Analysis: New COP29 Climate Finance Goal Text

As we approach COP29 in Baku, the latest draft version of the wording for the new climate finance goal (https://unfccc.int/sites/default/files/resource/cma2024_09a01.pdf), known as the New Collective Quantified Goal (NCQG), has been released.

This draft text could form the basis for the final negotiations at COP29 if Parties agree to build on it. If accepted, this text will be critical in the negotiations as it guides Parties in their decision-making about adopting a robust and equitable finance deal at COP29.

Climate Action Network, along with other civil society organisations, says the Global North must start meeting the historical climate debt it owes to the Global South in the region of US$5 trillion per year, while bearing in mind that no amount of money can ever fully replace the lives lost to climate impacts. The Global North can only begin clearing their debt with a COP29 agreement on finance that is made up of public money via grants, aimed at supporting the Global South in mitigating, adapting to, and recovering from the devastating impacts of escalating climate change, addressing loss and damage.

The new text presents both clarity and challenges, underscoring the urgent need to ensure that qualitative climate finance is delivered and grounded in equity, transparency, and accountability. There are still unresolved Issues, with many critical elements in brackets, which means they are still up for debate. At the same time, important components are missing. Now more than ever, it is crucial to keep pressure on developed nations to meet their commitments, focusing on grants, not loans, and centering the voices of vulnerable communities.

Below is CAN's analysis of the main elements in the new text, based on our key priorities:

1. A Public Grant-Based Finance Core Reflecting Needs

While all Parties have acknowledged the idea of a “public finance core,” its meaning needs to be clearly defined.

Public Finance Core: For CAN, this means a bulk of public grant-based finance at a scale of at least US$1 trillion annually, transferred from developed to developing countries. It should cover mitigation, adaptation and Loss and Damage. This figure is part of a broader climate debt owed by the Global North, estimated at $5 trillion per year.

Developing countries have long called for public grant-based climate finance, and Article 9 of the Paris Agreement provides the framework to define the New Collective Quantified Goal (NCQG), as highlighted by Brazil. The Like-Minded Developing Countries (LMDC), led by China, stress that the NCQG should ensure climate finance flows from developed to developing nations. The G77, represented by Uganda, emphasises that this new financial target must uphold equity and the principles of Common But Differentiated Responsibilities and Respective Capabilities (CBDR-RC). Meanwhile, Least Developed Countries have called for US$1 trillion in climate finance by 2030 to meet their growing needs.

Text Proposal: We need to work to reinforce Option 1 in the text (para 13-14).

Concerns have been raised about the concept of "Multilayered Goals", that envisages a variety of finance sources and providers, which is being promoted by developed countries, as it risks confusing and derailing the climate finance negotiations by creating confusion around who is contributing, potentially undermining transparency and accountability. The U.S. proposal for a "global investment goal" suggests that developing countries, along with private investors and financial institutions, would also contribute, diluting the core principle of developed-to-developing country obligations and contradicting equity and Common But Differentiated Responsibilities (CBDR). Similarly, the EU (particularly France, Germany, and Italy) has discussed an "investment layer for developing countries" alongside a public finance core, but the lack of clarity around the scale and focus could limit the role of public finance and prioritise private investment.

Text Proposal: Option 2 (paras 16–17) is unacceptable as it omits a public finance core, referring solely to investment goals.

2. Quality as a Top Priority

Amid the discussion about “trillions,” it is the quality of that climate finance which is paramount. Numbers alone are meaningless without assurances that finance will address the needs of those most vulnerable to climate impacts - and in this context, public grants are non-negotiable as we are talking about people's lives which cannot be compensated for with mere figures and finance that is actually exacerbating the crisis they are already facing.

Public grant-based finance: CAN says this is a crucial and non-negotiable element of the new goal. However, developed countries (particularly the US, EU and Australia) are emphasising the role of private finance, which introduces significant risks due to its profit-driven nature.

New and additional: CAN has been advocating for climate finance to be new and additional to ensure its quality and effectiveness. This aligns with calls from Least Developed Countries (LDCs), including Nepal and Malawi, which have emphasised in their interventions that climate finance must be separate from Official Development Assistance (ODA) to avoid diverting funds from other critical development needs.

Text Proposal: Paras 31, 32, and 38 should explicitly mention public grants for mitigation, adaptation, and loss & damage. Para 31's bracketed text should remain to ensure flexibility.

Debt Crisis: Grants are critical in the context of the debt crisis hitting the Global South and the high cost of capital developing countries are facing. Delivering finance via loans only exacerbates the existing debt burden in the Global South. The priority should be on debt cancellation, not debt swaps or suspension clauses.

Text Proposal: Replace mentions of debt swaps (Para 34) with clear language on debt cancellation.

Human Rights & Just Transition: CAN calls for human rights and a just transition to be anchored in the new climate finance goal. Similarly, AILAC, through Colombia, and the G77, via Uganda, have emphasised the need to prioritise a just transition and human rights, ensuring that sustainable development is closely aligned with climate action.

Text Proposal: Para 12 should be strengthened.

Access to Finance: CAN emphasises that direct access is an essential component of the new climate finance goal, particularly for vulnerable and marginalized communities. Least Developed Countries, represented by Gambia, and Alliance of Small Island States (AOSIS), via Barbados, also underscore the importance of ensuring that these communities can access the necessary financial resources to support their climate action efforts.

Text Proposal: The recognition in Para 10 of barriers faced by developing countries in accessing finance is a positive step.

3. Loss & Damage at High Risk

Despite its critical importance for developing countries, developed nations continue to oppose the inclusion of Loss and Damage (L&D) as a distinct subgoal in climate negotiations. This resistance risks leaving the (newly renamed) Fund to Respond to Loss and Damage (FRLD) seriously underfunded unless L&D is integrated into the overall climate finance goal. Developing countries, including Least Developed Countries like Nepal, Gambia, Guinea, and Malawi, as well as AOSIS members such as the Marshall Islands, Samoa, and Belize, have consistently advocated for L&D to be recognised as a thematic subgoal alongside mitigation and adaptation efforts.

Text Proposal: L&D should be mentioned without brackets in Paras 4, 13, 25, and 26 to guarantee its inclusion.

4. Anchoring NCQG in Transparency & Accountability

A clear definition of climate finance is essential to ensuring transparency and accountability.Developing countries, particularly Least Developed Countries represented by Malawi, view the adoption of this definition as a top priority. CAN calls for Parties to establish a process for adopting a new definition of climate finance, along with an exclusion list that explicitly outlines what should not be considered as climate finance—such as loans at market rates or fossil fuel financing. There appears to be a consensus among Parties regarding the need for an exclusion list, which should be both clearer and bolder. The G77 argues that loans at market rates, and the Group SUR (Argentina, Brazil, Paraguay and Uruguay) say private finance offered under commercial terms, as well as official development assistance (ODA) and domestic resources, should all be excluded from climate finance.

Text proposal: Nothing is proposed when it comes to a new definition, so Para 31 needs to be stronger on definition and expand the exclusion list to fossil fuel finance as well.

5. Developed Countries Must Lead on Tax Justice & Make Polluters Pay

Although the language concerning innovative finance sources has weakened compared to the previous draft, there remain opportunities to push developed countries to embrace tax justice, hold polluters accountable, and redirect harmful subsidies. Developed countries, including Australia, the EU, Germany, Ireland, the US, and Canada, argue that the only “realistic” approach is to broaden the base of contributors to increase financing. However, this assumption is fundamentally flawed as the primary focus should be on scaling up public finance from developed to developing countries.

Text Proposal: Section C.8 (disenablers) should challenge the funding scarcity narrative, advocating for tools like wealth taxes, fossil fuel levies, and subsidy redirection to raise climate finance at the needed scale.

What Must Happen Before COP29

Developed countries need to stop undermining the negotiations with delaying tactics and evading their historical responsibilities. The structure of the new climate finance goal (NCQG) should remain straightforward, anchored in Article 9 of the Paris Agreement, and focused on the obligations of developed countries to mobilise and provide funding for developing nations. For developing countries, it is crucial to remain vocal and clear about the scope and quality of the new finance goal.

Technical analysis: What we need to see in the text

1. Public Finance Commitment: There is an urgent need for at least US$1 trillion in public funding every year. According to Para 13 of the current text, the new climate finance goal (NCQG) is set at a minimum of US$1 trillion per year in grant-equivalent terms, with the possibility of this figure increasing to US$1.1 trillion, US$ 1.3 trillion, or even US$ 2 trillion. This funding is to be provided by developed country Parties, specifically aimed at addressing the evolving needs and priorities of developing country Parties from 2025 to 2030.

2. Sub-Goals for Climate Action: We need to see specific targets for climate action in three key areas: mitigation, adaptation, and loss and damage. Para 4 of the current text highlights the significant gap between what developing countries need and the support they are currently receiving, particularly in terms of adaptation finance and addressing loss and damage. Para 25 states that the new climate finance goal (NCQG) includes funding for mitigation, adaptation, and loss and damage, with more details to come on how much money will be allocated to each area.

3. Grant-Based Finance Prioritisation: Para 32 highlights the need for public resources to support adaptation and loss and damage, and emphasises the importance of grant and concessional resources for these priorities. It should also highlight the needs for grants for mitigation with the adequate nuances. Additionally, Para 38 talks about scaling up the provision of grant-based and highly concessional finance by using blended financing instruments and concessional loans, which CAN is not in favour of, while also promoting new financial instruments to attract additional funding sources.

4. Transparency and Definition of Climate Finance: A clear definition of climate finance is essential for maintaining transparency and accountability. Para 31 decides that the finance mobilised through the new climate finance goal (NCQG) should achieve multiple benefits, linking climate action with sustainable development. It must be new and additional, meaning it should not replace existing official development assistance. Additionally, the definition must specify that certain types of funding—such as market-rate loans, private finance, domestic resources, and export credits—will not be counted as climate finance. Para 31 should also state that incremental costs of climate action should be counted towards the NCQG.

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