COP29, the United Nations’ annual climate negotiations, will take place from 11 to 22 November 2024 in Baku, Azerbaijan. This year, climate finance is set to be the major issue during the two weeks of the conference, as countries will need to renew their annual climate financing pledge. Indeed, the current Collective Quantified Goal of $100 billion a year, which richer countries allocate towards poorer countries’ energy transitions, was established in 2009 and is expiring next year, thus requiring a new framework.

EU institutions are currently negotiating the Union’s final position, which is expected in October. A consensus to increase pressure on major emerging economies, such as China, and wealthy Gulf states, like Saudi Arabia, is forming among EU countries, the European Commission, and the newly elected European Parliament. A technical draft from mid-August, submitted by the Hungarian Presidency, notably suggested that states “with high greenhouse gas emissions and economic capabilities” should enhance their efforts.

In these negotiations, the EU is also mindful of its position as the largest contributor, providing about €30 billion. Outdated criteria, which date back to 1992, are seen as a root cause of the current imbalance. For example, China, despite being the second-largest economy globally and the largest CO2 emitter, still benefits from developing nation status, exempting it from contributing to climate finance.

The European Parliament, which began its work in late July, still needs to finalise its formal joint position. The Environment (ENVI) committee met on 4 September and echoed concerns about the fairness of the existing system, also shared by the Council and Commission. EU finance ministers are expected to agree on the funding aspects at their Council meeting on 8 October, with the final COP29 position to be approved by the Union’s environment ministers on 14 October.

Globally, the future climate finance goal has been discussed in various technical dialogues over the past three years. Last June in Bonn, 5,000 experts from 200 countries convened but failed to reach a pre-agreement. The most sensitive negotiations are still to occur during what has been billed as “the finance COP” in November, with countries holding widely divergent views.

Canada and Switzerland, for example, are proposing new GDP per capita thresholds of $20,000 and $22,000 respectively, with Saudi Arabia and the United Arab Emirates expected to exceed these thresholds by a significant margin while China would remain below them, with a GDP per capita around $12,500. The option closest to the EU's expected negotiating position would establish a global funding target of more than $1 trillion annually, encompassing both domestic investments and private funding, as well as a smaller contribution from countries with high emissions and substantial resources. Conversely, the option supported by Arab countries would set a target for developed nations to provide $441 billion per year in grants, alongside a goal to mobilise a total of $1.1 trillion in annual funding from all sources, including private finance, from 2025 to 2029.

Beyond the climate finance target figure and participating countries, the timeframe of the goal, the use of the funds, and tracking and evaluation will also be crucial aspects of the negotiations. Parallel issues, such as an agreement to phase out fossil fuel subsidies, advancing the Loss and Damages Fund to assist climate-vulnerable countries, progressing on the development and implementation of countries’ National Adaptation Plans (NAPs), and establishing common rules to govern international carbon markets, may also prove challenging.