Day3: Financial talks at COP29 reveal challenges, new emission pledges

The third day of the COP29 climate summit saw intense debates and negotiations around establishing a new financial target called the New Collective Quantified Goal (NCQG), as the current $100 billion annual commitment nears its 2025 expiration.

The lack of decisive leadership in the diplomatic discussions left many stakeholders concerned about the slow progress. Here’s a wrap-up of Day 3’s main events:

Key points

1. Draft Text Circulation Raises Concerns: The first draft of the NCQG text was circulated among the delegates, sparking extensive discussions. The text is filled with options and brackets, reflecting differing positions. The negotiating schedule was extended into the evening as countries grappled with issues like the total quantum of finance, sources, and disbursement mechanisms.

2. High Ambition Coalition (HAC) Calls for Leadership: The High Ambition Coalition (HAC), including Canada, France, and the Netherlands, urged developed countries to fulfill their financial commitments. “Developed countries must lead and meet existing finance commitments,” the coalition stressed, highlighting the need for strong financial backing to achieve climate goals.

3. Brazil Announces New Emission Reduction Target: Brazil pledged to cut its emissions by 59% to 67% by 2035, focusing on adaptation measures to address pressing climate impacts like Amazon deforestation.

Negotiations on NCQG

The NCQG negotiations are critical to set a new financial target post-2025. The proposed NCQG is expected to mobilize at least $1 trillion per year, a significant increase from the current $100 billion target. The focus is on creating a framework to support developing countries’ needs through concessional finance, including low-interest loans and grants.

Arunabha Ghosh, CEO of the Council on Energy, Environment and Water (CEEW), commented on the draft's complexity, saying:

“The lengthy NCQG text with many brackets and options shows various Parties maintaining their positions. More work is needed to agree on key NCQG aspects like quantum, quality, and timelines. Ultimately, the NCQG should align with developing countries’ needs and amount to at least USD 1 trillion per year, primarily in grants and concessional finance.”

Ghosh emphasized that climate finance needs to be “concessional, catalytic, convenient, and credible,” highlighting the importance of a well-structured financial mechanism to inspire confidence among member states and private investors.

Prof. Purnamita Dasgupta, Chair of Environmental Economics at the Institute of Economic Growth, highlighted the draft's critical elements:

“The end game is a collective goal of unprecedented climate action. The imperative is to set out a package that addresses not just the finance amount, but bundles mechanisms of disbursement, transparency frameworks, milestone maps, equity principles, and benchmarks for mitigation, adaptation, and loss and damage.”

Dasgupta warned that without a comprehensive framework with robust public finance commitments and addressing existing arrears, the new target might face similar challenges to the previous $100 billion pledge, which many view as inadequate.

Challenges ahead, bridging financial Gap

The discussions reveal a stark division between developed and developing nations. Developing countries have stressed the need for significant financial commitments, arguing that without support, they cannot implement mitigation and adaptation strategies. The emphasis has been on grants rather than loans to avoid increasing their debt burdens.

The High Ambition Coalition’s statement underscores frustration with the slow negotiations and the need for developed countries to increase their contributions. As negotiations continue, a pressing question is how to ensure transparency and accountability in fund disbursement and address previous commitment arrears.

After three days of negotiations, COP29 delegates face pressure to find a middle ground on the NCQG draft text. As discussions intensify, the focus will be on aligning the parties’ interests to establish a comprehensive and effective financial framework. The coming days will be crucial in determining whether the summit can achieve a breakthrough in climate finance, paving the way for stronger global climate action post-2025.

Day 3 of COP29 highlighted the challenges in bridging financial divides and the need for renewed commitment and leadership to push through the impasse. The world watches as leaders negotiate the terms that will define climate action financing for years to come.

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