Developing countries will need $1 trillion per year by 2030 to tackle the impacts of global warming, a report released on Thursday at COP29 has warned. Authored by the Independent High-Level Expert Group on Climate Finance, it stresses that this funding must come from both public and private sectors.

“To deliver on the $1 trillion of external finance, ambitious but credible targets will be required for the different strands, recognising the need for synergies and leverage to achieve scale and effectiveness. The tripling of MDB finance, for example, is crucial to scaling up private finance and reducing the cost of capital. This framework and the key elements within it should be the main focus of the NCQG,” the report said.

The report also cautions that delaying climate funding for these nations beyond 2025 could worsen the situation, creating greater financial challenges and making it harder to achieve climate stability in the future.

“Any shortfall in investment before 2030 will place added pressure on the years that follow, creating a steeper and potentially more costly path to climate stability. The less the world achieves now, the more we will need to invest later,” the report said.

Under the Paris Agreement, wealthier countries had pledged to provide $100 billion per year in public and private funding to support developing countries in their transition to greener economies and in adapting to the unavoidable effects of climate change. However, it was agreed that a new climate finance agreement needs to be established before 2025.

The report highlights that COP29 in Baku and the G20 Summit in Rio de Janeiro offer key opportunities to assess the climate finance agenda, set an ambitious Nationally Determined Contribution (NDC) goal, and identify priority actions to accelerate progress.

Again, in 2025, events like the Financing for Development conference in June, the G20 agenda under South Africa's Presidency, and COP30—focused on advancing a new round of ambitious NDCs—will be crucial for driving forward the necessary investment and financing.

Greenhouse gas emissions continue to rise, putting the world at significant risk of surpassing the 1.5°C temperature rise limit and triggering severe climate impacts. In 2023, global emissions reached a record 57.1 GtCO₂e, a 1.3% increase from 2022.

According to the UNEP's 2024 report, if current policies remain in place, global warming is projected to reach around 3.1°C by the end of the century—well beyond the Paris Agreement’s target of 1.5°C. Failure to meet the Paris goals would have devastating effects, with even a half-degree difference between 1.5°C and 2°C posing severe risks, especially since adaptation efforts on the ground are still inadequate.

Surpassing 1.5°C could push the planet past tipping points in crucial ecosystems, like the Greenland and Antarctic ice sheets, coral reefs, and permafrost, triggering feedback loops that would further accelerate warming.

Studies indicate that at 2°C of warming, the risk of irreversible damage to ecosystems, such as the Amazon Rainforest and global oceans, increases significantly. This could lead to severe consequences, including dramatic sea level rise, species extinction, and the release of large amounts of carbon. These impacts would pose a direct threat to millions of human lives, displace hundreds of millions of people, and potentially trigger resource conflicts on a large scale.

One of the key projections in the report is the estimated global investment required for climate action, which is expected to reach $6.3–6.7 trillion annually by 2030. This figure breaks down as follows: $2.7–2.8 trillion in advanced economies, $1.3–1.4 trillion in China, and $2.3–2.5 trillion in emerging markets and developing countries (EMDCs) outside of China.

“For 2035, we estimate global investment requirements for climate action to be around $7– 8.1 trillion per year, with advanced economies needing $2.6–3.1 trillion, China $1.3–1.5 trillion, and EMDCs other than China requiring $3.1–3.5 trillion. These needs are our estimations of what is required for delivery on the Paris Agreement, and the investments will also make a vital contribution to sustainable growth and the achievement of the Sustainable Development Goals.”

The report calls on multilateral development banks (MDBs) to commit to tripling their lending capacity by 2030 as part of the New Collective Quantified Goal (NCQG). It emphasizes that each MDB must contribute to this effort, requiring a shared commitment and leadership from their shareholders.

The report advocates for the creation of an integrated global network of public development banks, through initiatives like Finance in Common, to serve as a powerful and coordinated force for more effective climate action and financing.

ABOUT IHLEG

The Independent High-Level Expert Group on Climate Finance (IHLEG), launched by the COP 26 and COP 27 Presidencies, provides an independent perspective on the climate finance agenda. Its third report arrives at a critical moment, as the world prepares to agree on a New Collective Quantified Goal (NCQG) at COP29 and support ambitious Nationally Determined Contributions (NDCs) next year.

The report argues that the world is facing an unprecedented investment challenge and opportunity. To transition to clean, low-carbon energy, build resilience to climate impacts, and protect nature and biodiversity, substantial investments are urgently needed across all countries.

This investment surge will not only drive economic growth and development but also result in significant avoided costs and savings. However, realizing this potential requires a major overhaul of the climate finance system, with focused efforts to unlock investment opportunities and increase financing from all sources.