At COP29 in Baku, developed-country parties such as the EU, the US and Japan agreed to help raise “at least” $300bn a year by 2035 for climate action in developing countries.
The goal was welcomed by global-north leaders and presented as a “tripling” of the previous target for international climate finance.
Yet it faced a strong backlash from many developing countries, with some branding it a “joke” and “betrayal”.
Closer analysis of the goal and climate-finance data helps to explain this response.
Analysts have shown that the target is achievable with virtually “no additional budgetary effort” from developed countries, beyond already-committed increases.
A combination of pre-existing national pledges and multilateral development bank (MDB) plans will bring climate finance up to around $200bn a year by the end of this decade.
Counting money already being distributed by emerging economies such as China – as “encouraged” under the new goal – could bring the total to $265bn by 2030. This could mean the target is well on its way to being met by that date, with minimal extra effort.
Moreover, as activists and academics have noted, the $300bn target does not account for inflation. When this is factored in, its “real” value could shrink by around a quarter.
The new target has emerged against a backdrop of financial strain and political uncertainty in developed countries.
At the same time, developing countries have stressed that they need climate finance to reach the “trillions of dollars” needed to cut emissions and protect themselves from climate change.
This article looks at three ways in which the $300bn goal could be met with little extra financial effort by developed countries – and provide fewer benefits for developing countries than the figure suggests.
- Much of the goal will be met with ‘no additional effort’
- Developing-country contributions could cover part of the goal
- Inflation wipes out much of the increase in climate finance
1. Much of the goal will be met with ‘no additional effort’
The $300bn climate-finance target agreed at COP29 in Baku will be met with finance from a “wide variety of sources”, largely coming from developed countries.
This part of the “new collective quantified goal” (NCQG) for climate finance is likely to be made up of public finance provided directly by governments, as well as money from MDBs, specialised climate funds and private finance “mobilised” by public investments.
The wording of the $300bn goal frames it as an extension of the $100bn target. This was the amount that developed countries agreed in 2009 to raise for developing countries annually by 2020 – a goal that was extended through to 2025 by the Paris Agreement.
Beyond the central goal of $300bn, the NCQG also includes a much broader “aspirational” target of $1.3tn a year in climate finance by 2035.
However, this is harder to assess, as the text of the deal is vague about who will be responsible for raising the funds, which could include various sources that are beyond the jurisdiction of the UN climate process.
Developed countries and MDBs had already committed to raising their climate-finance contributions before a deal was struck at COP29, as noted in a joint analysis by the Natural Resources Defense Council (NRDC), ODI, Germanwatch and ECCO.
The collective impact of these pre-existing commitments can be seen below, with climate finance from developed countries set to increase from $115.9bn in 2022 – the most recent year for which data is available – to $197bn in 2030. This can be seen in the chart below, which does not account for inflation. (See: Inflation wipes out much of the increase in climate finance.)
The expected increase between 2022 and 2030 comes from a few different sources.
The analysts calculated that climate finance distributed “bilaterally” – as grants or loans via overseas aid and other public funding – was already expected to increase $6.6bn annually by 2025, based on existing pledges, bringing the total to $50bn. (The chart above assumes that bilateral finance remains at this level up to 2030.)
They also estimated that existing pledges and reforms at specialised climate funds, such as the Green Climate Fund and Climate Investment Funds, would add another $1.3bn per year by 2030. This would bring their contribution to $5bn.
The biggest increase that was already locked in before the COP29 deal was a pledge by MDBs – which provide 40% of existing climate finance – to increase their contributions further.
A joint statement by the World Bank, the Asian Development Bank and others in the first week of COP29 committed to raising $120bn of climate finance per year by 2030 for low- and middle-income countries. Of this, $84bn can be attributed to developed countries, based on their shareholdings in these banks.
On top of this, the climate-finance analysts estimated that $58bn of private finance would be mobilised by these bilateral and multilateral contributions in 2030 – up from $21.9bn in 2022.
The chart below shows the estimated breakdown, by source, of climate finance in 2030, compared to 2022.
These expected increases over the course of this decade mean that with “no additional efforts”, beyond what had already been agreed prior to COP29, developed countries would have been on a trajectory to reach around $200bn per year by 2030, and $250bn per year by 2035. (The latter was the first numerical target proposed by developed countries at COP29, which was, ultimately, negotiated upwards to $300bn on the final day.)
NRDC climate-finance expert Joe Thwaites, one of the researchers who undertook the Natural Resources Defense Council’s (NDRC) analysis, tells Carbon Brief that bilateral funding directly from governments is the “big constraint” in climate finance. COP29 came just after the re-election in the US of climate-sceptic Donald Trump and many European countries have cut their aid budgets. Thwaites says:
“The MDBs are growing and doing all kinds of reforms and getting bigger and better, but the bilaterals are what are politically very stuck.”
Moreover, the COP29 climate-finance deal contains no pledge by developed countries to provide a set amount of public, bilateral finance, despite strong pressure from developing countries to include such a goal.
Following COP29, Thwaites released updated modelling to calculate different ways of reaching the $300bn target. He wrote:
“What is clear is that $300bn by 2035 is eminently achievable, with little to no additional budgetary effort required from developed countries, let alone other contributors, to meet the goal.”
2. Developing-country contributions could cover part of the goal
Unlike the earlier $100bn target, contributions from developing countries could count towards the new climate finance goal.
Only developed countries are obliged to provide climate finance to developing countries under the Paris Agreement. But the NCQG outcome says that developing countries can “voluntarily” declare any climate-related funds they contribute, if they choose to do so.
This allowed negotiators at COP29 to skirt the controversial issue of formally expanding the list of official donors that are required to help with financial aid.
Developed countries had previously been pushing to enlist relatively wealthy developing nations, such as China and the Gulf states, to share the financial burden.
Several countries described since the early 1990s as “developing” under the UN’s climate convention are known to already make large, climate-related financial contributions to other developing countries. Examples include China’s Belt and Road initiative supporting clean-energy expansion and South Korea’s contributions to the GCF.
In fact, at COP29 China announced for the first time that it had “provided and mobilised” more than $24.5bn for climate projects in developing countries since 2017 – confirming that its contributions are comparable with those of many developed countries.
This roughly aligns with calculations by research groups that have placed China’s annual climate finance at around $4bn a year.
Both developed and developing countries pay money into MDBs. As well as “encouraging” developing countries to voluntarily contribute directly to climate finance, the NCQG outcome also specifies that these countries could start counting the share of climate-related money paid out of MDBs that can be traced back to their inputs.
Roughly, 30% of the banks’ “outflows” can be attributed to developing countries in this way.
Counting the developing-country share of the projected increase in climate finance from MDBs by 2030 would add an extra $36bn to the global total, plus an extra $20bn of private finance mobilised by the funds.
It is not possible to say for sure how much climate finance new contributors such as China will choose to officially declare.
However, the chart below shows an estimate based on an “illustrative scenario”, by NRDC and others, of bilateral finance and multilateral climate funds, combined with expected MDB outflows and the associated private finance that this would mobilise. This could bring total annual climate finance up to $265bn by 2030.
Some observers at COP29 said they hoped that officially counting developing-country contributions towards UN “climate finance” targets would enable parties, such as the EU, to set more ambitious goals.
However, Michai Robertson, lead finance negotiator for the Alliance of Small Island States (AOSIS), dismissed this as an “accounting trick”, because these funds are already being provided.
Li Shuo, head of the China climate hub at the Asia Society Policy Institute (ASPI), tells Carbon Brief that the NCQG outcome could bring more attention to China’s climate-related aid and lead to “stronger and better climate support from Beijing”. However, he notes that this is in the context of a low-ambition global target that is a “far cry” from what is needed:
“I take this as a classic example of geopolitical competition weakening environmental ambition, namely, the geopolitical desire of including China as a donor without corresponding desire of developed countries to contribute more limited the overall scale of climate finance.”
3. Inflation wipes out much of the increase in climate finance
One issue that has surfaced in the wake of COP29 is the impact of inflation. Campaigners have noted that the failure to factor this into the 2035 climate-finance target means that, by the time it is met, the true value of the money pledged will be far lower than it is today.
In an article highlighting this issue, the Guardian reported that the $300bn goal was, therefore, “not the tripling of pledges that has been claimed”.
Researchers had flagged this before COP29, pointing out that the previous $100bn annually by 2020goal, which was first set in 2009, had also not accounted for inflation.
They noted that merely correcting the $100bn for inflation would bring it to between $139bn and around $150bn a year. (Such calculations depend on the rate of inflation applied to the starting figure, as well as the base year for the calculation.)
Civil-society groups at COP29, such as Power Shift Africa, estimated that the impact of inflation would cut the “real” value of the $300bn to $175bn in today’s money by 2035. This is based on an annual inflation rate of 5%.
In its analysis, the Guardian opted for an inflation rate of 2.4% – based on the average rate in the US over the past 15 years. This is taken to reflect the conditions for governments contributing climate finance and the currency much of it would be provided in.
The figure below shows the impact of an inflation rate of 3%. This is based on input from economists and analysis by the Center for Global Development (CGD), which, in turn, is based on the World Bank’s global GDP deflator.
If inflation over the next decade follows this trend, the $300bn pledged in 2024 would only be worth $217bn in today’s money in 2035 – a 28% reduction in value.
In order to offer climate finance with a real value of $300bn in 2035, countries would have needed to set a goal for that year of around $415bn.
(The figures in the chart above cannot be directly compared with the existing pledges made by governments and MDBs, as those too would need to be adjusted for inflation.)
CGD modelling suggests that if developed countries’ climate-finance contributions simply increase in line with expected inflation and gross national income (GNI) growth, they would reach $220bn by 2035.
The CGD analysts write in a blog post that “by the time the new goal is met, beneficiary countries will find that the purchasing power of these resources has eroded significantly”.
Independent experts, as well as climate-vulnerable countries themselves, emphasised both before and during COP29 that more than $1tn dollars will be needed each year to help developing countries deal with climate change. Many developing nations said that around $600bn of this should come directly from developed countries’ public coffers.
With such a relatively small amount of finance pledged for the NCQG, some developing countries have already indicated that they may scale back their future climate ambitions.
The post Analysis: Why the $300bn climate-finance goal is even less ambitious than it seems appeared first on Carbon Brief.
Analysis: Why the $300bn climate-finance goal is even less ambitious than it seems
Drought and heatwaves occurring together – known as “compound” events – have “surged” across the world since the early 2000s, a new study shows.
Compound drought and heat events (CDHEs) can have devastating effects, creating the ideal conditions for intense wildfires, such as Australia’s “Black Summer” of 2019-20 where bushfires burned 24m hectares and killed 33 people.
The research, published in Science Advances, finds that the increase in CDHEs is predominantly being driven by events that start with a heatwave.
The global area affected by such “heatwave-led” compound events has more than doubled between 1980-2001 and 2002-23, the study says.
The rapid increase in these events over the last 23 years cannot be explained solely by global warming, the authors note.
Since the late 1990s, feedbacks between the land and the atmosphere have become stronger, making heatwaves more likely to trigger drought conditions, they explain.
One of the study authors tells Carbon Brief that societies must pay greater attention to compound events, which can “cause severe impacts on ecosystems, agriculture and society”.
Compound events
CDHEs are extreme weather events where drought and heatwave conditions occur simultaneously – or shortly after each other – in the same region.
These events are often triggered by large-scale weather patterns, such as “blocking” highs, which can produce “prolonged” hot and dry conditions, according to the study.
Prof Sang-Wook Yeh is one of the study authors and a professor at the Ewha Womans University in South Korea. He tells Carbon Brief:
“When heatwaves and droughts occur together, the two hazards reinforce each other through land-atmosphere interactions. This amplifies surface heating and soil moisture deficits, making compound events more intense and damaging than single hazards.”
CDHEs can begin with either a heatwave or a drought.
The sequence of these extremes is important, the study says, as they have different drivers and impacts.
For example, in a CDHE where the heatwave was the precursor, increased direct sunshine causes more moisture loss from soils and plants, leading to a drought.
Conversely, in an event where the drought was the precursor, the lack of soil moisture means that less of the sun’s energy goes into evaporation and more goes into warming the Earth’s surface. This produces favourable conditions for heatwaves.
The study shows that the majority of CDHEs globally start out as a drought.
In recent years, there has been increasing focus on these events due to the devastating impact they have on agriculture, ecosystems and public health.
In Russia in the summer of 2010, a compound drought-heatwave event – and the associated wildfires – caused the death of nearly 55,000 people, the study notes.
The record-breaking Pacific north-west “heat dome” in 2021 triggered extreme drought conditions that caused “significant declines” in wheat yields, as well as in barley, canola and fruit production in British Columbia and Alberta, Canada, says the study.
Increasing events
To assess how CDHEs are changing, the researchers use daily reanalysis data to identify droughts and heatwaves events. (Reanalysis data combines past observations with climate models to create a historical climate record.) Then, using an algorithm, they analyse how these events overlap in both time and space.
The study covers the period from 1980 to 2023 and the world’s land surface, excluding polar regions where CDHEs are rare.
The research finds that the area of land affected by CDHEs has “increased substantially” since the early 2000s.
Heatwave-led events have been the main contributor to this increase, the study says, with their spatial extent rising 110% between 1980-2001 and 2002-23, compared to a 59% increase for drought-led events.
The map below shows the global distribution of CDHEs over 1980-2023. The charts show the percentage of the land surface affected by a heatwave-led CDHE (red) or a drought-led CDHE (yellow) in a given year (left) and relative increase in each CDHE type (right).
The study finds that CDHEs have occurred most frequently in northern South America, the southern US, eastern Europe, central Africa and south Asia.
Threshold passed
The authors explain that the increase in heatwave-led CDHEs is related to rising global temperatures, but that this does not tell the whole story.
In the earlier 22-year period of 1980-2001, the study finds that the spatial extent of heatwave-led CDHEs rises by 1.6% per 1C of global temperature rise. For the more-recent period of 2022-23, this increases “nearly eightfold” to 13.1%.
The change suggests that the rapid increase in the heatwave-led CDHEs occurred after the global average temperature “surpasse[d] a certain temperature threshold”, the paper says.
This threshold is an absolute global average temperature of 14.3C, the authors estimate (based on an 11-year average), which the world passed around the year 2000.
Investigating the recent surge in heatwave-leading CDHEs further, the researchers find a “regime shift” in land-atmosphere dynamics “toward a persistently intensified state after the late 1990s”.
In other words, the way that drier soils drive higher surface temperatures, and vice versa, is becoming stronger, resulting in more heatwave-led compound events.
Daily data
The research has some advantages over other previous studies, Yeh says. For instance, the new work uses daily estimations of CDHEs, compared to monthly data used in past research. This is “important for capturing the detailed occurrence” of these events, says Yeh.
He adds that another advantage of their study is that it distinguishes the sequence of droughts and heatwaves, which allows them to “better understand the differences” in the characteristics of CDHEs.
Dr Meryem Tanarhte is a climate scientist at the University Hassan II in Morocco, and Dr Ruth Cerezo Mota is a climatologist and a researcher at the National Autonomous University of Mexico. Both scientists, who were not involved in the study, agree that the daily estimations give a clearer picture of how CDHEs are changing.
Cerezo-Mota adds that another major contribution of the study is its global focus. She tells Carbon Brief that in some regions, such as Mexico and Africa, there is a lack of studies on CDHEs:
“Not because the events do not occur, but perhaps because [these regions] do not have all the data or the expertise to do so.”
However, she notes that the reanalysis data used by the study does have limitations with how it represents rainfall in some parts of the world.
Compound impacts
The study notes that if CDHEs continue to intensify – particularly events where heatwaves are the precursors – they could drive declining crop productivity, increased wildfire frequency and severe public health crises.
These impacts could be “much more rapid and severe as global warming continues”, Yeh tells Carbon Brief.
Tanarhte notes that these events can be forecasted up to 10 days ahead in many regions. Furthermore, she says, the strongest impacts can be prevented “through preparedness and adaptation”, including through “water management for agriculture, heatwave mitigation measures and wildfire mitigation”.
The study recommends reassessing current risk management strategies for these compound events. It also suggests incorporating the sequences of drought and heatwaves into compound event analysis frameworks “to enhance climate risk management”.
Cerezo-Mota says that it is clear that the world needs to be prepared for the increased occurrence of these events. She tells Carbon Brief:
“These [risk assessments and strategies] need to be carried out at the local level to understand the complexities of each region.”
