As the 29th United Nations Climate Change Conference, or COP29, begins in yet another fossil-fuel-dependent state — and just days after the reelection of climate skeptic Donald Trump to the U.S. presidency — the atmosphere is charged with tension, but also opportunity. While fewer world leaders may be attending than in past years, this conference is also crucial, in that many consider it a last chance to set plans that put the world on the path to limiting global warming to 1.5 degrees Celsius above pre-industrial levels.
COP29 has been nicknamed "the finance COP," and that’s because all eyes are on climate finance negotiations — specifically, on the establishment of a new collective quantified goal, or NCQG. The last such target was set in 2009, when high-income countries said they would mobilize $100 billion in annual climate finance for low- and middle-income countries by 2020, a goal they only managed to hit in 2022.
Currently, most funding is directed toward mitigation, as it offers better financial returns. And returns are indeed a central issue here, as this $100 billion primarily consists of investments and loans that recipient countries will need to repay. This structure has become a major sticking point in negotiations, with low-income countries advocating for a “grant equivalence” approach. Grant equivalence assesses the net benefit to a recipient after accounting for interest rates, inflation, and repayment obligations. For example, if a $10 million loan only yields $5 million in net benefits after these costs, the reported funding amount should reflect $5 million, not the full loan amount.
About the author
Ayenat Mersie
Ayenat Mersie is a Global Development Reporter for Devex. Previously, she worked as a freelance journalist for publications such as National Geographic and Foreign Policy and as an East Africa correspondent for Reuters.
