New IHLEG report says current climate finance flows of $190 bn a year are “woefully inadequate”.
Roadmap charts pathway to mobilise $1.3 tn a year in external finance for developing countries by 2035.
Total annual investments of $3.2 tn needed for clean energy, adaptation, loss and damage and natural capital.
Dedicated $50 bn a year proposed for just and equitable transitions.
Report urges debt reform, domestic fiscal action, stronger MDBs and large-scale private finance mobilisation.
The global climate finance system is “not fit for purpose”, an expert group has concluded, unveiling a plan to mobilise $1.3 trillion annually for developing countries and allocate $50 billion to just transitions. The roadmap has been released during the ongoing 30th Conference of Parties (COP30) to the United Nations Framework Convention on Climate Change (UNFCCC).
The Independent High-Level Expert Group on Climate Finance (IHLEG) has unveiled a roadmap to mobilise $1.3 trillion a year in external finance by 2035 to help developing countries tackle the climate crisis. The group called for a transformation of the global financial system, warning that the current annual flow of $190 billion is “woefully inadequate” to meet the needs of the Global South.
The new roadmap, Delivering an Integrated Climate Finance Agenda, sets out what it describes as a comprehensive and achievable pathway to mobilise US$1.3 trillion a year in external finance for developing countries, excluding China, by 2035. It sets out a total annual investment need of $3.2 trillion for developing countries, excluding China, to pursue low-carbon, climate-resilient development. This includes $2.05 trillion for clean energy, $400 billion for adaptation, $350 billion each for loss and damage and natural capital, and $50 billion for ensuring a just and equitable transition.
The report was prepared at the request of the COP29 and COP30 presidencies and provides the analytical basis for the Baku to Belém process. According to the IHLEG, there is a feasible route to securing $1.3 trillion annually from external public and private sources to accelerate climate action and economic development in developing countries other than China.
“The world must move from billions to trillions if it wants to keep 1.5 degrees Celsius (°C) alive,” Vera Songwe, IHLEG co-chair, said in a statement. “We need an integrated approach — one that links debt reform, domestic fiscal action, private capital, and international solidarity into a single, coherent system.”
The IHLEG outlines three mutually reinforcing pillars: invest and transform, build domestic foundations, and scale up external finance. These pillars, it says, should guide governments, multilateral banks, and private investors in reshaping the architecture of climate finance.
Under the plan, domestic investment would make up roughly 60 per cent of total climate spending. The report urges governments to expand fiscal space by addressing debt vulnerabilities, reforming subsidies, introducing carbon pricing, and strengthening national development banks. “Debt restructuring, transparency, and fiscal reform are not side issues — they are the preconditions for credible climate action,” the report states.
The report calls for multilateral development banks (MDB) and development finance institutions (DFI) to triple their climate-related lending to $160-240 billion a year by 2035, while concessional finance through the International Development Association should rise to $50-75 billion annually.
Private capital, meanwhile, must increase fifteenfold from current levels, contributing $650 billion a year — half of all external flows. To make this possible, the IHLEG recommends a suite of de-risking tools: foreign exchange hedging, blended finance structures, securitisation, and clear climate-aligned taxonomies to attract institutional investors into emerging markets.
“Private finance will not flow at scale without public risk-sharing,” said Nicholas Stern, IHLEG member and economist. “Public finance must lead, not follow, to build confidence and unlock the trillions sitting in global capital markets.”
The report identifies new funding sources beyond traditional aid and loans. It estimates that Special Drawing Rights could be recycled to yield $5–20 billion a year, while solidarity levies on aviation, shipping, and fossil fuels could raise $20–110 billion annually. Debt-for-climate swaps and philanthropic partnerships could add a further $5–20 billion each year.
The IHLEG highlights emerging innovations such as Brazil’s Tropical Forest Forever Fund — designed to pay countries to keep forests standing — as scalable, nature-based finance mechanisms. High-integrity carbon markets, if governed properly, could generate $30–140 billion annually, the report suggests.
A key feature of this year’s report is a dedicated $50 billion a year allocation to support just and equitable transitions. This financing would help developing countries retrain workers, protect vulnerable communities, and diversify fossil fuel-dependent economies. The report stresses that fairness, gender inclusion, and social protection must be embedded in climate investments.
“The just transition is the bridge between climate ambition and political reality,” said Amar Bhattacharya, IHLEG co-chair, in a statement. “Without social protection and equity, there will be no durable transition.”
The report warns that fragmented, project-by-project finance will not deliver the speed or scale required. It calls for the creation of country-led investment platforms that align development priorities with climate goals, backed by stronger coordination among MDBs, DFIs, and climate funds. The approach, described by the authors as a global mutirão — the Brazilian concept of collective effort — reflects a new philosophy of cooperation and shared responsibility.
As negotiations in Belém enter their final week, the IHLEG report offers a concrete financial framework to bolster the Global South’s calls for fairness and real means of implementation. But whether developed nations will commit to scaling finance on this scale remains uncertain.
“The transformation of climate finance is not just about numbers,” the report concludes. “It is about rebuilding trust, sharing risks, and investing in a future that works for everyone.”