Money makes the world go round

Tackling climate change is expensive business, especially for developing countries that are not only bearing the brunt of impacts, but must also ensure a green and just transition of their economies, all while maintaining growth. The agenda at the ongoing COP29 in Baku is significant for the 'global south': reaching an outcome on a newly negotiated climate finance target, the New Collective Quantified Goal (NCQG). NCQG will define future annual finance flows from developed to developing countries. It's set to replace commitments made by developed countries in 2009 to provide $100 bn a year by 2020 to support climate action in developing countries, a target that has only been met once in 2022.

Climate finance has always been a sticky issue. Monday's backroom agenda fight over whether the dialogue on implementing last year's global stocktake outcomes should prioritise finance demonstrates how contentious this topic is. The global situation - Trump in the White House, collapse of the German government, the war in Ukraine - adds layers of difficulty.

Without a finance agreement, developing countries will find it difficult to raise their climate ambition. Their estimated needs requirement is $6.8 tn by 2030. Baku must deliver and signal to the broader financial system. But differences persist on key elements like who pays, whether support should be in grants or loans, and if sources should be public or private. Meeting this challenge will require out-of-the-box approaches, flexibility and compromise, as well as a willingness to move beyond long-held national and group positions. Failure to do so will create a two-speed global energy transition that leaves developing countries behind yet again. And that is not an option.