COP29 in Baku: A New Chapter in Climate Finance Negotiations

The first time I visited Baku was in 2018, attending a dear friend’s wedding. I was struck by the city’s dynamic identity as the capital of Azerbaijan’s oil economy—massive buildings owned by petrochemical giants dominated the skyline, and most locals I met were engineers working in the sector. At the time, the Grand Prix was Baku’s major global event.

Today, Baku is again in the international spotlight as COP begins. For the next 10 days, global leaders gather here to discuss one of the most pressing issues of our time: climate finance. Against a backdrop of geopolitical uncertainty, a critical question looms—will we see a breakthrough on the New Collective Quantified Goal (NCQG)?

The Road to a New Climate Finance Goal

The NCQG is intended to replace the outdated $100 billion annual commitment made in 2009, a goal that has since been extended to 2025. Now, as we approach this milestone, there is growing pressure to scale up commitments to match the reality of today’s climate finance needs.

In this uncertain geopolitical environment, India has a unique opportunity to amplify the voice of developing countries, advocating for a fairer, more equitable financial framework that bridges the divide with developed nations.

And one thing is clear: renewables are no longer just a moral choice—they are making strong business sense. The Global South, in particular, is at the forefront of a rapid energy transition, with 61% of its nations reaching a critical tipping point: solar and wind now account for more than 5% of their total energy generation. Countries such as Brazil, Namibia, Morroco, Mexico are already generating a greater share of power from renewables than some developed countries. By 2030, the Global South could be matching or even outpacing the Global North in renewable capacity.

Key Discussion Points for Developing Nations at COP

From my reading and conversations on the topic, here are five core issues that will shape the discussions and positions of developing countries at COP:

1. How Much Should Be Contributed? India has proposed that NCQG should entail at least $1 trillion in annual finance flows from developed to developing countries. The IHLEG report provides a clear call to action, emphasising that meeting climate goals requires mobilising an unprecedented $1 trillion annually by 2030 for developing countries and $2.4 trillion globally.
2. Who Should Contribute? Developed countries, including the EU, argue that larger developing economies with substantial emissions—such as China, the UAE, Qatar, and Saudi Arabia—should also contribute to climate finance. In contrast, developing nations highlight the principle of “common but differentiated responsibilities,” asserting that historically high emitters should lead on financing.
3. What Counts as Climate Finance? A significant debate revolves around what types of financial flows should be counted as climate finance. Developing countries emphasise that grants and concessional finance (rather than debt) should qualify, as they prevent increased financial burdens. Meanwhile, developed countries advocate for a broader inclusion of private sector mobilization, arguing it will help meet the funding targets. Options like carbon markets, debt-for-climate swaps, and international taxes on aviation or shipping are also being discussed as supplementary funding sources.
4. Who Should Receive the Funding? There is debate over prioritisation. Should funds primarily support the most vulnerable nations, such as least-developed countries (LDCs) and small island states? Developed countries generally favor a targeted approach, but low-income nations, in general, argue for a broader allocation to ensure equity and inclusivity.
5. What Activities Should Be Covered? Historically, climate finance has favored mitigation, even though many developing countries prioritize adaptation due to their climate vulnerability. Recently, there has been a push to secure separate, predictable funding for loss and damage, though integrating this need without detracting from adaptation finance remains a challenging issue.

There is much at stake, and the discussions here will shape not only climate finance but also the pace and nature of the global energy transition. As we watch the debate unfold, the hope is that a fair, ambitious, and actionable climate finance goal emerges to empower developing countries, drive impactful climate solutions, and truly address the scale of the climate crisis.

Sources

https://rmi.org/insight/powering-up-the-global-south/

https://www.globalinfrafacility.org/knowledge/new-report-independent-high-level-expert-group-climate-finance

https://www.carbonbrief.org/cop29-what-is-the-new-collective-quantified-goal-on-climate-finance/