The rich nations have pledged to mobilise $300 billion annually by 2035, which is triple the current funding levels but still far short of what the developing world needs and had hoped for. The new collective quantified goal (NCQG), will replace the existing $100 billion goal.

COP29 did have some positives. After nearly a decade of discussions, countries reached a key agreement on finalising the rules for carbon trading under Article 6 of the Paris Agreement. This sets up a global carbon market, allowing nations to trade carbon credits and work together to reduce emissions more efficiently.

With COP29 having a bittersweet ending, Outlook looks at what went down at the climate conference:

“Paltry sum” promised to developing nations

Dubbed the "finance COP," the climate conference in Azerbaijan was expected to secure substantial funding to help developing nations transition away from fossil fuels, as promised at last year’s COP28.

However, the conference fell short, with only $300 billion annually pledged by 2035, far below the $1.3 trillion requested. This gap leaves developing countries struggling to fund crucial climate mitigation efforts. This lack of consensus has widened the trust gap between developed and developing countries, further stalling global climate action, which experts say will be detrimental to the planet.

India’s delegate, Chandni Raina, voiced strong discontent saying it was “a paltry sum”. She criticised the agreement as “little more than an optical illusion,” emphasising that it fell far short of addressing the magnitude of the climate crisis.

Tina Stege, the Marshall Islands climate envoy, acknowledged the funding as a small step forward but stressed it was far from sufficient for the urgent needs of vulnerable countries. 

Sierra Leone's climate minister, Jiwoh Abdulai, criticised the deal, saying it reflected a “lack of goodwill” from developed nations. Similarly, Evans Njewa, representing Malawi and the Least Developed Countries bloc, said, “This goal is not what we expected to get. After some years of discussions, it is not ambitious to us." 

Another concern and demand by the developing nations is that the funds be given to them as grants and not loans, to avoid further straining their already fragile economies. They pointed out that previous funding, often provided as high-interest loans, has burdened low-income nations with mounting debt. 

These countries are already grappling with severe climate-induced challenges like drought, food shortages, water scarcity, and displacement, which cost them 5-10 per cent of their GDP annually. To address these challenges effectively, they have proposed that over 50 per cent of the total climate finance from developed nations be provided as grants, ensuring equitable and sustainable support.

Why do developed nations have to fund developing nations?

The world’s poorest and least-developed nations, despite contributing the least to climate change, suffer the most from its effects, facing devastating floods, extreme heatwaves, and other climate-related disasters. In contrast, the USA and China, the largest greenhouse gas emitters, are responsible for 27 per cent and 11 per cent of global emissions, respectively. The environmental damage caused by these emissions disproportionately impacts poor nations that lack the resources to manage the consequences.

To address this imbalance, COP27 introduced the idea of a “loss and damage” fund, where wealthy nations responsible for the climate crisis would provide financial support to vulnerable countries. Developing nations have called for a share of this wealth to reduce emissions, adapt to climate impacts, and recover from ongoing disasters, highlighting the need for fairness in addressing the global climate crisis.

However, there has been debate over which nation can be categorised as developed and developing. 

As per The Guardian, Balarabe Abbas Lawal, Nigeria’s environment minister, said: “China and India cannot be classified in the same category as Nigeria and other African countries. I think they are developing but they are in a faster phase than states like Nigeria.

“They should also commit in trying to support us. They should also come and make some contribution [to climate finance for poorer countries].”

Carbon markets agreement

A positive outcome from COP29 was the agreement on the rules for a global carbon market, which will enable countries to buy and sell carbon credits. This move is expected to mobilise billions of dollars for new projects aimed at combating global warming. 

The deal clarified how countries will carry out carbon credit transactions and manage tracking systems. Under the newly-adopted rules of Article 6 of the Paris Agreement, a UN-backed carbon market will allow both direct country-to-country trading and a regulated marketplace. 

This system will help countries meet their climate goals by trading carbon credits generated through projects that reduce greenhouse gas emissions, such as tree planting or renewable energy initiatives.