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The 29th Conference of Parties (COP29) to the United Nations Framework Convention on Climate Change (UNFCCC) in Baku, Azerbaijan, has been dubbed ‘the finance COP.’ Country negotiators are engaged in discussions aimed at finalising the New Collective Quantified Goal on climate finance (NCQG), due to be operationalised 2025 onwards. The NCQG is a goal meant for providing developing countries with the finance they require to implement impactful climate action.
On the first day of negotiations, the G77 and China bloc — the largest bloc at the negotiations with 134 developing country members — rejected the ‘substantive framework for a draft negotiating text’ presented by the co-chairs prior to the commencement of COP29.
The substantive framework was a document based on NCQG discussions over the past two years. It attempted to represent the views of different country groups on various aspects of the goal and serve as the basis for further deliberations between countries. However, the G77 and China bloc rejected the text stating that their views were inadequately represented within it.
The co-chairs presented the first iteration of a draft decision text on the NCQG following the first round of talks. This was a new, longer text (34 pages) with far more options and clustering of certain similar positions on elements of the goal. G77 and China stated they are willing to work with the compilation. Specifically, they asked that none of the options provided by them be added to or removed, and only a synthesising of technical aspects be done to streamline the text.
Several options for structure, quantum (amount) and quality of the goal given by developing countries were present in the new text. This included demands for at least US $1.3 trillion annually for developing countries, in line with Article 9 of the Paris Agreement (mandating the ‘provision’ of climate finance from developed to developing countries), addressing disenablers of climate finance, providing arrears for unfulfilled commitments, and ensuring the NCQG is new and additional, predictable, grant-based and concessional, and does not worsen indebtedness.
Party submissions that speak about climate justice within the NCQG also found greater prominence in the new text. This included references to the inclusion of loss and damage along with mitigation and adaptation finance, and stronger language on what does not count as climate finance (such as ODA finance, fossil fuel finance, market rate loans etc.).
The text also included language alluding to Article 2.1(c) of the Paris Agreement (which talks about making global finance flows climate-consistent) — something that developing Parties want to see separated from the immediacy of the NCQG. It also contains an optional section (for negotiators to accept, modify or reject) that frames the NCQG as an investment goal, something that Global South countries are vehemently opposed to — stating that it be kept a provision goal, in line with the obligations of developed countries as outlined in the Paris Agreement and UNFCCC.
A third iteration of the text was introduced later the same day; it was only one page shorter than the last. Negotiators responded asking for further shortening and streamlining to ensure a workable text is ready by Saturday. Countries moved to ‘informal informals’, closed door meetings among negotiators with no access for observers. Developed and developing countries found some common ground as they agreed to discuss select substantive aspects to begin with — how countries can access the finance, how transparency and reporting can be ensured to the highest standard, how can the disenablers that prevent access to climate finance for several countries inform the NCQG, and the aspect of aligning the new goal with ensuring human rights.
Discussions on transparency have so far focused on the Enhanced Transparency Framework (ETF) mentioned in Article 13 of the Paris Agreement. It is expected to be the primary mechanism for tracking the contributions and reporting of climate finance under the new goal (though the scope of the ETF is broader than the NCQG).
To observers of the negotiations, progress seems meagre. The elements of accessibility, transparency and human rights already had a sense of convergence to begin with. It appears that negotiators have opted for grabbing the low-hanging fruit first. But the critical issues of the amount of finance, sources of finance and who should be the contributors to the new goal have not yet seen any mention. These have seen the most divergence between developed and developing country groups and will need a lot of ironing out for a decent outcome at COP29, let alone a truly ambitious one.