Our YES-Europe delegation recently got back from COP29 held in Baku, Azerbaijan and is ready to report on the wins, missed opportunities, surprises and disappointments from this year’s climate negotiations. This post is the first in a series, analyzing the key outcomes of the negotiations. To catch up on the progress made prior to COP29, you can check out our previous blogposts from the Bonn Conference (SB60) here.

This first post focuses on the hottest and most polarizing issue this year- the NCQG.

What is the NCQG?

The New Collective Quantified Goal (NCQG) is a key element of the Paris Agreement. The goal is designed to set a new financial target for wealthy countries from the Global North to support countries from the Global South in their climate actions post-2025. The NCQG builds on the previous $100 billion target, which expires in 2025 and aims to address the needs of developing countries (estimated in the trillions). The NCQG was the cornerstone of this year’s COP process. The negotiations were extremely tense as negotiators discussed behind closed doors late into the final days, reaching an agreement two days past the conference’s official end.

What was agreed at COP29?

The COP29 final decision text on the NCQG calls on all public and private actors to work together to enable the scaling up of financing to developing countries for climate action from all sources to at least USD 1.3 trillion per year by 2035. However, the target that developed countries actually agreed to commit and can be held accountable for is much lower, as outlined in the next paragraph, which states “decides to set a goal, with developed countries taking the lead, of at least USD 300 billion per year by 2035 for developing countries from a wide variety of sources”.

Why is the NCQG “too little too late”?

Phrasing like “taking the lead” helps developed countries evade responsibility if they don’t manage to meet the goal as it implies that other actors should participate as well. For context, Article 9 of the Paris Agreement states that developed countries “shall provide financial resources to assist developing countries with respect to both mitigation and adaptation”. In addition, the goal should be met by 2035, which gives leeway to developed countries to achieve the goal as late as 2034. Furthermore, the decision does not specify the share of grants that will go to developing countries and explicitly mentions that private sources will be counted towards the achievement of the target as well (i.e. including market rate loans which risk exacerbating the already high debt burden of developing countries). It also does not state that this finance should be new and additional to current official development assistance, which risks repurposing existing financial streams instead of providing additional support. Lastly, the NCQG might sound like a tripling of the previous climate target set at USD 100 billion per year but considering inflation and that the majority of finance will come in the form of loans, it does not deliver justice or support to the most vulnerable communities.

Context: Why developing countries feel let down?

Some background information to help explain why this goal is seen as insufficient and disappointing by developing countries and civil society alike.

  1. Historical Responsibility

Developing countries are not asking for charity. Developed nations are responsible for most of the historical greenhouse gas emissions. Researchers and climate negotiators have argued that developed countries owe compensation or reparations to low-emitting countries for atmospheric appropriation (emitting more than their fair share of the remaining carbon budget) and climate-related damages, which fall disproportionately on poorer nations that have contributed little to the climate crisis. According to one estimate, rich Global North countries owe poorer ones USD 6.2 trillion per year until 2050 in financial compensation.

 

  1. The Unequal Burden of Climate Change

Developing nations that bear the least responsibility for climate change suffer its harshest consequences. The 55 countries most vulnerable to climate change estimate that between 2000 and 2019 they have lost USD 525 billion because of climate change’s effects on temperature and precipitation patterns despite accounting collectively for only 5% of global emissions. Developing countries therefore demand fair compensation to help them cut emissions, adapt to the impacts of global warming and address the consequences of previous disasters (loss and damage). The NCQG decision suggests that developing countries need USD 455–584 billion per year up until 2030 to implement their nationally determined contributions (i.e. for mitigation) and USD 215–387 billion annually for adaptation up until 2030.

 

  1. Historical Global Injustices

We cannot talk about climate justice without considering historical global injustices and colonial legacy. Even without climate change, developed countries owe developing countries trillions for the free land, labour and resources the former extracted from the latter for its economic growth and development. In 2022, 58 of the world’s poorest and most climate-vulnerable countries spent USD59 billion repaying debts compared to the USD28 billion they received in climate finance, over half of which came as loans. The cost of borrowing money can be up to seven times higher for developing countries because lenders see poorer countries as riskier places to invest. The colonial ramifications are also embedded in the global financial architecture. The World Bank and other international monetary institutions such as the IMF were established in the post-World War II era before many of the countries they affect had gained independence. This raises concerns about the legitimacy of these institutions, as their founding structures, policies and governance reflect the priorities and interests of the colonial powers of the time.

 

  1. Common but differentiated responsibilities and respective capabilities

Zooming out of the climate justice lens, the EU cannot solve the climate crisis alone. Given the EU has about 7% of current global GHG emissions even if it becomes climate-neutral by 2050, global temperatures will continue to rise if other nations fail to act. In the words of the executive Secretary Simon Stiell “climate finance is not charity,” but is in the self-interest of all parties: “If two-thirds of the world’s nations cannot afford to cut emissions, every nation pays the price.”

 

  1. The Economic Case for Climate Action

To my personal surprise climate change mitigation will not cost nations as much as feared. As we learned from a conversation with an IPCC representative, mitigation measures to limit global warming to 2°C entail losses to global GDP of between 1.3% and 2.7% in 2050. While annual mitigation costs are projected at 1–7% of GDP, these are minor compared to the expected doubling of global GDP by 2050, corresponding to a steady growth rate of 2–3% per year. This exemplifies the relatively small economic impact of mitigation measures. In comparison, each 1°C increase in global temperature can be linked to a 12% decline in global GDP, according to the report by the National Bureau of Economic Research (NBER).

Therefore, it was unfortunate that at COP29 developed countries failed to translate historical responsibilities into action and to ensure adequate financing to collectively achieve the objectives of the Paris Agreement and limit global warming. This is not a zero-sum game, nor is it only a matter of justice. Adequate climate finance benefits current and future generations alike, and failure to act will come at an even greater cost for everyone.