COP29: Options are becoming clearer for the global finance agreement

Discussions at COP29 in Baku are advancing on the climate finance goal, with three options on the table to determine contributions from wealthy countries to developing nations.

Share:

The formulation of the climate finance goal for developing countries, to be adopted in November at COP29 in Baku, is becoming slightly clearer according to a draft agreement published on Tuesday. However, the amount required from wealthy countries remains to be defined.

Three formulation options are now on the table in this text drafted by Egypt and Australia, designated as co-facilitators seeking to synthesize years of North-South disputes. The first option favors exclusive aid from developed countries, while the second proposes a sharing of responsibilities that includes wealthy emerging countries. The third option combines both approaches.

These proposals include several possibilities for quantification and distribution of the billions of dollars expected to establish this new global finance goal for climate, referred to by its English acronym NCQG (New Collective Quantified Goal). This goal is expected to be approved at the 29th United Nations climate conference, which will take place from November 11 to 22 under Azerbaijani presidency.

Options for Climate Finance Formulation

The first option imposes on wealthy countries, recognized as historically responsible for climate change in the UN Climate Convention, a commitment to provide an annual amount ranging from a minimum of $100 billion to $2 trillion over a yet-to-be-determined period. Proposed periods include 2025-2030 or until 2035.

The second approach proposes setting the NCQG “onion-style,” with several layers. It first envisions a total funding goal for developing countries to be achieved by 2035 or 2040, funded by all public and private sources, national and international. Subsequently, sub-goals would specifically require developed countries to contribute more.

Implications and Challenges of Proposed Options

However, the second option does not provide any indication of the additional effort that wealthy countries would be willing to accept, leaving room for interpretation regarding actual contributions. The third option, less detailed, would aim to combine elements from the first two, seeking a balance between exclusive aid and shared responsibilities.

According to Ialtchine Rafiev, Azerbaijan’s chief negotiator, the financial needs for public funding are in the order of trillions of dollars, with a realistic mobilization estimated at several hundred billion. These remarks were made following two days of “pre-COP” meetings in Baku, highlighting the importance of an ambitious yet achievable agreement.

History and Objectives of Climate Finance

The climate finance goal under discussion replaces the one set in 2009, which stipulated that wealthy countries provide $100 billion in annual aid to developing countries. This amount was difficult to achieve by 2022, underscoring the need for a new, more ambitious, and better-structured agreement.

Current discussions aim to define a stronger and fairer financial framework capable of effectively addressing the growing needs of developing countries in the face of climate challenges. COP29 represents a crucial step in establishing this goal, with intense negotiations among stakeholders.

Nearly USD92bn will be invested by major American and international groups in new data centres and energy infrastructure, responding to the surge in electricity demand linked to the rise of artificial intelligence.
Nouakchott has endured lengthy power interruptions for several weeks, highlighting the financial and technical limits of the Mauritanian Electricity Company as Mauritania aims to widen access and green its mix by 2030.
Between 2015 and 2024, four multilateral climate funds committed nearly eight bn USD to clean energy, attracting private capital through concessional terms while Africa and Asia absorbed more than half of the volume.
The Global Energy Policies Hub shows that strategic reserves, gas obligations, cybersecurity and critical-mineral policies are expanding rapidly, lifting oil coverage to 98 % of world imports.
According to a report by Ember, the Chinese government’s appliance trade-in campaign could double residential air-conditioner efficiency gains in 2025 and trim up to USD943mn from household electricity spending this year.
Washington is examining sectoral taxes on polysilicon and drones, two supply chains dominated by China, after triggering Section 232 to measure industrial dependency risks.
The 2025-2034 development plan presented by Terna includes strengthening Sicily’s grid, new interconnections, and major projects to support the region’s growing renewable energy capacity.
Terna and NPC Ukrenergo have concluded a three-year partnership in Rome aimed at strengthening the integration of the Ukrainian grid into the pan-European system, with an in-depth exchange of technological and regulatory expertise.
GE Vernova has secured a major contract to modernise the Kühmoos substation in Germany, enhancing grid reliability and integration capacity for power flows between Germany, France and Switzerland.
The National Energy System Operator forecasts electricity demand to rise to 785 TWh by 2050, underlining the need to modernise grids and integrate more clean energy to support the UK’s energy transition.
Terna has signed a guarantee agreement with SACE and the European Investment Bank to finance the Adriatic Link project, totalling approximately €1bn ($1.08bn) and validated as a major transaction under Italian regulations.
India unveils a series of reforms on oil and gas contracts, introducing a fiscal stability clause to enhance the sector’s attractiveness for foreign companies and boost its growth ambitions in upstream energy.
The European Commission is launching a special fund of EUR2.3bn ($2.5bn) to boost Ukraine’s reconstruction and attract private capital to the energy and infrastructure sectors.
Asia dominated global new renewable energy capacity in 2024 with 71% of installations, while Africa recorded limited growth of only 7.2%, according to the latest annual report from IRENA.
US President Donald Trump's One Big Beautiful Bill Act dramatically changes energy investment rules, imposing restrictions on renewables while favouring hydrocarbons, according to a recent report by consultancy firm Wood Mackenzie.
On July 8, 2025, the Senate validated the Gremillet bill, aimed at structuring France's energy transition with clear objectives for nuclear power, renewable energies, and energy renovation.
Brazil, Mexico, Argentina, Colombia, Chile, and Peru significantly increase renewable electricity production, reaching nearly 70% of the regional electricity mix, according to a recent Wood Mackenzie study on Latin America's energy sector.
The Canadian government announces an investment of more than $40mn to fund 13 energy projects led by Indigenous communities across the country, aiming to improve energy efficiency and increase local renewable energy use.
The German Ministry of Economy plans to significantly expand aid aimed at reducing industrial electricity costs, increasing eligible companies from 350 to 2,200, at an estimated cost of €4bn ($4.7bn).
A major electricity blackout paralyzed large parts of the Czech Republic, interrupting transport and essential networks, raising immediate economic concerns, and highlighting the vulnerability of energy infrastructures to unforeseen technical incidents.