$1.3tn climate finance ‘road map’ faces COP30 test

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Almost a year after a climate finance goal was agreed at a fraught UN summit in Baku, the issue of how to generate enough money for green action is back under the spotlight at COP30 in Brazil.

Under the 2024 deal backed by almost 200 countries, wealthy nations said they would take the lead in providing “at least” $300bn in climate finance to developing countries by 2035. 

But the agreement also gave the responsibility to Brazil and Azerbaijan, hosts of COP30 and COP29 respectively, of pulling together a “road map” on how to reach the total of $1.3tn that economists say developing countries need to shift to green energy and cope with climate change. 

Now countries must decide the future of this road map, which was published last week and sets out possible sources of revenue and potential next steps needed to generate the money needed.

Michael Jacobs, visiting senior fellow at think-tank ODI Global, says there are now “serious proposals on the table” for how over the next decade $1.3tn could be mobilised.

“If countries are serious about this $1.3tn, these are the kind of things they could do,” he says. “Are they serious? Well that’s the question for COP30.” 

Rich and poor countries have long clashed over climate finance, with developing economies accusing the developed world of missing a past finance goal to generate $100bn a year by 2020 — eventually hit some two years later, according to the OECD.

Tina Stege, climate envoy for the Marshall Islands, says COP30 must make progress on climate finance to ensure small islands like hers survive. “You don’t tell someone who is drowning, ‘Sorry, we just don’t have the money.’ You look absolutely everywhere to find the necessary lifelines.”

The road map put forward — which involved more than 200 governments, banks, businesses, and communities — outlines an array of possible revenue sources. These include so-called special drawing rights for crisis funding, carbon pricing, fees on aviation, and taxes on technology, luxury and military goods.

It also suggests a host of practical steps to put the road map in place by 2028. This includes a UN study on the expansion of debt-for-climate and debt-for-nature swaps, while suggesting credit rating agencies could work with finance ministries on better rating methods to include climate risks.

Laurence Tubiana, one of the architects of the Paris agreement, has also been working on how taxes and levies could be used to generate green revenues. She says countries must now ensure milestones are put in place for the funds to actually begin to flow.

“We have a whole list of what can be done, and now we need to agree who does what and by when,” she says. 

Joe Thwaites, a climate finance expert at NRDC, the US environmental non-profit organisation, says the report offers a “sober assessment” with a clear set of actions. It shows smart policy could address the chronic problems of a lack of co-ordination and financial system inequalities, as much as large amounts of capital, he adds.

But he also warns that there have been many other reports on climate finance that had good proposals but have fallen short on delivery.

Avinash Persaud, special adviser on climate change to the president of the Inter-American Development Bank, says trillions of dollars are already being invested in renewable energy, but much has gone to the rich world.

Multilateral development banks could play a key role in adaptation and resilience financing, he says, by offering concessional loans at lower than market rates or by turning existing profitable local loans into investable assets to attract global investors.

A study by the World Resources Institute, analysing 320 adaptation and resilience investments across 12 countries totalling $133bn, found that every $1 invested generated more than $10 in benefits over 10 years. 

There is no formal agenda item to discuss the new climate finance road map, though adaptation finance for projects to cope with the effects of climate change, such as flood defences and cooling measures, is expected to be covered in separate discussions.

Some participants have suggested Brazil should host a ministerial event on the specific issue of climate finance and the road map.

Simon Stiell, head of the UN climate arm, says it is “high time for a paradigm shift” and argued that “scaling up climate finance hugely benefits every nation”.

“Treating climate finance purely as cost, or as charity, is misguided and self-defeating, and has held back the progress we need,” he says.

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