BAKU, Azerbaijan — This year’s global climate talks are all about the money needed to prevent the effects of global warming from accelerating.
Easier said than done.
The nearly 200 countries represented here in Azerbaijan need to agree over the coming week how much money they can deliver every year. Halfway through the talks, they remain far apart — anywhere from about $100 billion to $2 trillion in potential pledges annually.
It’s largely a political battle between rich and poor countries. Wealthy nations that have long relied on polluting energy sources have the money to move away from them. Poorer ones don’t. But if they invest in oil, gas and coal as they develop, instead of cleaner alternatives, global emissions will continue to rise — hurting everyone.
German climate negotiator Jochen Flasbarth summed it up like this: “Anyone who can’t muster the strength for a constructive effort here is really playing with fire on an already burning globe.”
Add to that the complications of war, tight budgets and turbulence from the U.S. presidential election, and the stage is set for a messy standoff at COP29. Negotiators made little progress during the first week of the summit.
Here’s a guide to the tense finance talks:
How much money are we talking about?
No one can agree on the answer — and the clock is ticking for negotiators to break the impasse.
Wealthy countries like the U.S. and many European nations aim to keep the global target for public finance and the private investments it encourages from rising too far above its current level — $100 billion annually.
If that’s the floor, the ceiling is miles higher. A bloc of 134 developing countries say the yearly target beginning in 2026 should be $1.3 trillion, at least.
The latest report from a U.N.-backed expert group says the $100 billion target for public finance-related flows needs to triple by 2030, and overall money, including private capital, needs to reach $1 trillion to help developing countries (minus China) meet their growing energy needs with cleaner sources of power.
Rich countries have so far declined to offer a dollar figure, saying only that it should be more than the current $100 billion goal.
That’s less than 10 percent of what poorer countries are asking for.
Europeans in particular cite strained public accounts as an impediment to what they can sign up to in Baku. That matters even more if the U.S. stops providing climate money under President-elect Donald Trump, leaving the EU as the largest remaining wealthy donor. Trump has called the Paris Agreement, which is driving these talks, a rip-off and said he would leave it.
But according to one senior executive at a climate finance institution who was granted anonymity to speak candidly, rich countries had proved during the pandemic and when responding to the war in Ukraine that they can “mobilize to find the money for other things.”
Who pays?
This is another point of contention.
“You can’t just drop a [dollar] figure without knowing what you’re negotiating about,” said a French diplomat, who was granted anonymity to discuss the talks.
The U.S. and other wealthy nations want the donor group to be larger than what other countries are asking for. That would keep the cost down for each donor nation. But there’s a bigger motivation: moving China into the giving class of countries. (China is currently the world’s largest source of climate pollution, followed by the U.S., and its economy has been growing at breakneck speed — until recently).
Negotiators from Western nations argue that China and rich Gulf states such as Saudi Arabia and the United Arab Emirates should step forward with financial pledges, because they are “capable of contributing.” But those countries are not part of the official donor group under the terms of the 1992 U.N. climate treaty.
China says it already helps developing countries in various ways, including through funding. Chinese officials said this week they’ve provided developing countries with around $25 billion (177 billion yuan) in total since 2016. It’s willing to continue that largesse — in part because strengthening the economies of those nations could lead them to buy China-made solar panels and electric vehicles.
But China has fought to retain its standing as a developing country — a position that has complicated negotiations. Li Shuo, a climate expert with the New York-based Asia Society Policy Institute, a think tank, said one option for compromise might be an agreement that invites countries like China to “opt in” as donors.
Until developed countries are sure more countries will pay up, they don’t want to agree to a dollar amount.
What’s counted as climate finance?
There’s no shared definition for this — so it’s up for debate.
Developing countries want the target to be funded by governments, rather than less accountable sources such as corporations and voluntary carbon markets. That could help poorer nations receive more money in grants, which do not need to be repaid. Wealthy donors and multilateral development banks often prefer to use loans, which can saddle nations with debt and interest payments.
Developing countries also want more transparency about where the money comes from, so they know it’s new money for climate, rather than rebranded funding from another pot, like humanitarian aid.
“We also don’t expect loans at market rate to be called climate finance when we need grants,” Yusuf Mkungula, secretary of natural resources for Malawi, who chairs the least-developed country group, told reporters.
Rich countries have suggested two targets. First, an inner layer that reflects public money and the investments they draw in. A much larger outer layer, they say, should count all financial flows, including private capital. And yes, they are calling it an onion.
The problem, critics of that approach argue, is who holds the private sector accountable for delivering? And how do you track the money?
Who gets the money?
Technically all developing countries can receive climate finance. But even if the money is massively stepped up, there are questions over whether it will actually benefit all the countries that need it.
The EU wants the finance goal to include an assurance that small island nations and other extremely vulnerable countries would get a major share.
Small islands, unsurprisingly, agree. They want $39 billion each year just for their 39-member bloc known as AOSIS. The current goal doesn’t set a floor for allocations to different country groupings, with the small islands currently only getting around 3 percent of the $100 billion.
“If this finance doesn’t materialize, developing countries have less support to push the limits on emission reductions, and this is really important for the overall goal of limiting warming to 1.5” degrees Celsius, Cedric Schuster, Samoa’s minister for natural resources and environment, told reporters, referring to the Paris goal of limiting rising temperatures to 1.5 degrees Celsius since preindustrial times.
But accessing that money could be challenging. Wealthy countries are often hesitant to send money to nations with weak government oversight. Many want the COP29 deal to also provide guidance on this obstacle.
What do they agree on?
Just one thing — that there needs to be a new funding target by the end of this week.
Before next year’s milestone COP30 conference in Brazil, all governments are supposed to present new climate plans, and developing countries want to know how much money they’ll have to work with before committing to ambitious targets.
“The success of COP30 depends on the success of COP29,” said Ana Toni, Brazil’s state secretary for climate change. “We do have ambitious goals as developing countries. What we need is a signal that we’ll have the means of implementing the ambitions that we have.”
Without more ambitious climate targets, the world faces catastrophic warming of at least 2.6 degrees Celsius, according to a recent U.N. report.
Is there a Trump effect?
Biden administration officials say they want to ink a deal before handing the reins to Trump. But their position on climate finance has been less generous than their European partners.
As the world’s largest economy, the U.S. has provided more than $11 billion this year for climate programs in developing nations, according to a White House fact sheet. The EU, whose economy is two-thirds the size of the U.S., provided over $30 billion in 2023.
Trump’s victory could put pressure on the EU to deliver even more money.
“We cannot give a privileged position for the developed countries to be running away from commitments that they have made … if the U.S. election will bring someone who doesn’t believe in climate change,” said an African negotiator, also granted anonymity to discuss the sensitive negotiations.
The idea of paying America’s arrears irks Europeans, Canadians and other donor countries.
That is feeding a debate about when the new finance target should be fulfilled. Poorer countries say it must be 2030. The EU has been asking for 2035 — which coincidentally would give the U.S. a chance to hit the target under a different president.
As the conference reached its halfway point Saturday night, negotiators were still wrangling over as many as 13 versions of the final agreement. The standoff showed no signs of abating as environment ministers resumed talks Monday.
