Can COP30 Succeed Where COP29 Failed?

Last year's United Nations Climate Change Conference (COP29) in Baku ended with developed countries agreeing to mobilize $300 billion annually for climate finance in developing countries.

- Montek Singh Ahluwalia

But while this figure is three times higher than the previous $100 billion target, it falls far short of what's needed to close the climate funding gap.

The challenge today is more complex than when the Paris Climate Agreement was signed in 2015. Back then, the $100 billion figure was largely arbitrary, not based on a full analysis of actual investment needs. By contrast, COP29 had to estimate real costs and determine how much external financing would be required.

A report by the Independent High-Level Expert Group on Climate Finance (IHLEG), of which I am a member, finds that developing countries (excluding China) will need $2.4-3.3 trillion in climate investments by 2035. About 60% of this could be financed domestically through higher savings and reduced public deficits. Even so, after reallocating existing investments toward the green transition, a $1 trillion shortfall by 2030 – rising to $1.3 trillion by 2035 – remains. Closing this gap will require external funding.

While COP29 acknowledged the scale of the financing gap, it failed to agree on how to close it. Developing countries pushed for wealthier economies to cover the shortfall with public funds, but developed countries offered only $300 billion annually – and even that came with a caveat: they would only “take the lead” in mobilizing funds rather than guaranteeing direct provision.

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The IHLEG report suggests that $650 billion of the funding gap by 2035 could be met through private investment, including equity and debt. But this exposed a deep divide. Developed countries favored private capital to ease budget pressures, while developing countries, aware of its volatility, insisted on public funding for accountability and predictability.