UN report calls for trillion of dollars in climate finance to aid developing countries

Developing nations will need around $1.1 trillion annually in climate financing by 2025, a figure expected to climb to $1.8 trillion by 2030, according to a new report by the United Nations Conference on Trade and Development (UNCTAD). The report outlines a daunting roadmap for climate finance and calls for developed countries to meet escalating financial commitments to support global climate goals.

Under the New Collective Quantified Goal (NCQG), the contribution target for developed countries will start at $0.89 trillion in 2025, increasing to $1.46 trillion within five years. This represents a yearly commitment of approximately 1.4% of developed nations' GDP, or about 2% of developing countries' GDP. 

The targets, projected using the United Nations Global Policy Model (UN GPM), underscore the urgency of high-quality, effective climate finance that doesn’t burden developing economies with debt.

At the upcoming COP 29 in Baku, parties are expected to negotiate an NCQG that goes beyond the floor of $100 billion per year, taking into account the unique climate needs of developing nations. 

The report stresses that effective climate financing must be transparent, adaptable, and easily accessible, focused on expanding fiscal capacity rather than increasing debt burdens. It also emphasizes an equitable approach—aligning with the principle of Common but Differentiated Responsibilities and Respective Capabilities (CBDR-RC)—to ensure fair effort-sharing among developed countries.

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A strong international financial architecture (IFA) is critical, UNCTAD argues, to maximize the effectiveness of these climate flows and foster sustainable development. Though the NCQG can’t fully address all the financial obstacles facing developing countries, it can catalyse greater collaboration on reforming the IFA, making the path toward the Paris Agreement more achievable and cost-effective.

Manuj Bhardwaj, a Geneva-based climate policy advisor, advocates for a regional finance infrastructure inspired by the European Union (EU)’s economic framework.

“To bridge this gap, I propose a solution grounded in regional finance infrastructure, inspired by the EU’s success in fostering collaborative economic frameworks,” Bhardwaj said.

“Grouping countries with similar needs and regional characteristics under multilateral bodies could drive more tailored, responsive climate financing solutions, particularly in the Global South," Bhardwaj added. 

He noted that while organizations like the South Asian Association for Regional Cooperation (SAARC) could lead these efforts, geopolitical challenges have hindered progress. Strengthening these entities, he argues, is key to fostering resilient climate finance systems within a global framework.

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The NCQG, established by the United Nations Framework Convention on Climate Change (UNFCCC), aims to channel at least $100 billion per year in climate finance to developing countries by 2025. This funding is essential to support global efforts to limit greenhouse gas emissions and drive sustainable development across vulnerable regions.