Jakarta – As world leaders convene at the COP29 United Nations Climate Change Summit in Baku, a new report from the Independent High-Level Expert Group on Climate Finance, launched Thursday, November 14, lays out an urgent roadmap for meeting the Paris Agreement’s climate targets. The report calls for mobilising USD 1 trillion annually in external finance by 2030 to support the climate investment needs of emerging markets and developing countries (EMDCs), excluding China. By 2035, this figure will rise to USD 1.3 trillion annually.
Simon Stiell, Executive Secretary of the United Nations Framework Convention on Climate Change (UNFCCC), officially launched the report at a COP29 side event. The report aims to galvanise international efforts and secure the necessary commitments to transform the climate finance landscape.
The report highlights the critical need to accelerate climate financing, warning that any delays will result in steeper costs and more urgent demands for future investments. According to the authors, meeting these financial targets is essential for achieving the Paris Agreement’s goals and ensuring sustainable growth and progress toward the UN’s Sustainable Development Goals (SDGs).
The global investment requirement for climate action is projected to reach USD 6.3–6.7 trillion annually by 2030, with EMDCs (excluding China) accounting for USD 2.3–2.5 trillion. These needs will grow to USD 7–8.1 trillion annually by 2035. However, the report underscores that the current levels of investment in EMDCs fall far short of these targets, particularly in regions like Sub-Saharan Africa.
Key investment areas identified in the report include Clean Energy Transition, which will cost USD 1.6 trillion per year by 2030; adaptation and Resilience, which will cost USD 250 billion annually; loss and Damage, which will cost USD 250 billion annually; Natural Capital and Sustainable Agriculture, which will cost USD 300 billion annually; and just transition measures, which will cost USD 40 billion annually.
“Any shortfall in investment before 2030 will place added pressure on the following years,” the report warns. Delayed action could force countries to mobilise larger sums within shorter timeframes, dramatically increasing costs and jeopardising climate goals.
Four pillars of action to achieve climate finance goals
The report outlines four critical recommendations to bridge the significant financing gap. First, it calls for advanced economies to triple the USD 100 billion annual climate finance pledge made in 2009 and reaffirmed in 2015, bringing the total to USD 300 billion annually by 2030. This commitment would form the cornerstone of a new collective quantified goal (NCQG) for financial support beyond 2025.
Second, MDBs, including the World Bank, are urged to triple their lending capacity by 2030. The report notes that while MDBs have initiated reforms under the “better, bigger, and more effective” framework, their efforts must be accelerated to unlock transformative climate financing. MDBs are expected to be pivotal in scaling investments, particularly in renewable energy infrastructure.
Third, given the vast opportunities in sectors like renewable energy and sustainable infrastructure, private sector financing is expected to meet about half of the external climate finance needs. The report highlights the necessity of creating favourable conditions for private investments, including reducing the cost of capital and providing clear regulatory frameworks.
The fourth recommendation is to recognise the increasing role of developing countries in global climate finance. The report advocates for greater contributions from key EMDCs. Enhanced South-South cooperation can leverage financial and technical resources, building on existing collaborations to support climate resilience and sustainable development.
Innovative financing solutions
To close the remaining financing gap, the report explores several innovative mechanisms, including proposals to include levies on international shipping, aviation, and fossil fuels and a financial transactions tax. A recent consensus on Article 6.4 of the Paris Agreement aims to revitalise VCMs as a significant revenue source for EMDCs.
The report also emphasises the importance of concessional financing and bilateral climate finance from advanced economies. While bilateral contributions currently amount to USD 43 billion annually, the report recommends doubling this figure to address the most challenging investment needs and build trust between developed and developing nations.
Banner photo: Simon Stiell, Executive Secretary of the UNFCCC/screenshot of the UNFCCC YouTube channel
