowly after 2015, with the next breakthrough not occurring until 2022 at COP27 in Sharm El-Sheikh, Egypt. There, the parties finally agreed to establish a new fund designed to “assist… in responding to loss and damage” in developing countries. Details of the new Loss and Damage were finalized last year at COP28 in Dubai in late 2023.
Thus, in summary, the years between 2009 and 2024 have seen a slow but substantial expansion of climate finance commitments under the UNFCCC framework, beyond the initial GEF-managed funds intended primarily for treaty compliance assistance and adaptation planning, through experiments with market-based mechanisms to support conservation activities under the Kyoto Protocol, towards a much broader commitment to expand funding amounts and assist with developing country mitigation efforts under the Paris Agreement, to, most recently, a new commitment for loss and damage in 2022. The collection of these numerous mechanisms, which all still exist, constitute the finance commitments under the UNFCCC system.
Status of Funding under Existing Commitments
The UNFCCC finance commitments are closely monitored by numerous outside parties, as well as by the UNFCCC’s Standing Committee on Finance. Reports from this later group attempt to track aggregations in finance flows through all mechanisms toward various funding goals.
Since its inception, the GEF has received approximately $33 billion dollars in funding for its various managed programs. The most recent replenishment round, covering years 2022–2026, included a record $5 billion in voluntary public funding commitments from 29 countries, including a $600 million contribution from the United States. Obviously, this is a small fraction of the total goal.
For the new loss and damage fund, so far developed country voluntary contributions to the fund have totaled about $700 million, almost half of which comes from $100 million contributions from Germany, Italy, and the United Arab Emirates (the host of COP28). The United States has contributed $17.5 million. Again, this is far below what is needed.
Regarding developed country finance mobilization toward the $100 billion annual goal, the developed country parties claimed to have achieved the goal for the first time in 2022, although the claim is contested and in the years since that number has likely fallen.
There has never been a universally agreed-upon definition of climate finance, and therefore the parties currently rely on OECD methodologies that — coming as they do from the developed country parties themselves — are fairly generous. According to those reviews, which count funding from a very wide variety of sources, the parties’ commitments show steady upward trends, particularly through direct financial commitments to funds and through multilateral development banks.
But these figures also include funding through the export credit system, including export credit financing for qualifying project development in developing countries, and efforts to calculate and attribute private financed “mobilized” by developed countries, meaning private development activity that occurred with the assistance of public support programs. These are particularly prevalent in the energy sector.
It should be noted that there have been serious criticisms raised against the OECD’s analysis. Oxfam, particularly, has argued that “generous accounting practices have allowed [developed countries] to overstate the level of support they have actually provided. Moreover, much of the finance has been provided as loans, which means that it risks increasing the debt burden of the countries it is supposed to help.” Last month, Oxfam released a new report claiming that over 40% of the climate finance funds claimed to be delivered by the World Bank are, in fact, unaccounted for due to “poor record-keeping practices.”
These kinds of independent assessments indicate that it is always necessary to maintain a healthy skepticism of claims regarding funding amounts and to dig deeply into the methodologies used to calculate climate finance aggregation claims. Addressing these concerns will be part of the negotiations at COP29.
COP29: the New Collective Quantified Goal (NCQG) for Climate Finance
Although the existing $100 billion per year climate finance goal has barely been met, if at all, this annual finance commitment was also always intended to be temporary. In Decision 1/CP.21, paragraph 53, issued in 2015 together with the Paris Agreement, the parties also agreed to “set a new collective quantified goal from a floor of USD 100 billion per year, taking into account the needs and priorities of developing countries.” The New Collective Quantified Goal (NCQG), is a major negotiating item of COP29 this year in Baku. Widely varying estimates place the need for such a goal at up to $500 billion to $1 trillion per year.
With little progress made prior to 2021, in Decision 9/CMA.3 at COP26, the parties agreed to “establish an ad hoc work programme for 2022–2024,” including quarterly “technical expert dialogues,” and annual “high-level ministerial dialogues” on the NCQG. The parties agreed that the ad hoc work programme would end in 2024, setting COP29 as the deadline for finalizing the NCQG (Dec. 9/CMA.3).
The resulting process has produced a series of reports on the outcomes of the technical expert and high-level ministerial dialogues which are guardedly optimistic but largely non-substantive. The most recent high-level ministerial dialogue did, however, consider an “input paper” that spoke in terms of setting a goal of more than a trillion dollars in annual finance mobilization by 2035. The paper in reality consolidates the proposals submitted for consideration, rather than the amounts agreed to in principle by developed country parties, but it is useful as an anchor point for what will likely be under discussion at COP29.
Other elements of the negotiations are also coming into view after the most recent high-level ministerial dialogue. Among these, many of the options contemplate a “layered” commitment approach whereby a specific quantum of public funding would be specified, together with more details regarding both the sources and uses of the funds, and the definitions used to track finance and maintain accountability and transparency. Developed countries have also called for expanding who is contributing to these funds as part of the calculus.
Therefore, a successful “strong” NCQG outcome will likely look something like a firm commitment from developed countries to a particular, very large (e.g., $500 billion to $1 trillion per year) annual finance goal, including a clear commitment to a large portion of that goal coming from direct public finance, according to clear accounting principles that minimize the attribution of non-grant-equivalent funding toward meeting the goal. A successful but “weak” NCQG outcome would lack clarity particularly on the public finance and definitions elements, and a “failure” would be something like a maintenance or very small increase of the current $100 billion per year commitment. The NCQG outcome will play a large part in public perception of whether COP29, as a whole, is successful.
Finally, developing country parties remain concerned about ongoing contributions to loss and damage funding, with many calling for increased commitments to also be clearly specified in the NCQG. According to one analysis, however, it appears likely that this will not happen, potentially leaving the recent effort to expand the Loss and Damage Fund unmet in a time of worsening climate crises worldwide. As negotiations proceed, the treatment of loss and damage, either together with or separate from the NCQG, will be another critical outcome to watch at COP29.
If you have made it this far, you are now much better prepared to follow the negotiations around climate finance that have led to COP29 being called the “Finance COP.” The world will find out whether COP29 lives up to that name in Baku, beginning November 11.
In the next post, I will dig into another finance element, even more difficult than the NCQG: the Paris Agreement’s Article 6 carbon credit trading system. Although this is not as prominent a priority at COP29, there is still much work to be done on developing the technical rules that will allow Article 6 activities — meaning international carbon credit trading — to proceed.
Running Updates
COP29 Day 2: The G77 nations rejected existing draft proposals for climate finance, and proposed their own. They propose $1.3 trillion per year, with a framework of sub-limits for mitigation, and oppose expanding the contributor base. Wealthy nations want to include nations such as China and Saudi Arabia in the contributor base, and want to set clear rules for excluding fossil fuels and other problematic investments in the total.