COP29 continues in Baku, Azerbaijan, with primary negotiations focused on the new collective quantified goal (NCQG). I attended one of the discussions as an observer, and the dynamics were disheartening.

The UNFCCC shared the ad hoc work program on the NCQG for climate finance in mid-October 2024, which includes various proposals on its quantity and structure. Both developed and developing parties participating in the discussion criticized the document, albeit from contrasting positions. Developing parties highlighted the importance of taking common but differentiated responsibilities (CBDR) as a ground element in the discussions. Developed parties, namely the United States, Canada, and Australia, tagged CBDR as an “unworkable element” of the NCQG. The European Union aligned with other developed parties, asserting that the CBDR principle is applied in a different context compared to the stance of developing parties. Developed parties emphasize capabilities in climate finance mobilization, while developing parties often focus on responsibilities. The needs of vulnerable parties appear to be a derivative outcome of these two principles.

The climate finance agenda is caught at the intersection of science, ethics, and politics. The scientific findings are clear on the outcomes of climate change; what changes only is the severity and cost of inaction. The most challenging issue is aligning ethical considerations with actionable policy frameworks. One of the primary discussions regarding the NCQG is happening around including loss and damage funding to the NCQG. The inclusion of loss and damage to the NCQG is called “unworkable” by the US delegates. But the conversations around the NCQG still miss a very essential part: how should the climate finance be allocated between different pillars?

The answer to this question is naturally explored from a policy aspect. However, the core principles of international environmental law are not only grounded in legal responsibilities but are also deeply rooted in ethical foundations. If we are taking about just transition, the direct and indirect cost of this process should reflect fair shares in responsibilities and commitments. In this regard, climate finance allocation between different pillars should be grounded in the frameworks combining ethical considerations with enabling policy actions. It seems that both developing and developed parties approach this problem predominantly from a domestic or international political setting rather than real policy frameworks.

I had opportunity to participate in different sessions on adaptation and mitigation financing topics. There is a general concern about the current allocation of climate finance among these pillars. Currently around 85% of climate finance goes for mitigation financing, while adaptation financing remains one of the structural challenges across all countries, especially in the developing ones. The problem with adaptation financing is multidimensional, including limited scalability and the non-existence of universal and sound impact assessment tools. According to CPI, adaptation finance doubled between 2018 and 2022; however, annual flows are still at just one-third of the volume required until 2030 in emerging and developing economies.

What should be an ethical framework for climate finance allocation among these pillars? Mitigation efforts provide more measurable outcomes and may attract interest from the private sector. However, data and knowledge gaps hinder the ability to identify, develop, and prepare potential climate adaptation projects. The limited scalability of adaptation measures makes it the responsibility of governments to take a leading role, especially given the very high debt levels in most developing countries. The problem becomes more complicated when loss and damage funding, which addresses the impacts associated with climate change, is added.

Thus, the primary problem still exists not only in the mobilization of climate finance, but also in its allocation. The ethical challenges on the mobilization side are the responsibilities and commitments of stakeholders. On the allocation side, the primary ethical consideration appears to be the most impactful usage of these limited funds. There is not any universal methodology and metrics addressing this problem although different options exist. Therefore, the NCQG issue should not be considered resolved, even if parties agree on the quantified goals. Addressing climate change requires impactful spending and investments across various pillars, with their ratio still residing in the gray area at the intersection of policy, politics, and ethics.