Baku's USD 300 Billion Goal Will Not Move Energy Investment in Developing Countries on Its Own

After two weeks of difficult negotiations, the COP29 climate conference in Baku closed in the early hours of 24 November with agreement on a New Collective Quantified Goal for climate finance. Developed countries will take the lead in mobilising at least USD 300 billion a year for developing countries by 2035, three times the previous goal of USD 100 billion a year that applied from 2020 to 2025. The decision also calls on all actors to work towards scaling up finance to developing countries from public and private sources to at least USD 1.3 trillion a year by 2035, and launches a "Baku to Belém Roadmap" to show how that larger figure might be reached.

The Least Developed Countries Group said the countries most responsible for the climate crisis had failed them, and India's delegation objected strongly to the adoption of the decision. According to the World Resources Institute's analysis, the USD 300 billion goal is made up of public finance plus private finance specifically mobilised by that public finance. COP29 also failed to reach agreement on how to follow up the COP28 call for transitioning away from fossil fuels, deferring the issue to future sessions.

USD 300 billion a year across all climate needs, including adaptation, cannot fund the energy transition directly. For governments in South Asia, Africa and elsewhere, the new goal is an opportunity, but only if they are ready to use it. Countries should also prepare strong new nationally determined contributions, due in 2025, that set out credible energy investment plans and identify where international support is needed. The failure to reaffirm the COP28 language on transitioning away from fossil fuels matters for energy investors too.

Multilateral development banks are central to the new goal, since their climate finance can now count towards it. The COP29 finance goal is a modest step that falls well short of what developing countries need and what many hoped for.