Tropical Forests Forever Facility launched with limited pledges and funding doubts.
Expert group roadmap targets 1.3 trillion dollars annually by 2035.
Debate over public finance and Article 9.1 postponed via consultations.
Adaptation talks center on finance access, accountability and tripling support.
The 29th Conference of the Parties to the United Nations Framework Convention on Climate Change (COP29) in Baku in 2024 was dubbed the finance COP. This year, even though no headline finance track is on the table for negotiation at COP30, several discussions on finance are being carried out in Belem.
At the end of week one, we take stock of key climate finance developments and summarise them below.
The UN Secretary General, representatives from over thirty countries, and the World Bank came together at the pre-COP Leader’s Summit in Belem, to launch the Tropical Forests Forever Facility (TFFF).
Brazilian President Luiz Inacio Lula da Silva announced the TFFF Launch Declaration, which saw endorsement by 53 countries. Among them, Norway committed $3 billion over the next decade (with conditions); Brazil and Indonesia $1 billion; Portugal $1 million; France indicated considering up to $500 million until 2030; Netherlands $5 million; Germany is yet to finalise the amount it will contribute.
The United Kingdom will not be investing in the Brazilian Presidency’s signature COP initiative and China has also declined. The TFFF is aiming to collect $25 billion in pledges, which was reduced to $10 billion by 2026, to then ‘leverage’ about $125 billion for forest conservation (the total pledges stand at $5.5 billion so far).
TFFF aims to use a blended finance model and operate as a revenue-generating investment fund, but experts have vocalised concerns regarding uncertainties in its implementation and integrity issues.
According to Bloomberg’s Biodiversity Finance Factbook COP30 edition, progress on TFFF is likely to be limited: The 3 per cent “spread” that is a part of the fund’s financial mechanism (the gap between what the fund earns on its investments and what it must pay investors back) is really just a ‘risk premium’, not guaranteed money.
It said the fund’s risk analysis is inadequate. If emerging-market assets perform poorly, the forest payments could disappear and development banks may end up having to cover losses to the investors.
The Independent High Level Expert Group on Climate Finance, co-chaired by Amar Bhattacharya, Vera Songwe and Nicholas Stern, have released reports putting forward policy recommendations for increasing public and private investment for climate since COP26.
Their fourth report, released in week one in Belem, is in support of the Baku to Belem Roadmap process (part of the climate finance package being carried over from the Baku decision on the New Collective Quantified Goal on Climate Finance, or NCQG). The report put forward a three-pillar pathway to mobilise $1.3 trillion per year by 2035 in external financing (for developing countries other than China).
It pegged the total climate investment required at $3.2 trillion per year by 2035. The recommendations include increasing external private finance to $300–700 billion per year; reforming multilateral development banks (MDB) and concessional finance channels (raising MDB concessional flows to $50–75 billion by 2035) and scaling new sources such as carbon-market revenues and solidarity levies.
As mentioned in the report itself, this is in line with the Circle of Finance Ministers report released a few weeks prior (with a high-level event with no new statements on how the report will be implemented conducted this week as well); overall, the push for centering private sector mobilisation for climate finance continues.
Article 9.1 of the Paris Agreement has gotten a lot of press since COP29. It makes explicit the legal obligation of developed countries to provide public finance for climate action to developing countries.
At the mid-year climate talks in Bonn, the Like Minded Developing Countries (LMDC) bloc proposed a separate agenda item to create a dedicated space to discuss Article 9.1 at COP30 and beyond, in view of the mistrust from the NCQG decision. This faced strong resistance from developed countries and was expected to stall agenda adoption in Belem.
But, in an anti-climatic opening plenary, the contentious Article 9.1 agenda item proposal, along with three other items, were left to be discussed through “presidential consultations” — a show of classic Brazilian diplomacy — to avoid a ‘mess’ at all costs.
Consultations on the four proposed agenda items have concluded, with developed and developing countries echoing old divergences on Article 9.1. During the post-consultations stock-taking plenary at the end of week one, alternative options for the way forward on all four contentious items have been suggested. Further consultations are also scheduled in the second week of COP30.
Negotiations on the Global Goal on Adaptation (GGA) have countries seeking to move toward adopting a framework of indicators, and finance has taken centre stage here as well.
Developing country groups warned that the current draft text sidelines Means of Implementation. Their representatives stressed that the Global Goal on Adaptation cannot advance without scaled-up, predictable and grant-based finance from developed to developing countries and that public finance must remain central, not replaced by private or blended models.
Disagreements persist in the 100-indicator draft, particularly on how to capture obligations and accountability in climate-finance flows, with four options still on the table. In one iteration of the draft negotiation text, a potential call to triple adaptation finance from 2025 levels to reach at least $120 billion annually by 2030 was also captured.
Article 2.1c of the Paris Agreement, which talks about aligning all finance flows to the long-term climate goal of 1.5°C, has been discussed through the year and is expected to find a way forward in Belem.
In the first week, Parties welcomed finally having a consolidated text on process, but clear differences remained on what should happen next under Article 2.1c.
Developed countries such as the European Union, Canada, Switzerland, the UK, Australia and New Zealand want the process to continue under the Conference of the Parties serving as the meeting of the Parties to the Paris Agreement (at the COP talks each year), using the co-chairs’ report (published ahead of COP30) to shape non-prescriptive guidance and feed insights into the global stocktake.
Many developing country groups, including the LMDCs, Arab Group, African Group and the Small Island States pushed back, saying there is still no shared understanding of what 2.1c requires, opposing any link to the GST and insisting that work cannot add new burdens or dilute developed countries’ finance obligations.
Most parties agreed on the need for safeguards, but divergence remained on whether the next phase should become a formal work programme or stay a technical, exploratory dialogue. A revised text incorporating the differences and previously suggested safeguards has been produced; the core suggestion of an Annual Dialogue, while maintaining nationally determined approaches going forward remains intact.
The first week saw the launch of the call for proposals for the Barbados Implementation Modalities under the Fund for Responding to Loss and Damage (FRLD). The total amount for a pilot program under the FRLD stands at about $250 million, with each approved project to get between $ 5 million and $20 million.
This is a start, but civil society is continuing its demands to ‘fill the fund’ at COP 30. The need to fill the fund and finalise modalities becomes more crucial when considered against the backdrop of two climate-worsened typhoons hitting the Philippines in one week in November, in line with the Brazil climate talks.
Multiple other finance discussions are ongoing at COP30, including on the Adaptation Fund; the Green Climate Fund; matters relating to the UNFCCC Standing Committee on Finance; finance related discussions in the Just Transition Work Programme negotiations; discussions on carbon markets and Article 6, among others. Most are expected to continue in the second week, with more non-negotiated yet relevant conversations picking up momentum.
Lastly, it is typical at COP summits for the Presidency to appoint ministerial pairs (from one developed and one developing country) at the end of week one, to lead difficult conversations across tracks going forward. The ministerial pairing for handling climate finance issues is Kenya and the UK.