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Progress in climate finance following COP29: An assessment

Unrest in EU and US politics and regulations has cast doubt on the trajectory of climate finance this year. Has the global community been able to advance towards the fulfillment of the $300 billion climate finance commitment made at the COP29 conference?

Progress made in climate finance since COP29: an examination of the journey so far
Progress made in climate finance since COP29: an examination of the journey so far

Progress in climate finance following COP29: An assessment

Three years have passed since the COP29 climate summit in November 2024, where developed countries pledged to increase climate finance flows to $300 billion annually by 2035, a significant increase from the earlier $100 billion annual goal set in 2009. However, a closer look at the status of climate finance commitments reveals mixed progress and significant challenges.

At the summit, parties agreed on a New Collective Quantified Goal (NCQG) for climate finance, with developed countries committing to provide and mobilise at least $300 billion annually by 2035, balanced between adaptation and mitigation. This ambitious target, which replaces the earlier goal, remains a critical near-term milestone.

In the months following COP29, developed countries submitted plans outlining their future climate finance contributions. However, analyses show that even the strongest submissions lack clarity and comprehensiveness, and overall progress in improving these plans has largely stalled by mid-2025. Only a few countries have provided quantitative, transparent finance commitments.

Beyond the core $300 billion annual target, there is an aspirational goal to scale up to at least $1.3 trillion annually by 2035, which would include contributions from all public and private sources, not just developed countries. This broader target addresses demands from developing countries for much larger sums to meet their climate needs.

Independent expert estimates highlight the scale of the climate financing gap. The financing needs for emerging markets and developing economies (excluding China) are estimated at about $2.4 trillion annually by 2030, rising to $3.3 trillion by 2035. This covers a broad spectrum including clean energy, adaptation, loss and damage, natural capital, and just transition costs.

The climate finance landscape in the first half of 2025 has been affected by global financial market uncertainties and political changes. Notably, the new US administration revoked its international climate finance plan and halted most foreign aid including climate-related funding, which previously accounted for a significant share of global climate finance. This has introduced further challenges to meeting agreed targets.

To address stakeholder concerns about the adequacy and clarity of finance, a process called the Baku to Belém roadmap was launched to gather views and develop a strategy to scale climate finance towards the $1.3 trillion goal by October 2025. The consultations reveal deep divisions and highlight the complexity of operationalising these ambitious commitments.

The 'Raising Ambition and Accelerating Delivery of Climate Finance' report offers a clearer roadmap for scaling climate finance through to 2035. The World Bank is on track to meet its FY2025 goal of allocating 45% of its total lending to climate finance, which translates to approximately $52.9 billion. If a simple linear path is assumed to reach the $300 billion target by 2035, around $160 billion is needed in 2025.

However, political shifts, such as the US administration's rollback of climate finance commitments, have created uncertainty and reduced the overall pool of available financing. Individual financial institutions like HSBC and RBC have begun to scale back their climate commitments, delaying and dropping their net zero targets and sustainable finance goals.

All key actors, including financial institutions, corporates, and public entities, must recognise the mutual, non-negotiable goal to act decisively, ambitiously, and collectively on climate finance. The cost of delay in addressing climate change is not just financial, but existential. Climate risk is a critical driver of financial risk and must be assessed with a long-term, integrated understanding of how environmental and financial systems intersect.

The theme for London Climate Action Week 2025 is focused on building climate ambition towards COP30. As we move forward, it is crucial that all nations and stakeholders work together to bridge the financing gap and meet the ambitious climate finance targets set at COP29.

  1. The COP29 climate summit in 2024 pledged developed countries to increase climate finance flows to $300 billion annually by 2035, a significant increase from the earlier $100 billion goal.
  2. The New Collective Quantified Goal (NCQG) for climate finance at COP29 includes a commitment from developed countries to provide and mobilize at least $300 billion annually by 2035, balanced between adaptation and mitigation.
  3. Despite submitted plans following COP29, progress in improving future climate finance contributions has largely stalled, with few countries providing quantitative, transparent finance commitments.
  4. Beyond the core $300 billion annual target, there is an aspirational goal to scale up to at least $1.3 trillion annually by 2035, addressing demands from developing countries for much larger sums to meet their climate needs.
  5. Independent expert estimates point out a significant financing gap, with emerging markets and developing economies needing about $2.4 trillion annually by 2030, rising to $3.3 trillion by 2035, covering areas like clean energy, adaptation, loss and damage, natural capital, and just transition costs.
  6. The Baku to Belém roadmap, launched to address concerns about clarity in climate finance, reveals deep divisions and complexity in operationalizing these ambitious commitments, given global financial market uncertainties and political changes.
  7. As we approach COP30, it's crucial for all nations and stakeholders to work together to bridge the financing gap and meet ambitious climate finance targets, recognizing the existential cost of climate change delay and the intersecting nature of environmental and financial systems.

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