Can Baku Bridge the Gap Between Climate Rhetoric and Reality?

The 29th Conference of Parties (COP 29), in Baku, Azerbaijan, dubbed as the “finance” COP, is set to spotlight the finalising of the new collective quantified goal (NCGQ). The NCQG is expected to set a new, ambitious climate finance target beyond the previous $100 billion, ensuring predictable funding for developing countries' climate actions.

However, the US presidential elections have a bearing on COP negotiations. With a track record of both funding pledges and occasional withdrawals, the US holds a pivotal role that could either advance or delay consensus on the NCQG. This underscores the need for a robust, multilateral framework that can maintain momentum, regardless of national political shifts. For many developing nations, a reliable commitment from the US and other developed countries is essential for progress, as these funds are vital to building resilience and ensuring equitable climate action.

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Negotiations So Far Articles 2 and 9 of the Paris Agreement are central to climate finance discussions, underscoring the need to align financial flows with pathways that support low-carbon, climate-resilient development. Originating from the 2009 Copenhagen Accord, developed countries committed to providing $30 billion in "new and additional" financial resources for 2010-2012 and agreed to mobilise $100 billion annually by 2020. Building from a $100 billion floor, the NCQG was set for establishment ahead of 2025, reflecting the needs and priorities of developing countries.

Despite the guiding principles of predictability, effectiveness, additionality, fairness and intergenerational equity, reaching a consensus on the NCQG remains challenging. After 11 technical expert dialogues and three ad hoc meetings, deep divisions persist on key issues. Some countries support a single, unified target, while others propose a layered approach with annual targets across various climate action areas. This debate, alongside differing

preferences for five- or 10-year timelines and alignment with Nationally Determined Contributions (NDCs) and Biennial Transparency Reports (BTRs), adds layers of complexity.

Ambition for the New Goal The NCQG must reflect the growing needs of developing nations and surpass the $100 billion benchmark, which represents more of a political compromise than actual financial needs. As financing requirements are projected in the trillions annually, the NCQG should address this scale, with specific targets for mitigation, adaptation, and loss and damage. This would also help redress the current imbalance, where mitigation receives the majority of funding, leaving adaptation and loss and damage underfunded.

Adding specific targets for short-lived climate pollutants (SLCPs) could further balance efforts across critical climate areas. Fast mitigation of SLCPs can significantly curbs heat stress and temperature rise. These measures alongside decarbonisation are important, since the planet is moving towards a temperature increase of 2.6-3.1 degrees Celsius over the course of this century. This way, the NCQG can address the current imbalance and ensure that resources aren’t diverted from one critical climate area to cover another.

The NCQG should prioritise public, grant-based financing over loans. Currently, loans make up 69 per cent of international public climate finance, which exacerbates debt burdens for vulnerable countries. The NCQG should encourage a transition towards grant-based finance, which is more suitable for adaptation and loss and damage initiatives where private sector investment is limited due to uncertain returns. This would also ensure that fragile or conflict-affected nations receive support where private investment is unlikely.

Climate finance should be supplementary to, not a replacement for, official development assistance (ODA). Developed countries should adopt innovative tax strategies to mobilise funds, such as imposing taxes on shipping, aviation emissions, fossil fuel profits or wealth taxes, placing the responsibility on high-emission sectors rather than vulnerable communities. Meeting the United Nations Framework Convention on Climate Change’s (UNFCCC) criteria of "new and additional" finance is essential to avoid diverting resources from critical sectors like health, education, and progress on the sustainable development goals (SDGs).

The NCQG must prioritise accessible and inclusive finance, particularly for small

island developing states (SIDS) and least developed countries (LDCs). Simplifying procedures and offering direct funding can reduce reliance on intermediaries and improve timely access. Women, who are disproportionately affected by climate change, must be central to these efforts. Finance programmes should actively support women’s resilience, leadership and economic empowerment, incorporating gender analysis in projects and transparent gender equality metrics. Building institutional capacity for effective fund management at the grassroots level can enable support for local women's organisations.

To align with the principle of common but differentiated responsibilities and respective capabilities (CBDR-RC) outlined in the UNFCCC and Paris Agreement, the NCQG should include a fair-share approach. Developed nations, based on historical emissions and financial capacity, should contribute proportionately. Studies suggest Annex II countries should provide up to 80% of the overall finance target. While some call for large emerging markets to increase their contributions, this focus risks diverting attention from developed countries’ unmet obligations. Many developing nations already contribute voluntarily; extending reporting requirements to all nations could further boost contributions without altering their classification status.

With COP29 promising to be a turning point, decisive announcements and actionable frameworks will be critical to uphold and advance global climate ambitions. If the NCQG can embed these guiding principles, it has the potential to not only secure climate finance but to rebuild international trust, enabling a just and resilient path toward achieving shared climate goals.

The authors are director of the India Programme at Institute for Governance & Sustainable Development (ISGD) and chief of staff at IGSD, India.