What COP29 funding deal reveals about global climate action

Rarely has a climate summit venue so accurately reflected the mood and unfolding of negotiations. 

For two bumpy weeks, the labyrinthine corridors in Baku's Olympic Stadium have echoed with the hurried footsteps of negotiators rushing from one windowless meeting room to the next, avoiding dead-ends and wrong turns among the endless passageways.

Further characterized by missing global leaders, major disagreement and shifting geopolitical dynamics, the talks stretched deep into overtime before there was finally light at the end of the tunnel. And an agreement that sets a goal of at least $300 billion in climate financing per year by 2035 flowing from developed to developing countries.

India's representative was scathing of the goal, calling it a "paltry sum." "We seek a much higher ambition from the developed countries," she said, adding that the amount "does not inspire trust that we will come out of this grave problem of climate change."

Failure in Baku was "not an option," said UN Secretary-General Antonio Guterres, speaking on Thursday. But that failure looked possible late on Saturday when delegates from AOSIS (Alliance of Small Island States) and LDCs (Least Developed Countries) walked out of talks on the grounds their concerns were not being heard.

"What is happening here is highlighting what a very different boat our vulnerable countries are in, compared to the developed countries," said Cedric Schuster, the Samoan chairman of the group. "After this COP29 ends, we cannot just sail off into the sunset. We are literally sinking."

What have nations agreed — and is it enough?

COP29's core aim was getting the near 200 countries to agree on a new climate funding target that could replace the current goal of $100 billion (about €95 billion) per year. 

This financial package is intended to help developing countries tackle emissions, transition away from fossil fuels and adapt to a warming world.

But the size of the finance pot and which countries should foot the bill were huge sticking points in negotiations. 

Developing countries pushed for at least $1 trillion per year, a sum leading economists have said is necessary for them to respond to the climate crisis. Anything else was lowballing and "divorced from the reality of what was needed," according to Champa Patel of environment non-profit Climate Group.

But industrialized countries held off specifying concrete figures until the very last day and said they couldn't raise the money alone without private sector involvement.

The $300 billion promised is far lower than what developing countries were hoping for.

Sierra Leone's environment minister Jiwoh Abdulai said they were "disappointed in the outcome," which "signals a lack of goodwill by developed countries."  

"This COP, against the wishes of the vulnerable countries, has unfortunately adopted a $300 billion target (to be met in 2035), less than a quarter of what science shows is needed and barely enough to forestall a climate catastrophe," Abdulai said. 

Ani Dasgupta president of the World Resources Institute said it "was not enough" but praised negotiators for making a deal that "at least tripled climate financing flowing to developing countries" despite difficult geopolitical headwinds and called it an "important downpayment toward a safer, more equitable future."   

Low-income countries are seeing increasingly extreme floods, droughts, heat waves, storms and rising sea levels and do not have the resources to deal with them. Developed countries are responsible for the majority of historical emissions causing the planet to heat up. By 2050 climate change is expected to cause $38 trillion in damages around the world, according one estimate. 

But the new text released early Sunday morning, attempted to reassure progress to the $1.3 trillion would happen. It referenced a "Roadmap from Baku to Belem," which calls on "all actors" to "scale up" climate finance to developing countries and includes access to finance through "grants, concessional and non-debt-creating instruments."

Observers said negotiators from Africa and other developing countries had pushed for the changes to be included in the hope of creating a meaningful process to align the global financial system with the $1.3 trillion target by 2035. 

To date, much of the international climate finance has been provided to developing countries in the form of non-concessional loans. Organizations such as Oxfam have criticized this, pointing out that this increases the debt burden of some of the least developed countries. 

Developed countries also pushed for China and wealthy Gulf states that are heavily dependent on oil and gas to contribute to the $300 billion climate fund and share the burden. China is the world's biggest carbon emitter. And although it's a major economy, the UN still classes it as a developing country.

The final agreement didn't widen the donor base to include China, but it did introduce a fudge that would officially recognize the country's contributions. The new mechanism allows for voluntary recognition of cash flowing from developing countries through development banks as climate finance.

What does the outcome mean for global emissions? 

When it comes to fossil fuels — the primary source of global emissions and drivers of climate change — proceedings this year didn't get off to a good start. The Azerbaijani President Ilham Aliyev used COP29 as a platform to describe oil and gas as a "gift of God." 

This year's COP didn't do much to move the needle on cutting emissions. But negotiators did reach a deal on controversial carbon markets that would allow polluting countries to buy carbon-cutting offsets. Supporters say the new rules would help boost investment in local-income countries, where the carbon projects are usually located. But critics say they could be used for greenwashing climate targets.

"These decisions were taken behind closed doors," Tamra Gilbertson of the US-based non-profit Indigenous Environmental Network told DW. "We know that other carbon markets have completely failed to address climate change and emissions." 

Many were hoping for more progress to build on what was achieved at COP28 in Dubai last year, which concluded with a hard-won final agreement on "transitioning away from fossil fuels in energy systems." 

But oil producer Saudi Arabia, tried to derail progress on moving away from fossil fuel, and was described as a "wrecking ball" to the agreement.  

"We are in the midst of a geopolitical power play by a few fossil fuel states," said Germany's foreign minister Annalena Baerbock Saturday as talks spiraled.

As with previous COPs, there were strong criticisms regarding the presence of over 1700 oil and gas lobbyists. They received more passes to COP29 than all the delegates from the 10 most climate-vulnerable nations combined, according to one report.

Richard Folland, head of policy and engagement with independent financial think tank Carbon Tracker said the talks in Baku had been "strangled by the second highest attendance of fossil fuel lobbyists on record."

The core goal of the Paris Agreement is to hold global average temperature increases well below 2 degrees Celsius (3.6 Fahrenheit) compared to pre-industrial levels, and to strive to stay under 1.5 C. The science is clear that this requires urgent and deep cuts to global emissions.

However, global CO2 emissions from fossil fuels have hit new heights this year and 2024 is set to be the hottest ever on record. 

Dubbed the "finance COP," this year's conference highlighted the difficulties in reaching global consensus on climate action, and also drew calls for reform.

In an open letter to the UN, a group of scientists and former leaders said COP was "no longer fit for purpose," and required a shift from negotiation to implementation to "deliver on agreed commitments and ensure the urgent energy transition and phase-out of fossil energy."

With reporting from Giulia Saudelli and Tim Schauenberg in Baku, Azerbaijan. 

Edited by: Jennifer Collins and Tamsin Walker