Author: Ummamah Shah

The 29th Conference of the Parties (COP29) in Baku marked a pivotal moment in global climate finance discussions, particularly surrounding the New Collective Quantified Goal (NCQG). This ambitious framework seeks to define climate finance commitments post-2025, building on the $100 billion annual goal agreed upon in Copenhagen over a decade ago. While COP29’s NCQG negotiations represented progress, they also highlighted the significant challenges of balancing ambition with feasibility.

Developing vs. Developed Countries: A Divide in Expectations

The NCQG negotiations highlighted a stark divide between the expectations of developing and developed nations:

1. Developing Countries (G77 and China):
   • Advocated for an ambitious climate finance goal of $1.3 trillion annually by 2035.
   • Emphasized the need for grant-based financing with no conditionalities to ensure accessibility for vulnerable nations.
   • Called for specific allocations for adaptation and loss and damage while urging adherence to the principle of Common But Differentiated Responsibilities (CBDR).
2. Developed Countries:
   • Acknowledged the necessity of scaling up climate finance to an ambitious yet realistic quantum
   • Proposed expanding the contributor base to include emerging economies.
   • Highlighted the importance of a multi-layered investment approach, combining public, private, and multilateral funding.
   • Expressed concerns about the complexity of the negotiation text and the timeline for finalizing agreements.

Key Negotiation Challenges

The NCQG discussions were characterized by procedural and substantive hurdles:

1. Text Complexity:
   • The current draft spans over 30 pages, with significant duplication of ideas and inconsistent phrasing.
   • Streamlining the text remains a priority to facilitate consensus.
2. Contentious Issues:
   • Quantum of Finance: The divergence between the $1.3 trillion demand and the $300 billion pledge.
   • Contributor Base: Debates over which countries should provide finance and in what proportions.
   • Access Mechanisms: Ensuring timely and equitable access for Least Developed Countries (LDCs) and Small Island Developing States (SIDS).
   • Transparency Frameworks: Balancing accountability with simplicity.
3. Procedural Demands:
   • Developing countries requested extended negotiation sessions and synthesis of the text, while developed nations preferred quicker progress to involve ministers.

COP29 Outcomes: A Floor, Not a Ceiling

Despite the challenges, COP29 produced measurable outcomes:

• A $300 billion annual pledge by 2035: While this figure falls significantly short of the $1.3 trillion needed, it provides a foundation for scaling ambition.
• “Baku to Belém Roadmap to $1.3T”: A strategy to guide incremental increases in climate finance leading up to COP30.
• Commitments to triple UNFCCC climate fund outflows to at least $5.2 billion per year by 2030.
• Expectations for multilateral development banks to deliver $120 billion annually by 2030.

Critical Perspectives

The $300 billion target, though a step forward, raises important questions:

• Ambition vs. Urgency: The Intergovernmental Panel on Climate Change (IPCC) stresses the need for rapid and substantial climate action. Yet, the current quantum does not reflect the urgency required to address the climate crisis.
• Finance Quality: There is limited specificity on improving access and balancing finance for mitigation and adaptation. Developing countries argue for clearer mechanisms and equitable distribution.
• Public-Private Mobilization: Historic ratios of public to private capital mobilization (e.g., $1 of public to $0.22 of private finance) highlight the gap in leveraging private investments.

Future Pathways

The journey to achieving climate finance goals is far from over. Looking ahead:

1. The “Baku to Belém” process must bridge divides and foster trust between developed and developing nations.
2. COP30 will play a critical role in refining mechanisms to ensure efficient, accessible, and scalable finance.
3. Increased attention is needed to support LDCs and SIDS, which are disproportionately vulnerable to climate impacts.
4. Ambitious targets must be integrated into the next round of Nationally Determined Contributions (NDCs).

Final Thoughts

The NCQG negotiations at COP29 offered both hope and frustration. While the $300 billion goal represents progress, it must be seen as a baseline for further ambition. Collaboration, innovation, and sustained advocacy will be essential to meet the climate finance needs of developing countries. As we move toward COP30, the global community must focus on not just meeting targets but exceeding them—ensuring a just and equitable transition to a sustainable future for all.

The Pakistan Pavilion at COP29 was a pivotal venue for discussing climate resilience, energy transition, and the importance of climate finance. On November 14th, 2024, during the session ‘Acumen’s Climate Action Fund for Pakistan’, global leaders gathered to discuss how private sector solutions, especially in agriculture and agribusiness, could address Pakistan’s climate vulnerability. The event featured influential speakers such as Muhammad Aurangzeb, Pakistan’s finance minister, Jacqueline Novogratz, Founder of Acumen, Henry Gonzalez, Chief Investment Officer of the Green Climate Fund (GCF), and Kristen Sarri from USAID, who all emphasized the urgent need for innovative climate action in frontier markets like Pakistan.

Dr. Ayesha, Pakistan’s Country Director at Acumen, announced the launch of the Acumen Climate Action Pakistan Fund (ACAP), the country’s first climate fund. The fund is designed to improve climate resilience for vulnerable agricultural communities, particularly smallholder farmers who make up 90% of the country’s agricultural workforce. The fund aims to provide patient capital to agribusinesses, building climate adaptation solutions to mitigate the impacts of extreme weather events and rising temperatures. This initiative, with a $80 million goal, is supported by technical assistance (of $10 million) from the Green Climate Fund (GCF) and partnerships with USAID. It is expected to directly benefit 13 million lives, including farmers, by providing critical resources and financial support to increase resilience to climate change.

Henry Gonzalez from the GCF highlighted the international funding body’s role in supporting such ventures. Over the past years, GCF has invested more than $13 billion into over 240 projects worldwide, with a focus on strengthening the resilience of vulnerable countries. The GCF’s investment in Pakistan includes the ACAP Fund, marking a significant milestone in Pakistan’s climate finance journey. The GCF aims to increase its financial mobilization to $50 billion by 2030, involving more private sector partnerships to address the structural solutions needed for climate adaptation.

A key theme during this session was the collaboration between public and private sectors to leverage financial resources for climate action. Kristen Sarri, Acting Chief Climate Officer at USAID, discussed how USAID’s Climate Finance for Development Accelerator (CFDA) is accelerating climate investments. With a target of mobilizing $2.5 billion by 2030, CFDA’s initiative aims to connect investors, donors, and communities to generate large-scale capital flows for climate projects in countries like Pakistan.

The dialogue between Jacqueline Novogratz and Pakistan’s Finance Minister also explored the catalytic role of private sector investments in Pakistan’s energy transition and climate resilience efforts. As one of the top ten countries most vulnerable to climate change, Pakistan faces significant challenges in adapting to environmental shocks, with agriculture being particularly susceptible. However, through strategic investments, including solar irrigation systems and innovative agribusiness models, the country can not only build resilience but also unlock sustainable economic opportunities for the private sector to capitalize on.

In line with these efforts, the ‘Catalyzing Pakistan’s Energy Transition’ session on November 15, 2024, focused on transforming Pakistan’s energy sector, which is heavily reliant on fossil fuels. Pakistan’s energy sector struggles with load shedding, high capacity costs from costly power purchase agreements, and circular debt, which hampers efficiency and financial stability. Dr. Khalid Waleed from SDPI highlighted the urgent need to transition from coal to renewable energy in order to reduce reliance on imported fossil fuels and mitigate environmental harm. Furthermore, Pakistan’s carbon-intensive energy grid could face significant consequences under the European Union’s Carbon Border Adjustment Mechanism (CBAM). This policy imposes carbon tariffs on imports from countries with high emissions, meaning that Pakistan’s exports could become less competitive in the global market unless the country reduces its reliance on fossil fuels. Pakistan’s grid is 1.4 times more carbon-intensive than the EU’s, putting key sectors like cement, iron & steel, and fertilizers at risk of higher tariffs. To address these issues, Pakistan must accelerate its energy transition, focusing on export-led growth, renewable energy adoption, and reducing reliance on carbon-heavy industries.

Experts, including Dr. Rishikesh Bhandary from Boston University, discussed the early retirement of coal plants as a key strategy, which could also generate carbon credits. These credits, through the global carbon market, could fund clean energy projects, helping Pakistan meet its Paris Agreement goals. This presents an opportunity for Pakistan to reduce its carbon footprint and embrace a sustainable energy future. The country’s young fleet of coal plants, which continue to incur high operational costs due to underutilization, could be repurposed for renewable energy investments. This strategy aligns with the broader regional goal of reducing emissions, as seen in the Green Climate Fund’s support for initiatives in South Asia. Pakistan’s growing renewable energy potential, coupled with carbon credit incentives, offers a unique opportunity to integrate climate action with economic development.

Sardar from the National Energy Efficiency and Conservation Authority (NEECA) introduced the Prime Minister’s Fan Replacement Program, aimed at replacing outdated, energy-inefficient fans with high-efficiency models in both industrial and residential sectors. Fans are major electricity consumers, especially during peak summer months, and upgrading to more efficient models will help reduce consumption and alleviate pressure on the national grid. The program features an innovative On-Bill Financing Mechanism, allowing consumers to pay for new fans through their electricity bills. This trade-off, where payments previously spent on high energy bills are redirected to repaying the loan for fans, offers long-term benefits. The initiative aligns with NEECA’s 2030 goals of saving 9 MTOE in energy and reducing 35 MTCO2 in emissions, contributing to significant financial and environmental benefits for Pakistan’s energy efficiency targets.

A way forward includes strategies like the ‘Just Energy Transition Working Group’, the development of a ‘National Integrated Energy-Economics Plan’, and ‘P2X Alliances’ to drive industrial growth powered by renewable energy. By adopting cleaner energy solutions and reducing carbon emissions, Pakistan can not only enhance its global competitiveness but also contribute to long-term economic sustainability.

Ultimately, Pakistan’s climate agenda at COP29 underscored the interconnectedness of climate finance, energy transition, and resilience building. The discussions highlighted the country’s potential to lead the way in climate adaptation and sustainable development, while addressing the urgent challenges of energy inefficiency and environmental degradation. Through continued partnerships, financial innovations, and a focus on long-term solutions, Pakistan can pave the way for a more resilient, sustainable, and climate-resilient future.

The negotiations around the New Collective Quantified Goal (NCQG) on climate finance at COP29 underscore the intricate balancing act required to address global climate needs equitably. As countries debate ambitious targets, one thing is clear: the NCQG must be more than a number. It must be a transformative framework that reflects the realities of climate vulnerabilities and developmental aspirations of developing countries.

Bridging Climate and Development

Developing nations, particularly those represented by the G77 and China, emphasize that the NCQG must align with the principles of equity and Common but Differentiated Responsibilities (CBDR). With a proposed target of $1.3 trillion annually, the NCQG aspires to address the scale of needs. However, it’s not just the quantum but the quality of finance that matters. Many developing countries, including AOSIS and LDCs, call for grant-based financing to avoid exacerbating debt burdens. Climate finance must not force nations to choose between climate action and economic development.

Countries like Kenya highlight the inadequacies of previous goals, such as the $100 billion commitment, which fell short in addressing transparency, accessibility, and double-counting issues. They stress that NCQG should be additive, predictable, and grant-based, ensuring climate finance does not perpetuate historical inequities or foster dependency on non-concessional instruments.

Addressing Loss and Damage

A recurring theme in these discussions is the inclusion of loss and damage. Vulnerable nations such as Nepal and Bangladesh, facing devastating climate impacts like floods and glacial melts, emphasize the importance of grant-based finance specifically allocated to loss and damage. These funds must be additional and distinct, reflecting the unique challenges posed by irreversible climate impacts.

The debate on regional allocation floors also gains traction. Small Island Developing States (SIDS), with their unique vulnerabilities, call for specific minimum allocations, arguing that lumping all developing nations under a single target risks underrepresenting the dire needs of high-risk groups.

Transparency and Accountability

Transparency remains a cornerstone of the NCQG framework. Past experiences have shown that the lack of accountability in climate finance flows erodes trust. Developed nations must commit to robust annual progress updates and ensure that all finance is clearly delineated between grants, loans, and other instruments. Countries like Paraguay and the Gambia advocate for frameworks that ensure grant-based finance is prioritized, with no room for mechanisms that perpetuate fossil fuel dependencies.

Expanding the Contributor Base: A Contentious Debate

One of the most polarizing issues is the question of expanding the contributor base. Developed nations, led by the EU and the US, push for broader participation. However, many developing countries staunchly oppose this, arguing it undermines CBDR principles enshrined in the Paris Agreement. Countries like Saudi Arabia and India caution against using NCQG to dilute historical responsibilities or shift burdens onto emerging economies.

A Path Forward

The NCQG’s success hinges on its ability to strike a balance: ambitious enough to meet global climate goals, yet equitable in its distribution and mechanisms. This means addressing critical thematic areas—mitigation, adaptation, and loss and damage—while ensuring accessibility, transparency, and justice for vulnerable nations.

The road to finalizing the NCQG at COP29 is fraught with challenges, but it offers an opportunity to set a precedent. By prioritizing inclusivity, equity, and ambition, the NCQG can become a cornerstone of climate finance that genuinely supports sustainable development and resilience in the face of an escalating climate crisis.

As negotiations continue, all eyes are on how nations will bridge the gaps in ambition and equity, setting the tone for global climate action in the critical decade ahead.

Week one at COP29 in Baku has been a whirlwind of excitement, a touch of anxiety, and immense anticipation. Our journey began with a delay—our flight from Milan to Baku was set back by two hours, leaving everyone in the Duke delegation a bit sleep-deprived and exhausted. But, on arrival, greeted by massive COP29 signs throughout Heydar Aliyev International Airport and around the city, it truly felt like our months of preparation in the practicum class were finally taking shape. I have always been curious about the organizational side of one of the world’s largest climate conferences. Last year in Dubai, over 85,000 attendees were present, which made me wonder how Baku would manage the influx of visitors. The logistical management was, surprisingly, smooth. With COP29 shuttles readily available and efficient public transportation options, arriving at the accommodations was pretty easy and convenient – a promising start for the week ahead.

My first day kicked off early, heading to the venue at 5 a.m. The enthusiasm of arriving to my very first COP only grew as I entered the pavilion area. Each country’s booth was alive with colors, traditions, and music, creating a lively blend of culture within this climate-focused space. Indonesia opened its pavilion with a traditional dance, and Uzbekistan’s station offered guests tea and snacks. Many attendees proudly wore their traditional attire, creating a rich, colorful tapestry of global representation throughout the conference. I was especially moved when I heard an indigenous group performing a traditional song about climate and heritage. This cultural immersion was beautiful to witness, yet also a grounding reminder of the intersection of climate change with indigenous struggles and the resilience of those most vulnerable.

Given my role in the class mock debate, representing China’s delegation, I naturally gravitated toward the Chinese pavilion to observe its opening ceremony. The event featured talking points that echoed many of our team’s earlier discussions, with a focus on China’s leadership in renewable energy investments and its support for developing nations through initiatives like South-South Cooperation. Liu Zhenmin, China’s new special envoy for climate change, gave a powerful speech on fostering collaboration toward shared climate goals, which felt especially resonant as we prepared to make meaningful connections with representatives from other countries.

One standout moment of the day was learning about Incofin’s Climate-Smart Microfinance Fund. Highlighted by Belgium’s Prime Minister, this fund addresses the critical need for private sector financing in climate adaptation, often overlooked in favor of mitigation. Incofin’s fund targets small and micro-businesses in emerging markets that require support to adapt and scale. The fund’s CEO emphasized its mission to bridge the capital gap for these businesses, showcasing how initiatives like this can catalyze a climate-resilient economy and ensure lasting impact in vulnerable communities. Conversations like these are especially important as the negotiations around the New Collective Quantified Goal (NCQG) start this week. The opportunity to observe in these sessions is invaluable, especially as the role of public and private finance takes center stage in addressing both mitigation, adaptation and loss and damage needs.