COP29: Development Banks Set $170 Bn Annual Climate Finance Goal By 2030 To Help Poorer Nations

At COP29, leading MDBs announced a collective commitment of $120 billion in climate finance for low- and middle-income countries by 2030, with an additional $42 bn earmarked for adaptation efforts.

COP29 In Baku: The first day of the World Leaders Climate Action Summit at COP29, held in Baku, Azerbaijan, on November 12 concluded with a significant announcement by leading multilateral development banks (MDBs). A group of MDBs, including the Asian Development Bank (ADB), World Bank Group, African Development Bank (AfDB), and several others, outlined ambitious financial targets aimed at supporting climate action in low- and middle-income countries.

By 2030, the MDBs collectively intend to mobilise approximately $120 billion in climate financing annually for these countries, with $42 billion earmarked for adaptation efforts. Additionally, the MDBs aim to catalyse an additional $65 billion annually from the private sector. For high-income nations, the MDBs project an annual collective climate financing of $50 billion, including $7 billion for adaptation, with a similar private sector target of $65 billion.

MDBs have been making efforts to accelerate climate finance, having already surpassed their 2025 targets set in 2019. In the past year alone, the MDBs have achieved a 25% increase in direct climate finance and doubled their mobilisation for climate-related projects, according to the official press release posted on the COP29 website on Tuesday.

COP29 President Mukhtar Babayev, who hosted a high-level meeting on the estimates, underscored the summit’s focus on securing climate finance necessary for urgent climate action. Every contribution is welcome, but there is still a clear gap between where we are and where we need to be," Babayev stated. "We are working closely with the shareholders of international financial institutions at COP29 as we seek to build the foundations of a fair and ambitious new climate finance goal."

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Progress On Loss and Damage Fund Operationalisation

A key development at COP29 is the progress in operationalising the Fund for responding to Loss and Damage, intended to provide financial support to vulnerable communities severely impacted by climate change. After signing key documents, including the Trustee Agreement with the World Bank, the fund is now positioned to receive contributions, with disbursements anticipated to begin in 2025.

Sweden’s recent pledge of approximately $19 million, pending governmental approval, raises the fund’s pledged amount to over $720 million. The COP29 Presidency acknowledged Sweden’s contribution and encouraged further commitments to bolster support for climate-affected communities.

The COP29 Presidency also introduced a new annual dialogue to enhance coordination and complementarity among various funding arrangements for loss and damage. This high-level dialogue will engage stakeholders within and beyond the UNFCCC process, focusing on streamlining support for climate-vulnerable communities.