Amit Mitra, Souryabrata Mohapatra
As COP29 wraps up in Baku, the global response to the escalating climate crisis faces significant scrutiny. Activist Greta Thunberg called the summit’s draft text “a complete disaster,” reflecting rising frustration over unfulfilled commitments and inadequate action. The Global South’s pressing need for $1.3 trillion in annual funding by 2035 starkly contrasts with a mere $250 billion proposal, highlighting the discrepancies between promises made and actions taken. With climate-related disasters in 2024 inflicting over $520 billion in damages and displacing 40 million people, the urgency to act is greater than ever. Can global leadership rise to meet this formidable challenge?
The recent G20 Summit in Rio de Janeiro aimed to inspire action on climate finance among world leaders but resulted in vague promises and reiterated plans to finalize the New Collective Quantified Goal (NCQG) by 2025. Intended to succeed the outdated $100 billion annual target, the NCQG has yet to effectively address the widening divide between rhetoric and reality. Developed countries have only pledged $250 billion by 2035, a figure that falls significantly short of the estimated $6.8 trillion needed to achieve global climate objectives.
India, a crucial player in the G20, requires $250 billion yearly until 2047 to meet its net-zero goals, yet there are still no clear strategies to secure such funding. The G20’s inability to provide concrete solutions leaves nations like India vulnerable to the escalating impact of climate disasters, which caused losses exceeding ₹1.5 lakh crore in 2024.
Developing nations have long advocated for fair climate finance to tackle the disproportionate challenges they face. For example, Bangladesh endures nearly a 1% GDP loss annually due to climate-induced events. Despite these hardships, the OECD reported that only $150 billion in climate finance was mobilized in 2022—less than 2.5% of what’s needed by 2030. The $250 billion annual commitment proposed at COP29 is a far cry from addressing the systemic inequalities present in climate finance negotiations.
The draft text’s suggestion for countries like China and Saudi Arabia to contribute additional funds complicates matters further. As “developing nations” under UN climate conventions, they have resisted obligations to finance adaptation in other countries. This contentious point, along with ambiguous definitions of what constitutes “climate finance” (grants, loans, or private investments), risks undermining the essential solidarity needed to combat climate change effectively.
Adding to the uncertainty surrounding COP29 is the potential return of Donald Trump as U.S. President. His previous administration’s withdrawal from the Paris Agreement and focus on fossil fuel extraction set a concerning precedent. If Trump regains office, global climate diplomacy could suffer severe setbacks, threatening years of advancement. Given that the U.S. contributes over 20% of historical emissions, its leadership—or lack thereof—will significantly affect climate finance negotiations.
Any potential rollback of U.S. commitments poses a threat to the fragile consensus established at COP29. Currently, U.S. contributions to climate finance fall short of global requirements, and Trump’s policies could further undermine trust between nations. In this context, achieving the $1.3 trillion annual target advocated by the Global South increasingly appears unattainable.
The consequences of inaction are profound. A recent study suggests that unchecked climate change could reduce global GDP by up to 10% by 2050, resulting in $178 trillion in economic damages. For the Asia-Pacific region, economic losses could soar to $3.2 trillion annually by mid-century without decisive mitigation measures. Even developed countries are at risk: the U.S. faces approximately $20 billion in annual wildfire damages, while Europe could incur €200 billion in annual costs from escalating heatwaves by 2050.
India faces immediate risks as well. With extreme weather events occurring on 342 days in 2024 alone, the country could see a GDP loss of 2-2.5% by 2050 if global temperatures exceed 1.5°C. These figures underscore the urgent need for binding commitments and effective strategies to mobilize large-scale climate finance.
COP29’s failure to tackle the fundamental issues of climate finance illustrates a critical gap in global leadership. The Warsaw International Mechanism on Loss and Damage, designed to assist nations affected by irreversible impacts, remains underfunded and improperly operationalized. Likewise, progress on Article 6 of the Paris Agreement—potentially enabling global carbon markets—has stagnated. Experts estimate that an effective Article 6 framework could lower global emissions by 5 gigatons annually by 2030, yet this potential remains unleveraged.
The proposed $250 billion annual target, while a move in the right direction, lacks the scale and urgency vital for confronting the climate crisis. Moreover, the absence of clear accountability mechanisms or enforceable timelines risks perpetuating a cycle of unfulfilled commitments evident in past negotiations.
As COP29 concludes, it leaves behind a disturbing legacy of unmet ambitions. The desired $1.3 trillion in climate finance remains out of reach, with a fragmented consensus revealing more divisions than solidarity. Despite G20 nations controlling 85% of global GDP and accounting for three-quarters of emissions, their failure to provide actionable solutions reveals a concerning inertia. Instead of a pivotal moment, this summit serves as a cautionary tale of political stalemate amid an escalating crisis. The costs of inaction continue to rise daily, leading to the pressing question: how much longer can the world afford to wait?
(The writers are associated with the National Council for Applied Economic Research, New Delhi.)
