Lack of clear rules undermining collaboration on climate finance

An aerial view of houses marooned by floods due to rising water levels of Lake Baringo. [File, Standard]

One of the biggest but often overlooked obstacles to meaningful progress in global climate negotiations is the lack of an agreed definition of climate finance. Questions such as what counts as climate finance and who decides what climate finance is are among crucial items that remain unresolved to date. 

Without clear rules, rich nations have traditionally inflated their contribution by including loans, private investments and even double-counting aid as part of climate finance. This lack of transparency not only skews the numbers but also erodes trust. 

Experts also cite inconsistent reporting and vague definitions as the reasons for obscurity over whether the $100 billion goal set 15 years ago was met, who benefitted and whether the resources were consistent with the Paris Agreement. 

This ambiguity has led to a widening climate finance shortfall, as revealed by multiple findings, including the 2023 UN Environment Programme’s Adaptation Gap report. It has also meant increased exposure to climate impacts for front-line communities globally. The continued uncertainty of what constitutes finance is a dangerous game that undermines their ability to plan and respond to the crisis.

Meanwhile, rich countries benefit from this vagueness, often shifting their responsibility to multilateral banks and the private sector or offering loans which plunge poor and climate-vulnerable nations into deeper debt. The failure to establish clear rules during climate talks is a glaring omission that continues to undermine global collaboration on climate finance.  

This is what COP29 in Baku, Azerbaijan, was expected to address under the New Collective Quantified Goal (NCQG) on climate finance. Specifically, countries were to agree on significant issues surrounding the total climate finance amount, which countries should contribute and those to receive the funding. 

Additionally, the negotiators sought to embed clarity, accountability and transparency in the NCQG framework. Addressing these touch points would effectively resolve the impasse that has characterised climate finance discussions. 

For Africa and other vulnerable regions, COP29 was a moment of reckoning. It was supposed to signal a turning point. It was an opportunity to restore trust and confidence in international cooperation. Instead, many left wondering if we had seized the moment or let it slip through the fingers.

The adoption of $300 billion goal to fund climate action in developing countries was in many ways a product of the confusion that has surrounded these discussions. Developing countries had demanded $1.3 trillion in climate finance, a figure that was informed by the current and evolving needs and vulnerability of poor nations. 

Whereas $300 billion per year may seem like a significant leap from the initial $100 billion target, for vulnerable nations, it feels like being handed a bucket to stop a flood. Adaptation alone requires at least $400 billion annually, according to scientific assessments. 

There is also vagueness around how rich nations determined that $300 billion was adequate to provide sufficient climate response. To many in the Global South, the Baku deal is nothing more than a politically convenient figure that falls woefully short of addressing the actual climate needs.

The call for collaboration to mobilise $1.3 trillion annually by 2035 underscores the immense financial ambition required to address the climate crisis. The "Baku to Belém Roadmap to $1.3T" offers a vision for scaling up finance, but will this plan deliver? Grants, concessional loans, and non-debt mechanisms are mentioned as pathways, yet the roadmap risks becoming another promise unless bold action is taken.

To put it simply: Imagine being promised a lifeboat as your home floods, only to be handed a leaky raft. 

The gap between promise and reality isn’t just disappointing, it’s devastating for millions of people already enduring rising seas, scorching heat, and vanishing livelihoods. 

The NCQG also sidesteps the question of financial responsibility. What portion of the $300 billion will be from public finance, for instance? What part of it will come as grants as vulnerable countries demand? Without clarity on this, wealthy countries responsible for causing the climate crisis could dodge their responsibility, shifting the burden to multilateral banks, the private sector, and even the very countries that are smarting from climate impacts. 

Worse still, there’s no explicit commitment in the NCQG to balancing adaptation and mitigation funding. Adaptation finance, critical for regions like Africa, remains the forgotten sibling of climate finance family, accounting for less than 20 per cent of the total flows. This omission is a repeat of the mistakes of the $100 billion goal, where the promise to double adaptation finance to 40 per cent soon turned into a broken dream. 

What’s Next? The NCQG may be a step forward, but it’s not the leap that climate justice demands. Without stronger commitments, the dream of keeping global warming within safe limits will remain just that—a dream. 

To yield the level of ambitious finance required to address climate challenges in the world, parties must resolve the ambiguity around climate finance by agreeing on a universal definition. They must also put emphasis on transparency and specify the scale of financing and the timelines for provision. This will ensure clear commitments and follow-through from developed countries, enhance tracking and eliminate political exploitation of ambiguities.  

COP30 in Belém, Brazil, later this year would be a good starting point. It must lay the roadmap to attain the $1.3 trillion. Importantly, it must pave the way to translate years of finance pledges into action. Finance must start flowing where it’s needed the most.

For Africa and other vulnerable regions, the sooner the stalemate can end, the sooner they will be able to implement adaptative strategies to secure lives and livelihoods.