Baku: A deep divide over climate finance erupted into the open on Thursday at the UN climate summit COP29, as developed nations and developing nations roundly rejected a new draft proposal that offered two starkly different options for funding climate action, leaving the talks in disarray with barely a day remaining.
A controversial proposal to count developing countries’ domestic resources as part of climate finance has sparked fierce opposition, with India maintaining that any expansion of the contributor base or focus on private sector funding flows “are contrary to the mandate for the goal.”
The 10-page draft, slimmed down from an earlier 25-page version, presents two starkly different approaches to the New Collective Quantified Goal (NCQG) on climate finance, the deal at the heart of this year’s talks. The NCQG refers to the next step of funding for climate crisis. While one option maintains traditional flows from developed to developing nations, the controversial alternative suggests counting “all sources of finance, including domestic resources” toward climate funding goals.
The first option establishes an annual climate finance goal of “at least USD [X] trillion” from 2025-2035, specifically flowing from developed to developing countries. It emphasises grants or grant-equivalent terms and includes provisions for adaptation, mitigation, and loss and damage support.
The alternative proposal, backed by developed nations, sets a similar trillion-dollar target but delays implementation until 2035 and includes the contentious “domestic resources” provision. It also aims to “gradually improve the global data available to track financial investments in climate action, including data not currently captured under formal reporting systems.”
“The audacity to even consider including ‘domestic sources’ in the NCQG – a goal mandate to be from developed to developing countries in a climate treaty signed in 2015. Incredible. Developed countries respect the Paris Agreement by convenience, not norm,” wrote Avantika Goswami from the Centre For Science And Environment.
The developed countries attacked the options as well. “This text is imbalanced, unacceptable and unworkable,” declared EU Climate Envoy Wopke Hoekstra at the plenary, focusing his criticism on what he saw as insufficient mitigation commitments. The EU insists that “all parties with capacity must contribute to NCQG.”
Mitigation refers to commitments to cut down on emissions.
By evening, some parties, including members of the Independent Association of Latin America and the Caribbean (AILAC), suggested a potential compromise where an overall quantum of at least $1.3 trillion could be agreed upon, with mobilisation pathways detailed later on the “Baku to Belem” road. However, developed countries have yet to discuss any specific NCQG quantum figures.
The United States joined the criticism, with Climate Envoy John Podesta expressing “deep concern” about the “glaring imbalance.” “We must build on UAE consensus in Dubai,” Podesta said, pushing for expanded climate finance contributions beyond traditional donor countries.
Representatives of developing countries took strong exception to the latest round of discussions.
“We live in an upside-down world, where the architects of climate change destruction—the developed countries—deflect their responsibilities onto the Global South,” said Diego Pacheco, spokesperson for the Like-Minded Developing Countries group, which includes India. “It is really shocking listening that the obvious developed country option in the NCQG is now rejected, attempting now to move from zero to minus zero.”
India’s deputy delegation head Leena Nandan emphasised that the goal should be “$1.3 trillion with $600 billion of this coming through grants and grants equivalent resources.” She rejected any interpretation of “just transition” that focuses solely on domestic actions, arguing that developed countries’ inaction constrains developing nations’ right to development.
The G77 and China group maintained their demand for specific funding commitments. “We want a headline figure of $1.3 trillion per year. There is no figure at the moment,” stated G77 chair Adonia Ayebare.
The African Group, while welcoming the streamlined text, highlighted the crucial missing element. “The elephant in the room is the lack of a quantum proposal,” said Ambassador Ali Mohamed, adding that the text “continues to include many of the untenable positions of the developed countries as options.”
Complicating negotiations further, Saudi Arabia warned that the Arab Group would reject any deal targeting fossil fuels. “The Arab Group will not accept any text that targets any specific sectors, including fossil fuel,” declared Saudi official Albara Tawfiq.
China too criticised the draft. “The current text contains a lot of elements that are not satisfactory and acceptable to China,” said Chinese official Xia Yingxian, but urged parties to “meet one another halfway.”
The Presidency is expected to release another iteration of the text either late Thursday or early Friday, with time running out to bridge the fundamental divisions over both finance and mitigation ambitions.
The deadlock reflects deeper tensions over implementing last year’s Dubai agreement, which called for tripling renewable energy capacity and transitioning away from fossil fuels. Developed nations are pushing for all countries to adopt mid-century net-zero goals, while developing countries resist what they see as prescriptive mitigation measures without adequate financial support.
