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November 2024

COP29 – Accelerating Climate Finance
 COP29 – Accelerating Climate Finance 1024 768 Global Climate Finance Accelerator

COP29 concluded on November 24, 2024. Referred to as the “Finance COP”, its central focus was on adopting a new climate finance target. Read on to explore the global progress made in climate finance.

This COP started strong, with three major advancements in climate finance negotiations:

  • The “Baku Finance Goal” (BFG): A new commitment to channel $1.3 trillion of climate finance to the developing world each year to help address the negative effects of climate change
  • Full operationalization of Article 6: Implementing cross border cooperation to reduce the costs of achieving national GHG emission reduction targets by up to $250 billion per year
  • Full operationalization of the Loss and Damage Fund: Total pledged financial support now exceeds $730 million, with project financing to help the world’s most vulnerable countries respond to loss and damage starting in 2025

Breaking It Down: What Do These Developments Mean?

1. The Baku Finance Goal (BFG):

  • The BFG contains a core target for developed countries to lead on mobilizing at least $300 billion annually for developing countries by 2035. 
    • As background, the previous climate finance pledge, made at COP15, committed to $100 billion annually by 2025. According to an OECD analysis, this goal was achieved for the first time in 2022.
  • Additionally, Multilateral Development Banks (MDBs) announced the estimation of $170 billion climate finance annually by 2030. This includes $120 billion for low- and middle-income countries and $50 billion for high-income countries. In addition, each group has a target of mobilizing $65 billion annually from the private sector.
  • Despite these efforts, gaps remain between the trillion-level goals and billion-level commitments. The COP Presidencies will lead the “Baku to Belém Roadmap to 1.3T” to make progress towards that aim in COP30 next year. Additionally, the Independent High-Level Expert Group on Climate Finance report highlights pathways to bridge these gaps:

 

2. Article 6 Operationalization: 

  • The Paris Agreement’s Article 6 allows countries to collaborate on achieving Nationally Determined Contributions (NDCs) by establishing the framework for an international carbon credit trading marketplace.
    • To recap, Article 6.2 facilitates government-to-government carbon credit trading via Internationally Transferred Mitigation Outcomes (ITMOs), and Article 6.4 establishes an UN-backed carbon-crediting program. COP29 also concluded negotiations on Article 6.8 to facilitate internation cooperation through non-market approaches such as capacity-building and technical support.
    • The UN first approved Article 6.4 on day one of COP29, showing a strong signal to move forward and attract more capital. Trading in carbon credits could reduce the cost of implementing countries’ NDCs by more than half – up to $250 billion by 2030, while enabling the removal of 50% more emissions (about 5 gigatons of CO2 per year by 2030) at no additional cost. 
  • Voluntary carbon markets may align with Article 6 standards, enhancing transparency and credibility while enabling  high-integrity carbon credits to trade under Article 6. This alignment leverages existing voluntary carbon market infrastructure and supports countries and the private sector in transitioning to Article 6 markets.
  • Article 6 is far from perfect at this stage. Negotiations are ongoing, with the deadline to transition Certified Emission Reductions (CERs) from the legacy Clean Development Mechanism (CDM) to Article 6.4 set for 2028. Updates to Nationally Determined Contributions (NDCs) are expected in early 2025.
  • While the details will continue to evolve, the uncertainty impeding action has ended. Article 6 now represents an important and tangible tool for scaling up climate finance in developing countries.

3. The Loss and Damage Fund:

  • The Loss and Damage Fund is a climate finance mechanism designed to assist developing countries that are particularly vulnerable to the adverse effects of climate change.  It addresses losses and damages caused by climate-induced events such as extreme weather and sea-level rise. 
  • Established at COP27, the fund saw $700 million pledged at COP28 and now exceeds $730 million following COP29.
  • COP29 formalized critical operational measures, including the appointment of Ibrahima Cheikh Diong as Executive Director and an agreement between the fund’s board and the World Bank. Financing projects are set to commence in 2025.

What Is Canada’s Role in Climate Finance?

  • Canada announced  the launch of GAIA during COP29: a US$1.48 billion blended finance platform supporting high-impact climate projects in up to 25 emerging markets and developing economies.
  • 70% of the platform will support adaptation projects and 25% will invest in small island developing states and least developed countries.
  • GAIA, co-founded by FinDev Canada, Mitsubishi UFJ Financial Group (MUFG), and the Green Climate Fund in 2023, exemplifies innovative financing. Structured to accelerate the availability and accessibility of long-term loans for climate projects, GAIA aims to demonstrate how a blended finance structure that combines commercial, concessional, and grant capital can catalyze private finance at scale to support projects aligned with the Paris Agreement.
  • In 2021, Canada doubled its international climate finance commitment from $2.65 billion (2015-2021) to $5.3 billion (2021-2026), including 40% grant and 60% unconditional repayable contributions (akin to concessional loans). 

As COP29 concludes, the progress achieved sets a strong foundation for climate finance, although significant gaps remain. The Global Climate Finance Accelerator addresses these challenges by offering innovative and affordable capital solutions through customized collaboration between partners in business, finance, government, and academia to more effectively mobilize resources. 

Learn more about our work in global climate finance by visiting our Ocean Love project site. Ocean Love is pioneering sustainable and equitable growth in the blue economy by investing directly in the untapped carbon sequestration and biodiversity projection potential of local coastal communities in the Caribbean and East Africa.

Hao Tian is an independent advisor on blended finance solutions for the Global Climate Finance Accelerator. She has nearly a decade of experience in finance and sustainability across global banks and the World Bank Group. As a seasoned leader in finance and sustainability, Hao connects the dots between capital markets, VC, and the public sector across developed and developing markets by exploring collaborative pathways design and innovative blended finance solutions. Hao holds a Master of Finance degree and a Graduate Diploma in Social Responsibility and Sustainability from the University of Toronto, and a Bachelor of Economics degree from the Central University of Finance and Economics. She is a Certified Financial Risk Manager and owns IFRS (ISSB) FSA Credential.

Ocean Love
 Ocean Love 500 281 Global Climate Finance Accelerator

PROJECT OCEAN LOVE LOCAL BLUE ECONOMY INITIATIVE DEVELOPER FOR COASTAL COMMUNITIES PROJECT OCEAN LOVE Pioneering sustainable and equitable growth in the blue economy by investing directly in the untapped carbon sequestration and biodiversity protection potential of local coastal communities in the Caribbean and East Africa. VISION MISSION Our mission is to create and support carbon and biodiversity credit generation projects that not only mitigate the effects of climate change but also enhance resilience against its physical impacts. WHAT WE DO Pioneering sustainable and equitable growth in the blue economy by investing directly in the untapped carbon sequestration and biodiversity protection potential of local coastal communities in the Caribbean and East Africa. OUR APPROACH Our approach centers on leveraging the natural capital of marine and coastal ecosystems, transforming traditional conservation efforts into proactive, income-generating activities. INVEST IN PROJECT OCEAN LOVE Together we will chart a sustainable course towards a resilient and equitable blue economy. Project Ocean Love is creating the Blue Economy Starter KitTM, a portable toolkit of technologies and methodologies to forecast the impacts of location-specific conservation approaches on carbon sequestration and ecosystem resilience. Included in the BE Starter KitTM is a comprehensive guide to environmental markets including existing protocols for carbon and biodiversity credits with best practices for developers on how to proceed in regions lacking formal frameworks. PROJECT OCEAN LOVE IS IN THE PROCESS OF COMPLETING A PROTOTYPE, WHICH WILL BE PILOTED IN THE BAHAMAS. HOW WE DO IT Replicated for Global Coastal Communities Once demonstrated at the Project Ocean Love’s Conservation Institute, the BE Starter KitTM will be replicated for coastal communities throughout the Caribbean and East Africa, starting with our partner in the Somaliland region of Somalia. PROJECT OCEAN LOVE PLANS TO SUPPORT ITS ACTIVITIES THROUGH THE FOLLOWING REVENUE-GENERATING OPPORTUNITIES: Deep Sea Fishing Deep sea fishing revenues from a resort currently existing on the Conservation Institute proposed site. Green Coffee Exports Roasted Coffee US Distribution Experiential Education Sales of BE Starter KitTM Carbon & Biodiversity Credits Specialty Kenyan Green Coffee beans, ethically sourced and sustainably harvested with cupping scores of 87 and above. Wholesale and Retail online roasted coffee sales and subscription. Student conservation programs at the high school and university level. Sales of BE Starter KitTM to coastal communities funded by Global North climate funds. Carbon and biodiversity credit revenues. WHAT WE NEED OCEAN LOVE PROJECT Purchase of land to host the Conservation Institute facilities and marine ecosystem assessment work Revenue generating land site potential: Deep sea fishing Marina International student conservation projects BE Starter KitTM technology demonstration funding Project Ocean Love operational expenses Salaries (R&D) IT Infrastructure Professional services e.g., legal contracts OUR TEAM NIKITA SHIEL-ROLLE,FOUNDER & CEO - YME BAHAMAS & THE CAT ISLAND CONSERVATION INSTITUTE IS A COMMUNITY BASED ORGANIZATION BUILDING SKILLS FOR THE BLUE ECONOMY AND SUSTAINABLE DEVELOPMENT IN LOCAL COMMUNITIES IN THE CARIBBEAN AND AFRICA VAVA COFFEE IS A COFFEE PRODUCER AND EXPORTER OF EAST AFRICAN SPECIALTY COFFEE HORN ENVIRONMENTAL AND FISHERIES ORGANIZATION IN THE SOMALILAND REGION OF SOMALIA WORKS TO BUILD CAPACITY FOR THE BLUE ECONOMY IN RURAL COASTAL COMMUNITIES WITH A FOCUS ON WOMEN AND CHILDREN. ISENSYS IS A TECHNOLOGY AND ENGINEERING COMPANY FOCUSED ON CREATING MORE EFFICIENT AND COST EFFECTIVE TECHNOLOGICAL SOLUTIONS FOR SCIENCE AND SUSTAINABLE DEVELOPMENT PLANETWERX A US NPO LEVERAGES TECHNOLOGY, FOSTER’S COMMUNITY ACTION, AND PROMOTES EDUCATION FOR THE PRESERVATION OF OUR EARTH. THE GLOBAL CLIMATE FINANCE ACCELERATOR CONVENES PARTNERS ACROSS BUSINESS, FINANCE, GOVERNMENT AND ACADEMIA ON STRATEGIES, POLICIES, PROCEDURES AND TOOLS TO FINANCE CLIMATE SOLUTIONS

Building capacity in local communities to capitalize on carbon sequestration and biodiversity credit markets in the Caribbean and African coastal communities.

Climate Justice
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Impact: SDG
1, 4, 5, 8, 10, 11, 13, 14, 17