The UN Climate Change Conference (COP29) closed with a new finance goal that triples financing for developing countries from the previous goal of $100 billion annually to $300 billion annually by 2035. The new goal, officially known as the New Collective Quantified Goal on Climate Finance (NCQG), was agreed upon after two weeks of intense negotiations and several years of preparatory work. 

Private equity and credit firms, asset managers, and impact investors may be able to identify new investment opportunities in emerging markets that result from this additional financing.

Let's explore the new goal set by UN COP29 in detail.

Background of the COP29 finance goal

The COP29 event had a central focus on climate finance, and it brought together nearly 200 countries in Baku, Azerbaijan, to reach an agreement on triple finance for developing countries. It builds on significant strides forward on the global climate action at COP27, which agreed on the historic Loss and Damage Fund, and COP28, which delivered a global agreement to transition away from fossil fuels in energy systems. The NCQG reflects the urgent need for enhanced financial support to help developing countries combat climate change and adapt to its impacts. 

Executive Secretary of UN Climate Change said, "This new finance goal is an insurance policy for humanity, amid worsening climate impacts hitting every country, But like any insurance policy – it only works – if premiums are paid in full, and on time. Promises must be kept, to protect billions of lives. It will keep the clean energy boom growing, helping all countries to share in its huge benefits: more jobs, stronger growth, cheaper and cleaner energy for all."

Key aspects of the new COP29 finance goal

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  The NCQG agreement will secure the efforts of all actors to work together to scale up climate finance to developing countries from public and private sources to $1.3 trillion per year by 2035. 

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  The new financial goal highlights the necessity for increased assistance for adaptation initiatives in developing nations, particularly those which are affected by climate change. This involves meeting the estimated adaptation funding needs of $215 billion to $387 billion yearly through 2030.

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  The new goal of $300 billion will be mobilized by a combination of grants and loans, which has faced criticism from developing nations that prefer unconditional grant-based support. 

Feedback on the new COP29 finance goal

Many developing nations have expressed disappointment with COP29's $300 billion commitment, mentioning that it is insufficient compared to their demands of over $1 trillion in annual support. Critics argue that this amount falls too drastically short of what is necessary to combat climate change effectively. 

Arunabha Ghosh and Arjun Dutt from the Council on Energy, Environment and Water (CEEW) described the agreement as a "post-dated cheque drawn on a failing bank," highlighting that it fails to address the pressing realities faced by developing countries, which are often left to fend for themselves amid rising climate disasters.

Next steps

In 2024, the International Energy Agency projects global investment in clean energy will exceed $2 trillion for the first time. The new finance goal for climate change in developing countries has the potential to build on this achievement and promote sustainable investment globally. 

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