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| Photo Credit: Reuters

The world’s top multilateral banks pledged to ramp up climate finance to low and middle income countries to $120 billion a year by 2030 as part of efforts at global talks in Azerbaijan on Tuesday (November 12, 2024) to agree an ambitious annual target.

Reaffirming a goal of capping global warming at 1.5 degrees Celsius above the pre-industrial average by 2050, the new figure is a more than 60% increase on what the group of 10 multilateral development banks (MDBs) had funnelled to poorer nations last year, according to a statement released during the U.N. climate summit in Azerbaijan’s capital Baku.

Also read | COP29 day 2 updates

The new figure includes $42 billion to help adapt to the impacts of extreme weather, a 70% increase over the 2023 number.

With the U.S. government under Donald Trump expected to pull back from global efforts to fight climate change and many other countries cutting development aid, more emphasis is being placed on helping the private sector increase its funding for climate.

“MDB finance is most needed for the poorer countries, as wealthier governments can typically access cheap debt more easily,” said Clare Shakya, global managing director of climate from the Nature Conservancy.

Going forward, the group of MDBs, including the World Bank, European Investment Bank and Asian Development Bank, said they would aim for their lending to bring in an additional $65 billion in private sector cash. “While the scale of MDBs’ financial commitments is essential, MDBs’ most significant impact comes from our ability to drive transformative change,” the group said in a statement.

However, the group warned their ability to do more largely depended on the commitment of banks’ shareholders from both developed and developing countries, who needed to show “greater ambition”.

“Provision of climate finance at scale also depends on increased MDB internal resources; a larger pool of grant and concessional funds to support enhanced policy dialogue, finance public goods and mobilize private finance; and additional capital to unlock more MDB financing,” the statement said.

“We welcome the ambition set out today by the multilateral development banks, which played a key role in scaling up climate finance to exceed the $100 billion goal,” a U.S. official, who declined to be named, said on the sidelines of the gathering.

“The MDBs are a key part of the climate finance architecture.”

A woman demonstrates a sign on veganism at the COP29 U.N. Climate Summit, Tuesday, Nov. 12, 2024, in Baku, Azerbaijan.
| Photo Credit: AP

In a landmark decision on the first day of the global climate talks here, COP29 has officially adopted the new operational standards for a mechanism of the Paris Agreement under Article 6, setting the stage for a global carbon market.

Also Read: COP29 Summit LIVE Day 2

This adoption of Article 6.4, achieved during the Conference of the Parties serving as the meeting of the Parties to the Paris Agreement (CMA), sets the stage for operationalising Article 6, which has faced years of deadlock.

Article 6 of the Paris Agreement facilitates international collaboration to lower carbon emissions.

It offers two pathways for countries and companies to trade carbon offsets, supporting the achievement of emission reduction targets set in their climate action plans, or nationally determined contributions (NDCs).

The first option, known as Article 6.2, allows two countries to establish a bilateral carbon trading agreement under their own terms.

The second, Article 6.4, seeks to develop a centralised, UN-managed system to enable both countries and companies to offset and trade carbon emissions.

The Article 6.4 Supervisory Body, tasked with creating a United Nations-governed carbon market, finalised essential standards covering carbon removal projects and methodology guidance.

These include guidelines on the development and assessment of methodologies and requirements for carbon removal activities. While previously delayed by conflicting views over transparency and quality, the early adoption of these standards is intended to streamline carbon market operations.

Despite the historic agreement, concerns arose over the process. Some delegates questioned whether the Presidency’s swift push to adopt these standards at the start of COP29 undermined traditional governance procedures.

Negotiations had previously faltered due to divergent views on how permanent and reliable carbon credits should be.

At COP28, disputes over forest credits and deforestation risks hindered progress, leading some stakeholders to worry that the expedited adoption at COP29 could set a precedent for sidestepping scrutiny.

Environmental organisations expressed cautious optimism.

John Verdieck, Global Climate Policy Lead at The Nature Conservancy, noted, “The Art 6.4 decision is a helpful start to COP29. We need every financial mechanism we can get to solve the climate crisis.” Florence Laloe, Senior Director of Climate Policy at Conservation International, added that the adoption of standards under Article 6.4 moves the market closer to full operationalisation, helping overcome a procedural hurdle and enabling countries to address other critical issues at COP.

Experts also emphasised the need for continuous improvement. Dhruba Purkayastha from the Council on Energy, Environment and Water (CEEW) praised the methodological standards, especially the provisions for “downward adjustment” to ensure credible baselines.

However, he flagged remaining issues, such as the lack of clear standards for post-crediting monitoring periods and reversal risk assessments, which he noted are essential for long-term market reliability.

The Article 6.4 mechanism is seen as an important tool in bridging the climate finance gap.

As Laloe noted, “Science shows that it is mathematically impossible to meet global climate goals without nature.” The mechanism aims to enhance climate finance flows to countries with carbon-rich ecosystems, supporting both environmental integrity and equitable access to funding.

Despite this achievement, significant elements under Article 6 remain unresolved, especially Article 6.2, which governs bilateral trades between countries.

The EU and the U.S. remain divided over transparency requirements, and these talks will continue throughout COP29.

For Article 6.4, additional standards on insurance policies, stress testing of the Reversal Risk Buffer Pool, and monitoring frameworks are still needed to ensure rigor and investor confidence.

As negotiations advance, stakeholders urge continued commitment to a transparent, equitable, and functional global carbon market, stressing that the urgency of the climate crisis demands both ambitious action and robust oversight.