Global Climate Finance and COP29: Is There Hope for Africa, Least Developed Nations, and Small Island States?

As COP29 draws to a close this week, discussions surrounding climate finance and support for vulnerable nations have intensified. With the latest findings from the World Meteorological Organization (WMO) showing a record-breaking rise in global mean near-surface temperatures in 2023, the urgency to address climate change is clearer than ever. This “Finance COP” in Baku brings renewed focus on equitable financial support and emissions reduction commitments, which are critical for Africa, least developed nations, and small island states.

A significant focus of COP29 is ensuring a just energy and industry transition. Key goals include decarbonising power and heavy industry, which requires addressing supply, demand, policy, and investment gaps in regions like Africa. To halve emissions by 2030, equitable access to financial resources for Africa and other vulnerable regions is paramount. While developed nations contribute to global climate finance, a considerable portion comes as loans rather than grants, leaving low-income countries burdened by debt. Although developed countries finally met the $100 billion annual climate finance goal in 2022, nearly 70% of this support was in loan form. Developing nations argue that this approach is insufficient and unsustainable, and they need more accessible, grant-based funding to support adaptation and transition efforts without exacerbating debt burdens.

Another key focus of COP29 is finalizing Article 6 of the Paris Agreement, which establishes frameworks for international carbon markets. These markets are crucial for promoting green investments and ensuring that emissions reductions are financially viable on a global scale. However, challenges remain, particularly in ensuring that these markets benefit emerging economies rather than favoring wealthier nations. COP29 leaders must negotiate frameworks that can enhance carbon market accessibility for African nations and small island states while protecting local economies and promoting fair trade.

Represented by the G77 plus China, a coalition of 130 developing countries, vulnerable nations are demanding that developed countries raise at least $1.3 trillion annually to meet their financial commitments under the Paris Agreement. This demand highlights the imbalance between high-income and low-income nations’ contributions to climate change solutions. While developed nations have mobilized some resources, there has been reluctance to provide this support in the form of publicly funded grants rather than loans or investments. This reluctance risks undermining the integrity of the COP process and raises questions about the commitment of wealthier nations to supporting a truly equitable climate transition.

For African nations, small island states, and other vulnerable regions, COP29 represents a critical opportunity. The WTO’s recent green trade and investment initiatives offer some hope, as they aim to create more equitable decarbonization pathways. However, progress hinges on developed countries’ willingness to commit to substantial grant-based financing and finalize frameworks that support carbon markets in underdeveloped economies.

As COP29 unfolds, these issues are at the center of discussions. The hope is that this year’s COP will lay the groundwork for meaningful, grant-based support and finalize Article 6 frameworks, giving developing nations a clearer path to sustainable development and climate resilience as the world prepares for COP30 in Brazil